United States: Illinois Supreme Court Upholds One Of The Nation’s Strictest Worker Misclassification Laws; Employers May Face Millions Of Dollars In Penalties

Worker misclassification is now a bet-the-company issue.

On February 21, 2004, the Illinois Supreme Court rejected a constitutional challenge to Illinois’s Employee Classification Act (the “ECA”), a law that defines most individuals who perform construction-related services as employees of the company who retains them, even if the relationship is set up as an independent contractor relationship.  Illinois’s ECA is one of the strictest worker misclassification statutes in the country.

Bartlow v. Costigan arose out of a preliminary finding that a small construction firm, Jack’s Roofing, had misclassified 10 workers as independent contractors instead of employees for periods ranging from 8 to 160 days in 2008.  The Illinois Department of Labor calculated a potential penalty for having misclassified these 10 workers as $1.6 Million.  Under the Illinois misclassification law, each day that each worker is misclassified is considered a separate violation, with fines of up to $1,000 for a first offense.  Willful violations result in triple damages.  Subsequent violations double the penalties again.

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(Please note that the date of this court decision is actually February 21, 2014)