Full Text of HB5002 94th General Assembly
HB5002ham002 94TH GENERAL ASSEMBLY
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Rep. Larry McKeon
Filed: 3/1/2006
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| AMENDMENT TO HOUSE BILL 5002
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| AMENDMENT NO. ______. Amend House Bill 5002, AS AMENDED, by | 3 |
| replacing everything after the enacting clause with the | 4 |
| following:
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| "Section 1. Short title. This Act may be cited as the | 6 |
| Employee
Classification Act.
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| Section 3. Purpose. This Act is intended to address the | 8 |
| practice of misclassifying employees as independent | 9 |
| contractors. | 10 |
| Section 5. Definitions. As used in this Act: | 11 |
| "Construction" means building, altering, repairing, | 12 |
| improving, or demolishing any structure or building or making | 13 |
| improvements of any kind to real property. | 14 |
| "Contractor" means any person or entity who is engaged in | 15 |
| construction as defined in this Act. "Contractor" includes a | 16 |
| general contractor and a subcontractor, but does not include a | 17 |
| person or entity who furnishes only materials or supplies.
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| "Department" means the Department of Labor. | 19 |
| "Director" means the Director of Labor. | 20 |
| "Employer" means any contractor that employs individuals | 21 |
| deemed employees under Section 10 of this Act; however, | 22 |
| "employer" does not include (i) the State of Illinois or its | 23 |
| officers, agencies, or political subdivisions or (ii) the |
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| federal government. | 2 |
| "Entity" means any contractor for which a person is | 3 |
| performing any service and is not classified as an employee | 4 |
| under Section 10 of this Act; however, "entity" does not | 5 |
| include (i) the State of Illinois or its officers, agencies, or | 6 |
| political subdivisions or (ii) the federal government.
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| Section 10. Applicability; status of individuals | 8 |
| performing service. For the purposes of this Act, an individual | 9 |
| performing any service for a contractor is deemed to be an | 10 |
| employee unless it is shown that: | 11 |
| (1) the individual has been and will continue to be | 12 |
| free from control or direction over the performance of the | 13 |
| service, both under his or her contract of service and in | 14 |
| fact; | 15 |
| (2) the service is either outside the usual course of | 16 |
| the business for which the service is performed or the | 17 |
| service is performed outside of all the places of business | 18 |
| of the enterprise for which the service is performed; and | 19 |
| (3) the individual is engaged in an independently | 20 |
| established trade, occupation, profession, or business. | 21 |
| Provided however, that this shall not impair the ability of a | 22 |
| contractor to subcontract with a subcontractor provided the | 23 |
| subcontractor satisfies the provisions of this Section, nor | 24 |
| impair the ability of a subcontractor to subcontract with a | 25 |
| lower tiered subcontractor provided the lower tiered | 26 |
| subcontractor satisfies the provisions of this Section. | 27 |
| Section 15. Notice. | 28 |
| (a) The Department shall post a summary of the requirements | 29 |
| of this Act in English, Spanish, and Polish on its web site and | 30 |
| on bulletin boards in each of its offices. | 31 |
| (b) An employer or entity for whom one or more persons | 32 |
| classified as independent contractors are performing service |
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| shall post and keep posted, in conspicuous places on each job | 2 |
| site where those persons work and in each of its offices, a | 3 |
| notice in English, Spanish, and Polish, prepared by the | 4 |
| Department, summarizing the requirements of this Act. The | 5 |
| Department shall furnish copies of summaries to employers and | 6 |
| entities upon request without charge. | 7 |
| Section 20. Failure to properly designate or classify | 8 |
| persons performing services as employees. | 9 |
| (a) Except as provided in subsection (b), it is a violation | 10 |
| of this Act for an employer or entity not to designate an | 11 |
| individual as an employee under Section 10 of this Act unless | 12 |
| the employer or entity satisfies the provisions of Section 10. | 13 |
| (b) Subsection (a) does not apply to any designation of an | 14 |
| individual by an employer or entity in accordance with the | 15 |
| requirements of any other law, rule, or regulation. However, a | 16 |
| general contractor shall not be liable under this Act for a | 17 |
| lower tier subcontractor's failure to properly designate or | 18 |
| classify persons performing services as employees, nor shall a | 19 |
| subcontractor be liable for a lower tiered subcontractor's | 20 |
| failure to properly designate or classify persons performing | 21 |
| services as employees. | 22 |
| (c) Nothing in this Section shall be deemed to apply to any | 23 |
| action arising out of personal injury or tort. | 24 |
| Section 25. Enforcement. It shall be the duty of the | 25 |
| Department to enforce the provisions of this Act. The | 26 |
| Department shall have the power to conduct investigations in | 27 |
| connection with the administration and enforcement of this Act | 28 |
| and any investigator with the Department shall be authorized to | 29 |
| visit and inspect, at all reasonable times, any places covered | 30 |
| by this Act and shall be authorized to inspect, at all | 31 |
| reasonable times, documents related to the determination of | 32 |
| whether a person is an employee under Section 10 of this Act. |
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| The Director of Labor or his or her representative may compel, | 2 |
| by subpoena, the attendance and testimony of witnesses and the | 3 |
| production of books, payrolls, records, papers, and other | 4 |
| evidence in any investigation or hearing and may administer | 5 |
| oaths to witnesses. | 6 |
| Section 27. Order for violation and public hearing. | 7 |
| Whenever the Department believes upon investigation that there | 8 |
| has been a violation of any of the provisions of this Act or | 9 |
| any rules or regulations promulgated under this Act, the | 10 |
| Department may: (i) issue and cause to be served on any party | 11 |
| an order to cease and desist from further violation of this | 12 |
| Act; (ii) take affirmative or other action as deemed reasonable | 13 |
| to eliminate the effect of the violation; and (iii) assess any | 14 |
| civil penalty allowed by this Act.
The civil penalties assessed | 15 |
| by the Department shall be recoverable in an action brought in | 16 |
| the name of the People of the State of Illinois by the Attorney | 17 |
| General. In any order issued to an offending party under this | 18 |
| Act, the Department shall include a summary of its findings, | 19 |
| which give evidence of the violation. Any party affected by an | 20 |
| order of the Department shall have the right to a hearing | 21 |
| before the Department; however, a written request for such | 22 |
| hearing shall be served on the Department within 10 days of | 23 |
| notice of such order. In the absence of the receipt of a | 24 |
| request for hearing, the affected party shall be deemed to have | 25 |
| waived its right to a hearing and the Department's order shall | 26 |
| become a final administrative decision.
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| Section 30. Review under Administrative Review Law. Any | 28 |
| party to a proceeding under this Act may apply for and obtain | 29 |
| judicial review of an order of the Department entered under | 30 |
| this Act in accordance with the provisions of the | 31 |
| Administrative Review Law, and the Department in proceedings | 32 |
| under the Act may obtain an order from the court for the |
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| enforcement of its order.
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| Section 35. Contempt. Whenever it appears that any employer | 3 |
| or entity has violated a valid order of the Department issued | 4 |
| under this Act, the Director of Labor may commence an action | 5 |
| and obtain from the court an order commanding the employer or | 6 |
| entity to obey the order of the Department or be adjudged | 7 |
| guilty of contempt of court and punished accordingly. | 8 |
| Section 40. Penalties.
An employer or entity that violates | 9 |
| any of the provisions of this Act or any rule adopted under | 10 |
| this Act shall be subject to a civil penalty not to exceed | 11 |
| $1,500 for each violation found in the first audit by the | 12 |
| Department. Following a first audit, an employer or entity | 13 |
| shall be subject to a civil penalty not to exceed $2,500 for | 14 |
| each repeat violation found by the Department within 5 years. | 15 |
| For purposes of this Section, each violation of this Act for | 16 |
| each person and for each day the violation continues shall | 17 |
| constitute a separate and distinct violation. In determining | 18 |
| the amount of a penalty, the Director shall consider the | 19 |
| appropriateness of the penalty to the employer or entity | 20 |
| charged, upon the determination of the gravity of the | 21 |
| violations. The amount of the penalty, when finally determined, | 22 |
| may be recovered in a civil action filed in any circuit court | 23 |
| by the Director of Labor, or a person aggrieved by a violation | 24 |
| of this Act or any rule adopted under this Act. For any second | 25 |
| or subsequent violation determined by the Department which is | 26 |
| within 5 years of an earlier violation, the Department shall | 27 |
| add the employer or entity's name to a list to be posted on the | 28 |
| Department's website. Upon such determination the Department | 29 |
| shall notify the violating employer or entity. Such employer or | 30 |
| entity shall then have 10 working days to request a hearing by | 31 |
| the Department on the alleged violations. The amount of the | 32 |
| penalty, when finally determined, may be recovered in a civil |
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| action filed in any circuit court by the Director of Labor or a | 2 |
| person aggrieved by a violation of this Act or any rule adopted | 3 |
| under this Act. In any civil action brought by an aggrieved | 4 |
| person pursuant to this Section, the circuit court shall award | 5 |
| the aggrieved person 10% of the amount recovered. In such case | 6 |
| the remaining amount recovered shall be submitted to the | 7 |
| Director of Labor. Any uncollected amount shall be subject to | 8 |
| the provisions of the Illinois State Collection Act of 1986. | 9 |
| Section 42. Debarments.
For any second or subsequent | 10 |
| violation determined by the Department which is within 5 years | 11 |
| of an earlier violation, the Department shall add the employer | 12 |
| or entity's name to a list to be posted on the Department's | 13 |
| website. Upon such notice, the Department shall notify the | 14 |
| violating employer or entity. No State contract shall be | 15 |
| awarded to an employer or entity appearing on the list until 4 | 16 |
| years have elapsed from the date of the last violation.
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| Section 45. Willful violations.
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| (a) Whoever willfully violates any of the provisions of | 19 |
| this Act or any rule adopted under this Act or whoever | 20 |
| obstructs the Director of Labor, or his or her representatives, | 21 |
| or any other person authorized to inspect places of employment | 22 |
| under this Act shall be liable for penalties up to double the | 23 |
| statutory amount. | 24 |
| (b) Whoever willfully violates any of the provisions of | 25 |
| this Act or any rule adopted under this Act shall be liable to | 26 |
| the employee for punitive damages in an amount equal to the | 27 |
| penalties assessed in subsection (a) of this Section. | 28 |
| (c) The penalty shall be imposed in cases in which an | 29 |
| employer or entity's conduct is proven by a preponderance of | 30 |
| the evidence to be willful. The penalty may be recovered in a | 31 |
| civil action brought by the Director of Labor in any circuit | 32 |
| court. In any such action, the Director of Labor shall be |
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| represented by the Attorney General.
Any uncollected amount | 2 |
| shall be subject to the provisions of the Illinois State | 3 |
| Collection Act of 1986. | 4 |
| Section 50. Employee Classification Fund. All moneys | 5 |
| received by the Department as fees and civil penalties under | 6 |
| this Act shall be deposited into the Employee Classification | 7 |
| Fund and shall be used, subject to appropriation by the General | 8 |
| Assembly, by the Department for administration, investigation, | 9 |
| and other expenses incurred in carrying out its powers and | 10 |
| duties under this Act. The Department shall hire as many | 11 |
| investigators and other personnel as may be necessary to carry | 12 |
| out the purposes of this Act. Any moneys in the Fund at the end | 13 |
| of a fiscal year in excess of those moneys necessary for the | 14 |
| Department to carry out its powers and duties under this Act | 15 |
| shall be available to the Department for the next fiscal year | 16 |
| for any of the Department's duties. | 17 |
| Section 55. Retaliation.
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| (a) It is a violation of this Act for an employer or | 19 |
| entity, or any agent of an employer or entity, to retaliate | 20 |
| through discharge or in any other manner against any person for | 21 |
| exercising any rights granted under this Act. Such retaliation | 22 |
| shall subject an employer or entity to civil penalties pursuant | 23 |
| to this Act or a private cause of action. | 24 |
| (b) It is a violation of this Act for an employer or entity | 25 |
| to retaliate against a person for: | 26 |
| (1) making a complaint to an employer or entity, to a | 27 |
| co-worker, to a community organization, before a public | 28 |
| hearing, or to a State or federal agency that rights | 29 |
| guaranteed under this Act have been violated; | 30 |
| (2) causing to be instituted any proceeding under or
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| related to this Act; or | 32 |
| (3) testifying or preparing to testify in an
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| investigation or proceeding under this Act. | 2 |
| Section 60. Private right of action.
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| (a) A person aggrieved by a violation of this Act or any | 4 |
| rule adopted under this Act by an employer or entity may file | 5 |
| suit in circuit court, in the county where the alleged offense | 6 |
| occurred or where any person who is party to the action | 7 |
| resides, without regard to exhaustion of any alternative | 8 |
| administrative remedies provided in this Act. Actions may be | 9 |
| brought by one or more persons for and on behalf of themselves | 10 |
| and other persons similarly situated. A person whose rights | 11 |
| have been violated under this Act by an employer or entity is | 12 |
| entitled to collect: | 13 |
| (1) the
amount of any wages, salary, employment | 14 |
| benefits, or other compensation denied or lost to the | 15 |
| person by reason of the violation, plus an equal amount in | 16 |
| liquidated damages; | 17 |
| (2) compensatory damages and an amount up to $500 for | 18 |
| each violation of this Act or any rule adopted under this | 19 |
| Act; | 20 |
| (3) in the case of unlawful retaliation, all legal or
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| equitable relief as may be appropriate; and | 22 |
| (4) attorney's fees and costs. | 23 |
| (b) The right of an aggrieved person to bring an action
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| under this Section terminates upon the passing of 3 years from | 25 |
| the final date of service to the employer or entity. This | 26 |
| limitations period is tolled if an employer or entity has | 27 |
| deterred a person's exercise of rights under this Act by | 28 |
| contacting or threatening to contact law enforcement agencies. | 29 |
| Section 65. Rulemaking. The Department may adopt | 30 |
| reasonable rules to implement and administer this Act. For | 31 |
| purposes of this Act, the General Assembly finds that the | 32 |
| adoption of rules to implement this Act is deemed an emergency |
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| and necessary for the public interest and welfare. | 2 |
| Section 70. No waivers. | 3 |
| (a) There shall be no waiver of any provision of this Act. | 4 |
| (b) It is a Class C misdemeanor for an employer to attempt | 5 |
| to induce any individual to waive any provision of this Act. | 6 |
| Section 75. Cooperation. The Department of Labor, the | 7 |
| Department of Employment Security, the Department of Revenue, | 8 |
| the Office of the State Comptroller, and the Illinois Workers' | 9 |
| Compensation Commission shall cooperate under this Act by | 10 |
| sharing information concerning any
suspected misclassification | 11 |
| by an employer of one or more of its employees as independent | 12 |
| contractors. Upon determining that an employer or entity has | 13 |
| misclassified employees as independent contractors in | 14 |
| violation of this Act, the Department of Labor shall notify the | 15 |
| Department of Employment Security, the Department of Revenue, | 16 |
| the Office of the State Comptroller, and the Illinois Workers' | 17 |
| Compensation Commission who shall be obliged to check such | 18 |
| employer or entity's compliance with their laws, utilizing | 19 |
| their own definitions, standards, and procedures.
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| Section 900. The State Comptroller Act is amended by adding | 21 |
| Section 9.06 as follows: | 22 |
| (15 ILCS 405/9.06 new)
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| Sec. 9.06. Misclassification of employees as independent | 24 |
| contractors. The Department of Labor, the Department of | 25 |
| Employment Security, the Department of Revenue, the Office of | 26 |
| the State Comptroller, and the Illinois Workers' Compensation | 27 |
| Commission shall cooperate under the Employee
Classification | 28 |
| Act by sharing information concerning any
suspected | 29 |
| misclassification by an employer or entity, as defined in the | 30 |
| Employee
Classification Act, of one or more employees as |
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| independent contractors. | 2 |
| Section 901. The Department of Employment Security Law of | 3 |
| the
Civil Administrative Code of Illinois is amended by adding | 4 |
| Section 1005-160 as follows: | 5 |
| (20 ILCS 1005/1005-160 new)
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| Sec. 1005-160. Misclassification of employees as | 7 |
| independent contractors. The Department of Labor, the | 8 |
| Department of Employment Security, the Department of Revenue, | 9 |
| the Office of the State Comptroller, and the Illinois Workers' | 10 |
| Compensation Commission shall cooperate under the Employee
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| Classification Act by sharing information concerning any
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| suspected misclassification by an employer or entity, as | 13 |
| defined in the Employee
Classification Act, of one or more | 14 |
| employees as independent contractors.
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| Section 905. The Department of Labor Law of the
Civil | 16 |
| Administrative Code of Illinois is amended by adding Section | 17 |
| 1505-125 as follows: | 18 |
| (20 ILCS 1505/1505-125 new)
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| Sec. 1505-125. Misclassification of employees as | 20 |
| independent contractors. The Department of Labor, the | 21 |
| Department of Employment Security, the Department of Revenue, | 22 |
| the Office of the State Comptroller, and the Illinois Workers' | 23 |
| Compensation Commission shall cooperate under the Employee
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| Classification Act by sharing information concerning any
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| suspected misclassification by an employer or entity, as | 26 |
| defined in the Employee
Classification Act, of one or more | 27 |
| employees as independent contractors.
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| Section 910. The Department of Revenue Law of the
Civil | 29 |
| Administrative Code of Illinois is amended by adding Section |
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| 2505-750 as follows: | 2 |
| (20 ILCS 2505/2505-750 new)
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| Sec. 2505-750. Misclassification of employees as | 4 |
| independent contractors. The Department of Labor, the | 5 |
| Department of Employment Security, the Department of Revenue, | 6 |
| the Office of the State Comptroller, and the Illinois Workers' | 7 |
| Compensation Commission shall cooperate under the Employee
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| Classification Act by sharing information concerning any
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| suspected misclassification by an employer or entity, as | 10 |
| defined in the Employee
Classification Act, of one or more | 11 |
| employees as independent contractors.
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| Section 915. The State Finance Act is amended by adding | 13 |
| Section
5.663 as follows:
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| (30 ILCS 105/5.663 new)
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| Sec. 5.663. The Employee
Classification Fund.
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| Section 920. The Illinois Procurement Code is amended by | 17 |
| changing Section 50-70 as follows:
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| (30 ILCS 500/50-70)
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| Sec. 50-70. Additional provisions. This Code is subject
to | 20 |
| applicable provisions of
the following Acts:
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| (1) Article 33E of the Criminal Code of 1961;
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| (2) the Illinois Human Rights Act;
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| (3) the Discriminatory Club Act;
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| (4) the Illinois Governmental Ethics Act;
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| (5) the State Prompt Payment Act;
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| (6) the Public Officer Prohibited Activities Act; and
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| (7) the Drug Free Workplace Act ; and
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| (8) the Employee
Classification Act .
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| (Source: P.A. 90-572, eff. 2-6-98.)
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| Section 925. The Workers' Compensation Act is amended by | 2 |
| adding Section
26.1 as follows:
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| (820 ILCS 305/26.1 new)
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| Sec. 26.1. Misclassification of employees as independent | 5 |
| contractors. The Department of Labor, the Department of | 6 |
| Employment Security, the Department of Revenue, the Office of | 7 |
| the State Comptroller, and the Illinois Workers' Compensation | 8 |
| Commission shall cooperate under the Employee
Classification | 9 |
| Act by sharing information concerning any
suspected | 10 |
| misclassification by an employer or entity, as defined in the | 11 |
| Employee
Classification Act, of one or more employees as | 12 |
| independent contractors.
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| Section 990. Severability. The provisions of this Act are | 14 |
| severable under Section 1.31 of the Statute on Statutes. | 15 |
| Section 999. Effective date. This Act takes effect July 1, | 16 |
| 2006.".
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