"Hiding a full-time employee as an independent contractor creates
an unfair competitive advantage. It artificially lowers the costs
for the business owner who breaks the law, undermining and
outbidding the honest business owner who follows the rules," Gov.
Quinn said. "Stopping this fraud means business owners will compete
fairly, workers will be paid the wages and overtime they earn, and
funds set aside to help someone when they are hurt or unemployed no
longer will be shortchanged. This initiative rewards those who do it
right and punishes those who knowingly do it wrong."
Employers who misclassify their workers artificially lower their
costs because they do not pay unemployment insurance and workers'
compensation for their employees. Law-abiding businesses that
properly classify their workers subsidize the misclassifying
scofflaws. As a result, the honest business owner pays higher
unemployment insurance, workers' compensation and general payroll
taxes to make up for those breaking the law.
"This issue touches everyone right in the pocketbook.
Misclassification robs workers of hard-earned wages and puts
business owners who play by the rules at a competitive disadvantage
by as much as 30 percent," said Department of Labor Director Joseph
Costigan. "By gaming the system, these predatory business owners
harm our economic growth, tamp down our wages and poison the
relationship between labor and management."
In 2010, the White House estimated that increased enforcement
nationally could yield $7 billion in the next decade though proper
payments and penalties.
Details on the educational and fraud-reporting components of the
initiative are available at
Illinois Department of Labor, Illinois Department of Employment
Security, Illinois Department of Revenue and Illinois Workers'
Compensation Commission are working jointly to increase awareness,
help responsible business owners and punish fraud.
[to top of second column]
"Competitive advantages should come from hard work, not
cheating," said Illinois Department of Employment Security Director
Jay Rowell. "This effort is not about those companies who make an
honest mistake. Rather, it targets those who knowingly break the
Generally speaking, to be considered an independent contractor, a
worker must be free from direction or control. A worker is not an
independent contractor just because an employer designates him or
her as such -- even if the worker agrees to the designation.
Employers breaking the law could face fines of at least $10,000
and up to 24 percent interest on failed payments.
"This misclassification hurts employers who are paying workers'
compensation insurance to take care of injured workers, and they are
put at a competitive disadvantage by employers who fail to follow
the law and provide coverage for their employees," said Mitch Weisz,
chairman of the Illinois Workers' Compensation Commission. "We must
hold accountable the business owners who knowingly misclassify
Department of Employment Security and
Department of Labor file received from the
Illinois Office of
Communication and Information]