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Governor signs Employee Classification Act

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in Compensation and Benefits,Human Resources

Gov. Rod Blagojevich signed Illinois’ Employee Classification Act into law in early August. The law targets the construction industry with the intent to prevent employers from misclassifying employees as independent contractors.

Under the law, people performing construction work are presumed to be employees unless they can meet the ABC test:

A. The individual is free from control or direction over the performance of the contract.

B. The service performed is outside the contractor’s usual course of business.

C. The individual is an independently established trade, occupation, profession or business.

Unless employers can demonstrate an individual meets all three criteria, the individual is presumed to be an employee.

Note: Employers must prove to the satisfaction of the Illinois Department of Labor, U.S. Labor Department, Workers’ Compensation Commission and the IRS that an individual is an independent contractor. If they can’t, the individual is an employee.

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