Blagojevich signs legislation to increase protections for workers in
Employee Classification Act will increase protections for workers
and law-abiding contractors by ending the practice of worker
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[August 08, 2007]
CHICAGO -- Gov. Rod R. Blagojevich
joined national labor leaders and state legislators on Monday to
sign legislation that will help increase protections for workers in
the state's construction industry.
House Bill 1795 will prevent the practice of misclassifying
workers in the construction industry as independent contractors. The
new law will make sure that employees in the construction trades are
properly classified, entitling them to protections under numerous
labor laws, including minimum wage, overtime, workers' compensation
and unemployment insurance.
"All workers in Illinois should be protected by employment and labor
laws. When workers are misclassified as independent contractors, not
only are they being denied basic protections, but their employers
are also getting away with avoiding taxes and other obligations like
payroll and Social Security taxes and workers' compensation
premiums," said Blagojevich. "This bill will help increase
protections for workers, and will also help law-abiding contractors
who are being underbid by contractors who misclassify their workers,
and I'm happy to sign it into law."
House Bill 1795, the Employee
Classification Act, was sponsored by state Rep. Harry Osterman,
D-Chicago, and state Sen. Debbie Halvorson, D-Chicago Heights. The
bill addresses the issue of employees being categorized as
independent contractors in an attempt to avoid taxes and coverage
under employment laws, including payroll, Social Security,
unemployment insurance taxes and workers' compensation benefits.
This law will send a strong message to unscrupulous contractors who
have been misclassifying their workers that the days of cheating the
state and federal governments out of tax revenues and workers out of
critical employment protections are numbered. Additionally, this
will level the playing field in the industry, helping law-abiding
contractors who play by the rules and are frequently underbid by
contractors who misclassify their workers.
This law presumes an individual performing work for a
construction contractor is an employee unless the following set of
criteria, known as the ABC test, is met: The individual is free from
control or direction over the performance of the contract; the
service performed is outside the usual course of business of the
contractor; and the individual is in an independently established
trade, occupation, profession or business. There are also exceptions
to the ABC test for legitimate sole proprietors or partnerships.
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The act authorizes the Illinois Department of Labor to enforce the
law, including assessing penalties of up to $1,500 for each
violation found in the a first audit by the department, and up to
$2,500 for each repeat violation found by the department within five
years. For any second or subsequent violations within five years,
the department will bar the employer from receiving any state
contracts for four years.
"This landmark legislation will level
the playing field for construction contractors and provide needed
protections for workers," Osterman said. "I want to thank the
governor for signing this legislation and also those legislators who
worked with me to pass this important law."
"This law will help to ensure that all contractors in Illinois
classify their employees correctly. It will protect the rights of
employees, and even the playing field in Illinois industry," said
Halvorson, the Senate's majority leader.
"The Illinois AFL-CIO and our affiliates in the building trades
have worked for three years to pass legislation that will end the
practice of employers misclassifying their employees as independent
contractors and not paying the proper taxes on those workers," said
Illinois AFL-CIO President Michael T. Carrigan. "It's a costly
problem that robs the state of millions of dollars in annual taxes
and puts honest contractors at a significant disadvantage when they
bid on construction projects. This legislation not only levels the
playing field for the honest contractors who do pay their taxes, but
it also protects workers, especially day laborers who are often
targets of this deceptive practice. Thanks to Senator Halvorson,
Representative Osterman and Governor Blagojevich for championing
this cause on behalf of working men and women."
[Text from file received from
Illinois Office of
Communication and Information]