On July 23, 2013, Governor Pat Quinn signed into law two separate measures that amended portions of the Illinois Employee Classification Act. That law, which was first enacted in 2008, penalizes contractors who perform either public or private work in the construction industry that treat individuals or partners as “independent contractors” rather than as “employees” unless such persons qualify under the Act’s multi-pronged test for independent contractor status. Violations of the law can result in monetary penalties for each day a violation occurs, actual and punitive damages, costs and attorney’s fees for any resulting litigation, possible debarment from State contracts for repeat offenders, and potential criminal sanctions for willful misconduct.
The first amendment (Public Act 98-0106) makes certain changes in the procedures for assessment of liability under the Act. These include notification of the employer within 120 days of the filing of a complaint against it; a requirement that the employer file an answer to the Department’s initial findings of a violation of the Act within 28 days or be deemed to have admitted the violation; and hearing procedures for employers to contest an alleged violation. More importantly, although the amendment reduces the monetary penalties for a first offense to $1,000 per employee per day, and a second offense to $2,000 per employee per day, the amendment also subjects any officer or agent of a corporation who “knowingly” permits the employer to violate the Act to personal liability for the same penalties and remedies as the employer.
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