Illinois Supreme Court Protects Workers, Upholds Constitutionality of Employee Classification Act
Chicago, IL (Law Firm Newswire) May 7, 2014 – The Illinois Supreme Court has upheld the constitutionality of the state's Employee Classification Act.
The Employee Classification Act protects construction workers from being misclassified as independent contractors rather than employees. In the case, Bartlow v. Costigan, the state high court rejected a constitutional challenge by a roofing company that claimed the law was impermissibly vague and violated due process rights.
“This is an important ruling for workers,” states Robert Briskman, a Chicago work injury attorney. “When employees are misclassified as independent contractors, their employers avoid paying worker's compensation premiums, unemployment insurance and overtime, putting workers at risk.”
The court's February 21 decision upholds one of the strongest worker classification statutes in the country. The law creates a presumption that an individual performing construction services is an employee unless the company can prove otherwise.
As with the laws in many other states, to prove that an individual is an independent contractor, the company must show that the individual is free from control and direction by the company in the manner and means of performing the services; that the service is not in the usual scope of services that the company performs; and that the individual has an independent business or trade.
However, the Illinois law goes a step further, applying the employee presumption not just to individuals, but also to sole proprietorships and partnerships. These are deemed individuals unless an additional 12-factor test is met, showing that the entity is a self-sustaining business. The factors include showing that the entity has made a substantial capital investment and that it serves the general public.
The Illinois Department of Labor said that the misclassification of employees costs the state up to $700 million per year in lost payments and taxes.
Violations of the law subject the employer to penalties. Each day of misclassification for each worker is considered a separate violation. A first offense can bring a penalty of up to $1,000, with willful violations resulting in triple damages and subsequent violations resulting in double damages.
The Department said it has collected $314,325 in penalties resulting from 111 separate investigations since the law went into effect in 2008.
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