Starting next year, construction contractors that employ independent contractors in Illinois will face new reporting requirements and the possibility of increased penalties and individual liability for misclassification.
Illinois Governor Pat Quinn signed into law two new amendments to the state's Employee Classification Act, which governs the classification of independent contractors in the construction industry. "Workers shouldn't have to worry about whether their employers are following the rules and paying everything they owe," Quinn said in a statement. "These new laws will also help the state collect the money it's owed and help those out of work find employment."
Under the first amendment, 2013 Ill. P.A. 098-0105, construction contractors that employ independent contractors in any given year will be required to submit to the Illinois Department of Labor (IDOL) by January 31 of the following year a report that includes:
The construction contractor's name, address and business identification number;
The independent contractor's name, address and federal employer identification number; and
The total amount the construction contractor paid to the independent contractor each year, including payments for services and for any materials and equipment.
Under the second amendment, 2013 Ill. P.A. 098-106, civil penalties for violations of the act will increase from $1,000 to $1,500 for each violation found in an audit by the IDOL, and from $2,000 to $2,500 for each subsequent violation found in by the IDOL in a five-year period following the first audit. Underlining Quinn's statement that Illinois' renewed focus on independent contractor misclassification aims not only to protect workers but also to boost revenues, 10 percent of the penalties will be distributed to affected employees while the remaining 90 percent will go to the IDOL.
The final significant change is that any officers or agents of a corporation who knowingly permit violations can be held individually liable for violations and assessed penalties.