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Individuals who are performing work for a business entity are generally either classified as independent contractors or employees. The difference between the two classifications is important; being considered an employee entitles individuals to greater benefits than independent contractors receive. Unfortunately, whether intentionally or not, the misclassification of employees occurs, and can end up costing employees access to significant benefits. 

Classifying Workers 

An independent contractor provides a good or service while retaining control over how that good or service is provided or performed. Moreover, an independent contractor will often treat the entity that he or she provides the work for more like a customer or client, rather than an employer. Frequently, an independent contractor will be performing similar work for multiple entities. 

If a person performing work is considered an independent contractor, the business entity can avoid providing the person with the benefits that employees are entitled to. Some of these benefits include workers’ compensation, overtime pay, insurance, minimum wage, and family or medical leave. By avoiding these benefits, the entity can enjoy significant cost savings, which can create a competitive advantage over similar businesses. However, this comes at the expense of the individuals the entity employs. 

Under the Illinois Unemployment Insurance Act, a presumption of employment exists that must be rebutted by the entity in order to lawfully classify the individual performing work as an independent contractor. Specifically, an individual performing services for a business entity is considered an employee unless it is proven that:

1. The individual is free from the entity’s control or direction over the performance of the work, both under the terms of the contract and in fact;

2. The service provided is outside of the normal course of the business or is completely performed outside of all of the places of business of the entity; and

3. The individual is part of an independently created trade, occupation, profession or business. 

Under the Illinois Employee Classification Act, a construction worker is considered an independent contractor if the above test is met or if the worker is a sole proprietor or partnership. 

Holding Employers Liable 

The Illinois Department of Labor, as well as various other government agencies, is responsible for enforcing state laws that govern employee misclassification. Consequences for misclassifying employees as independent contractors include the assessment of interest on late or delinquent unemployment insurance trust contributions and financial penalties. An employer that does not obtain workers’ compensation insurance can be fined up to $500 for every day that it is non-compliant, with a minimum fine of $10,000. It is also possible for an individual to file a personal lawsuit against his or her employer to recover damages such as wages, back overtime pay, or other lost benefits. 

If you believe that you have been misclassified as an independent contractor, it is important to contact an experienced Illinois employment law attorney as soon as possible. There are potentially significant benefits that you have been denied as a result of that misclassification. Our firm proudly helps individuals in communities throughout the northwest suburbs, including Crystal Lake, Schaumburg, Palatine, Des Plaines, Rolling Meadows, Deer Park, Inverness, Arlington Heights, Barrington, and Buffalo Grove. 



About the Author: Attorney Ken Apicella is a founding partner of DGAA focusing in the areas of personal injury, employment, insurance coverage disputes, and civil litigation. Ken earned his J.D. from DePaul University College of Law in 1999. He has been named a SuperLawyers Rising Star and a Forty Illinois Attorneys Under Forty to Watch. Ken has written and lectured for the Illinois Institute for Continuing Legal Education and regularly serves as a moderator at Northwest Suburban Bar Association's Continuing Legal Education seminars.

Sources:

http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=082004050K212

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2898&ChapterID=68

The relationship between employers and employees comes with many legal complexities, and there are times when employers can improperly curtail employees' rights, either by accident or design. One common place where this sort of issue arises is through employee misclassification, the practice of designating an employee as an independent contractor. Although the decision of which of those classes a worker falls into is one for a court to decide, many employers choose to make an improper classification in order to avoid having to provide things like overtime pay or workers' compensation insurance.

What Misclassification Is

There are two classes of worker for many employment law purposes: employees and independent contractors. Generally speaking, the difference between the two is the amount of control that an employer exercises over them. The more control, the more likely the court is to find that an employer/employee relationship exists. However, there are actually a variety of factors that courts look to, including:

• - How much direction the employer gives in how to complete tasks;
• - The type of evaluation system the worker operates under;
• - Whether the business trains the worker;
• - Whether the business reimburses the worker's expenses;
• - Whether the worker can work for other employers;
• - How the worker is paid;
• - Whether the relationship is intended to be long-term; and
• - Whether the worker's services are a key part of the business.

Examples can often be helpful to understand whether someone qualifies as an employee or an independent contractor. For instance, a secretary working at an office for years probably qualifies as an employee because of the high amount of control the employer would retain, as well as the other factors. Conversely, an IT worker hired to set up the company's network would probably be an independent contractor because they are going about the work in their own way, and the job's duration is limited.

Why It Matters

This distinction matters because it affects the responsibility that an employer has towards the worker. Many of the legal protections afforded to workers are only given to people in an employer/employee relationship. For instance, many employers misclassify their employees in order to avoid paying overtime pay or to avoid providing workers' compensation insurance. They can also use misclassification to shift tax burdens onto the worker, by avoiding things like unemployment insurance and Social Security taxes.

A worker's classification is a matter for courts to decide, and how an employer has elected to treat the worker is immaterial. If you believe that you have been misclassified and are losing access to benefits like overtime pay or workers' compensation benefits, contact an experienced Illinois employment lawyer today. Drost, Gilbert, Andrew & Apicella, LLC serves workers in many northwest suburban towns, such as Rolling Meadows, Schaumburg, Inverness, Deer Park, and Arlington Heights.

About the Author: Attorney Ken Apicella is a founding partner of DGAA focusing in the areas of personal injury, employment, insurance coverage disputes, and civil litigation. Ken earned his J.D. from DePaul University College of Law in 1999. He has been named a SuperLawyers Rising Star and a Forty Illinois Attorneys Under Forty to Watch. Ken has written and lectured for the Illinois Institute for Continuing Legal Education and regularly serves as a moderator at Northwest Suburban Bar Association's Continuing Legal Education seminars.