April 2014
By: Nancy E. Joerg, Esq.

An Illinois construction company in the business of installing siding, windows, seamless gutters and roofs brought a legal challenge to the Illinois Employee Classification Act (ECA). This case finally worked its way up to the Illinois Supreme Court.

In March 2014, the Illinois Supreme Court decided in Bartlow v. Costigan, No. 2014 IL 115152 (Ill. 2014), that the Employee Classification Act does not violate procedural due process rights and is not impermissibly vague.

Construction companies (who were hoping that the Illinois Employee Classification Act would be struck down by the Illinois Supreme Court) were of course very disappointed.

Effective January 1, 2014, the Illinois Employee Classification Act was amended and new provisions for notice and a formal administrative hearing were put in place. The Illinois Supreme Court took these new amendments into consideration in deciding that the Illinois Employee Classification Act is constitutional.

As many Illinois construction companies are aware, the Illinois Employee Classification Act became effective January 1, 2008. It was put into effect in order to harshly punish those Illinois construction companies who were using independent contractors that did not pass the very strict legal test for independent contractor status as laid out in the Illinois Employee Classification Act.

The potential penalty (for misclassification of independent contractors in the Bartlow case) was well over $1 million!

The Illinois Department of Labor is the agency which audits, investigates and issues these severe penalties. Under the new 2014 amendments, there are now formal hearings with an Administrative Law Judge. The construction company hit with the penalties can also appeal any hearing decision of the Administrative Law Judge to the state courts for administrative review.

The Illinois Employee Classification Act is of course a big worry to those construction companies who use independent contractors in Illinois.

For assistance with evaluating potential liability under the Illinois Employee Classification Act (or for consultations on limiting your liability in the use of independent contractors), contact Attorney Nancy E. Joerg, who enjoys a nationwide reputation in working with companies who use Independent Contractors of all types. Nancy Joerg can be reached at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.