Illinois Independent Contractors laws & compensation compliance analysis

Illinois Independent Contractors: What you need to know

Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law, particularly in areas such as unemployment tax liability, workers' compensation, and state wage and hour requirements. For example, independent contractors are specifically excluded from coverage under the Illinois Family Military Leave Act (IL Comp. Stat. Ch. 820 Sec. 151/5) and the School Visitation Rights Act (IL Comp. Stat. Ch. 820 Sec. 147/10).
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The Employee Classification Act (IL Comp. Stat. Ch. 820 Sec. 185/1et seq.) establishes specific criteria to determine if an individual performing services for a construction contractor is an employee or an independent contractor. The law is aimed at the practice in the construction industry of contractors misclassifying workers as independent contractors in order to avoid tax and labor law obligations, such as payroll taxes, unemployment insurance taxes, workers’ compensation premiums, and minimum wage and overtime payments. Under the law, an individual performing services for a contractor is presumed to be an employee unless:
• The individual is free from control or direction over the performance of the service for the contractor;
• The service performed is outside the usual course of services performed by the contractor; and
• The individual is engaged in an independently established trade, occupation, profession, or business.
Sole proprietors or partners performing services for a contractor are not ...

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