Illinois Takes Aim at Employee Misclassification, Again

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Illinois is cracking down on employers in the construction industry that misclassify workers.  Employee misclassification laws are aimed at employers that misclassify workers as independent contractors in an attempt to avoid paying payroll taxes, unemployment insurance, and worker’s compensation premiums and overtime payments. Two new Illinois laws expand employer liability and increase reporting requirements.

The first of these laws (HB 2649) adds “individuals” to the definition of covered contractors, and imposes individual liability for violations and penalties on any officer or agent of a corporation who knowingly permits a construction employer to misclassify an individual, sole proprietorship, or partnership may be held individually liable. The law makes it a separate violation for each worker misclassified on each separate day.

The second law (HB 923) requires that all contractors report to the Illinois Department of Labor all payments to people who are not classified as employees of the company. Reports must include the individual’s name, address, and “business identification number” or “federal employer identification number” as well as the amount paid.

Both laws take effect January 1, 2014.

Employers in the construction industry are required to post the Employee Classification Act of 2008 (#13601) in a conspicuous place on each job site where independent contractors are working and in each of the contractor’s offices.