“Gig” Workers in Illinois are Not Always Contractors

State and federal law can bite employers who misclassify their employees

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The world of employment has undergone rampant restructuring in the last decade or so, incorporating concepts like remote work, flex-time, gig opportunities and a host of other innovations that challenge our traditional understanding of what it means to be an employee. Yet, whether one is an employee, or an independent contractor, is a matter of ongoing significance.

“The thing about the gig economy is that people want to make everybody within that an independent contractor,” says Chicago employment attorney Antoinette Choate. “But misclassification of employees is a significant concern in Illinois.”

If you’re classified as an independent contractor, the company you perform work for doesn’t have to pay you minimum wage, or offer overtime, payroll taxes, sick leave, unemployment insurance, workers’ compensation or health insurance mandated by the Affordable Care Act. The Government Accountability Office estimated that the United States lost $2.72 billion due to contractor misclassifications in 2006. And certain sectors are particularly prone to misclassification, such as construction, delivery driving and offsite services like housecleaning.

There can be obvious incentives for companies to shield themselves from liability for the expenses of employees—like saving 30 percent or more in labor costs. However, classification of a worker as employee or independent contractor is not a matter of choice. It is, rather, dictated by federal, state and local laws. Intentional misclassification, then, can have costly outcomes for the employer.

Determining a worker’s classification is largely an assessment of who is in control of the work itself. “You look at the degree of control the employer has,” says Choate. “Do they set your schedule, give you your shifts, give you your supplies? Do they control the way you effectively do your work? If so, you’re truly an employee of the company.”

Choate elaborates on what can be a common misconception: “As I understand the gig economy, it’s temporary. But just because it’s temporary or seasonal, like holiday-season workers for a retailer, that doesn’t mean that you’re not an employee. They’re setting your schedule, telling you when to show up; you have to comply with their code of conduct. You may have a transient project, but if you’re making them come to your workplace and act like any other employee, it may be a gig, but they must still be an actual employee.” 

When employers get it wrong, the results can be severe. “There are tons of actions where people get misclassified,” Choate says. “For example, I represented drivers who worked for a restaurant where the restaurant called them independent contractors. The judge agreed that, under the law, they were employees. When that happens, they can be owed wages, because they may not have been paid overtime. Any time an employee works more than 40 hours in a given work week, they get time-and-a-half, under the Fair Labor Standards Act, and under Illinois and local law.”

She continues: “Depending on whether the conduct was willful, you may also get liquidated damages under federal and state law, which is double damages, plus attorney’s fees and costs. Under Chicago and Cook County employee law, you can get treble damages if you fail to pay someone properly.” Moreover, officers and employees who willfully misclassify can be held liable for unemployment and workers compensation fines, and be subject to criminal charges.

Clearly, there are significant risks to assuming project workers are independent: “Be very careful when you classify, because misclassifying you can get into a lot of trouble,” Choate says. If you need help evaluating your workers’ classifications, talk to an experienced employment attorney

Illinois

“You may have a transient project, but if you’re making them come to your workplace and act like any other employee, it may be a gig, but they must still be an actual employee.” 

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