In 2007, the Employee Classification Act was created by the Illinois General Assembly to eliminate the practice of deliberately misclassifying workers as private contractors by construction companies. (Click here for a summary)

What is employee misclassification?

Misclassification occurs when an entity classifies an individual as an "independent contractor," rather than an employee, in order to evade paying its share of Social Security taxes, federal unemployment taxes, workers compensation contributions, and state unemployment insurance contributions as required by state and federal law. Workers who are misclassified as private contractors often receive lower wages and lack basic workplace protections for employees.

Why do some employers misclassify their employees?

By skirting their responsibility to pay their fair share of various taxes and contributions are able to undercut those who play by the rules when bidding for jobs. Honest union contractors are unfairly placed in a competitive disadvantage in the marketplace.

What is the extent of and harm caused by misclassification?

According to a recent study conducted by the University of Missouri-Kansas City, 20,000 construction workers in Illinois were misclassified as independent contractors in 2005. As a result of misclassification in all industries in Illinois, including construction, $124.7 million in income tax was lost annually between 2001 and 2005.

Click here for more information about HB 1795, the Employee Classification Act (PDF)