If your Company is audited by the Illinois Department of Employment Security (IDES) and you use independent contractors, you will (almost always!) be asked to complete the IDES Worker Relationship Questionnaire for each group or type of independent contractor.
The DOL has started to implement its pro-business policies, which should create a better environment for businesses. Although it took the DOL some time to hit its stride, we are now seeing some key policies being implemented.
On Wednesday, June 7, 2017, the U.S. Department of Labor (US DOL) issued a three sentence statement trumpeted by national news and happily noted by many employers. The recently-confirmed Labor Secretary, Alexander Acosta, personally announced that he has withdrawn the US DOL'S two Interpretations on two key legal issues worrying many businesses: joint employment and independent contractors.
In recent years, many states have passed laws attempting to regulate ride-hailing companies such as Uber (and other members of the "gig economy"). These new laws cover how to treat independent contractors with regard to insurance requirements, recordkeeping, inspections and background checks, etc.
This article is being written as a cautionary tale for readers who are interested in how to have a good outcome in an Illinois Department of Employment Security (IDES) audit, especially where independent contractors (1099 workers) are at issue.
On March 3, 2017, the U.S. Court of Appeals for the D.C. Circuit ("D.C. Circuit") issued a forceful decision strongly in favor of FedEx and its claims of independent contractor status for some of its drivers. The D.C. Circuit squarely disagreed with the National Labor Relations Board (NLRB), which had held that single-route Ground Division drivers for FedEx were employees (and not independent contractors) under the NLRB independent contractor test. FedEx Home Delivery, an Operating Division of FedEx Ground Package System, Inc. v. NLRB, Nos. 14-1196, 15-1066, 15-1116 (D.C. Cir. Mar. 3, 2017).
Over the many years during which I have helped Illinois companies with their use of independent contractors, the most urgent call I get is from Illinois companies who have just found out they are going to be audited by the Illinois Department of Employment Security (IDES).
With an increasing pace, the news is filled with lawsuits against companies who use independent contractors. This marked litigation trend spans the entire United States and shows no sign of letting up. Companies who use independent contractors need to carefully review their practices with their independent contractors and try to reduce their risk in using independent contractors.
NEW LAWS SPRINGING UP: With the change in our national economy and workforce tilting more and more towards "self-employment" and independent contractor status, new laws are springing up, both state and federal, to respond. Some of these new laws intend to punish companies who "misclassify" employees by (incorrectly) calling them independent contractors.
I am getting an increasing number of phone calls from very nervous people who have heard that the Illinois Department of Employment Security (IDES) is now auditing Illinois companies based solely on the fact that the company had a prior IDES audit involving alleged "misclassification of independent contractors" ("follow-up audits").