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Independent Contractors vs. Employees in Illinois

freelancers, Illinois Employment Lawyer, Illinois small businesses, independent contractors, unemployment tax, workers’ compensationTo be one’s own boss is a deep thread in the narrative of the American dream. And in recent years, employers — especially in major cities like Chicago —have been utilizing independent contractors. And unlike employees, these employers have not been providing independent contractors with the same benefits as salaried workers.

According to Business & Legal Resources, Illinois state law states that an employer must adhere to strict requirements regarding unemployment tax, workers’ compensation, and wage laws for employees. Yet these restrictions do not necessarily extend to independent contractors.

However, in July 2013, Governor Pat Quinn signed the Employee Classification Act into law in an attempt to bring independent contractors, specifically construction workers, some of the protections offered to salaried workers.The Employee Classification Act ”establishes specific criteria to determine if an individual performing services for a construction contractor is an employee or an independent contractor.” The law went into effect in January.

Thus, this legislation makes it more difficult for employers to misclassify independent contractors. The misclassification of employees as contractors leaves contractors without recourse when it comes to workplace protections, and also allows the business to avoid paying certain payroll taxes and other payments that end up costing the Illinois taxpayer. The Illinois Government News Network notes that the misclassification of employees costs the sate up to $700 million annually “in lost taxes and payments.”

As reported by the Small Business Administration, there are several major differences between an independent contractor and an employee, and misclassification can result in a costly legal battle for employers. If an independent contractor is hired and then expected to perform job duties as an employee, according to the SBA, an employer may be required to:

  • Reimburse the contractor for overtime already earned;
  • Pay back payroll taxes; and
  • Provide employee benefits, such as health insurance and retirement savings.

If you or someone you know suspects that your job has been misclassified in Illinois, the most important step is to seek legal counsel. Contact The Miller Law Firm, P.C. today.

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