A poor independent contractor agreement can raise serious issues regarding the payment of additional worker’s compensation premiums, unemployment insurance contributions, as well as expose a business owner to the Illinois Wage Payment and Collection Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act and/or the Family and Medical Leave Act.
All of these statutes determine the rights of an individual based on his or her status as an employee or independent contractor. If a court finds that an individual is an employee, then it can lead to penalties, fines and payment of additional premiums for providing Worker’s Compensation Insurance for an individual that was believed to be a independent contractor. Wausau General Insurance Company v. Kim’s Trucking Inc., 289 Ill. App.3d 201 (1st Dist. 1997). Often times, business owners think that putting together a contract and providing a 1099 is sufficient, however, these factors are not dispositive.
Courts looks at the nature of the relationship, the right to control the individual, the level of supervision provided to the individual, the tools provided to the individual, the level of specialized knowledge that is required to perform the tasks, the method or manner of payment and often these factors may lead to the finding of an employment relationship, even if, you have a independent contractor agreement. See. Martens v. MCL Construction Corporation, 347 Ill. App.3d 303 (1st Dist. 2004) and Roberson v. The Industrial Commissions, 225 Ill.2d 159 (2007).
Having a good independent contractor agreement, proper payment means and good business practices in utilizing the inviduals can help reduce this risk. If you have questions regarding an individual’s independent contractor or employee status, then please feel free to contact our office.