EMPLOYEE CLASSIFICATION ACT IN ILLINOIS
(HB 1795/PUBLIC ACT 95-0026): IMPORTANT TIP
TO HELP PASS ONE OF THE PARTS OF THE 12-FACTOR TEST
By
Nancy E. Joerg, Esq.
Senior Attorney and Shareholder
Wessels Pautsch & Sherman P.C.
St. Charles, Illinois
(630) 377-1554
najoerg@stch.w-p.com
http://www.w-p.com/
Under a brand new Illinois law, the Illinois Employee Classification Act (formerly HB 1795 - Currently Public Act 95-0026), if you are in the same "course of business" as the independent contractors - i.e., for example, you are a builder and your independent contractors are carpenters - you should realize that you are immediately thrown under the category of the very tough 12-part test and not the also very tough three-part test.
What does this mean in everyday English? This means that you must pass each and every part of the Employee Classification Act's 12-part test in order to escape severe penalties by the Illinois Department of Labor.
INDEPENDENT CONTRACTOR MUST HAVE FILED THE NECESSARY FEDERAL INCOME TAX SCHEDULES: Be aware that one of the parts of the 12-part test - and again you must pass ALL 12 parts so that you are not found to be the "employer" of the independent contractor - is that the independent contractor must have filed the necessary federal income tax Schedules. Many companies are upset about this requirement. They feel, quite reasonably in my opinion, that they should not be held legally responsible for the independent contractor filing his or her federal income tax Schedules each year.
Until this new Illinois law is struck down as unconstitutional, or until we get rid of it in some other fashion, it is of course prudent for you - the company using independent contractors in construction, construction-related, or trucking - to have the independent contractor CERTIFY IN WRITING EVERY YEAR (by signing and dating a statement to this effect) that they (i.e., the independent contractors) have indeed filed their federal income tax returns.
We do not know at this point in time what the legal result will be if an independent contractor filled out such a certification, and, indeed, the certification is not true and the independent contractor, in reality, has not filed a federal income tax Schedule. Because we do not know very much about this new law - there are no Regulations yet, no cases, and the law doesn't go into effect until January 1, 2008 - it is best to just take a very proactive position. Therefore, we recommend that all construction, construction-related, and trucking companies who are involved in the construction world take all steps to get such a certification completed and the certification into independent contractor files.
If you wish a free copy of the Illinois Employee Classification Act including the 12-part test, contact Legal Assistant Tammy Nelson at 630-377-1554 or tanelson@stch.w-p.com.
If you have any questions about the Illinois Employee Classification Act, contact Senior Attorney and Shareholder Nancy Joerg at 630-377-1554 or najoerg@stch.w-p.com.
Biographical Information for Nancy E. Joerg
Nancy E. Joerg is a senior attorney and shareholder at Wessels Pautsch & Sherman P.C., a labor and employment law firm concentrating exclusively in the representation of management. Wessels Pautsch & Sherman P.C. maintains offices in St. Charles and Chicago, Illinois; Milwaukee, Wisconsin; Davenport, Iowa; Minneapolis, Minnesota; and Indianapolis, Indiana. (Ms. Joerg can be reached at the St. Charles, Illinois office at 630-377-1554.)
Ms. Joerg defends trucking and construction companies in audits and hearings before various state agencies (including the Illinois Department of Employment Security and the Illinois Department of Labor) on the issue of independent contractor status and other issues of employment law. She reviews and drafts IDES owner-operator leases, independent contractor agreements, and employee handbooks. Ms. Joerg also defends companies before the EEOC and the IDHR as to discrimination cases of all kinds.
