Section 2732.200  Section 212 of the Act – Services in Employment

 

a)         In determining whether services performed by an individual for an employing unit are employment, as defined by Section 212 of the Unemployment Insurance Act (the Act) [820 ILCS 405/212], the Agency shall, when applicable to a particular factual situation:

 

1)         Review written agreements between the individual and the employing unit;

 

2)         Interview the individual or employing unit;

 

3)         Obtain statements of other persons with relevant information;

 

4)         Examine regulatory statutes governing the organization, trade or business;

 

5)         Examine the books and records of the employing unit; and

 

6)         Make any other investigation necessary to make a determination.

 

b)         The Agency will apply the exceptions specified in the Act to the facts as they exist, and the designation or description which the parties apply to their relationship is not controlling.

 

c)         The mechanics of compensation are not controlling and the fact that an individual is compensated by commission or any payment other than salary does not preclude a determination that the individual is in employment under the Act.

 

d)         The exceptions in Section 212 of the Act are conjunctive, and all three must be proven by the employer to establish the exemption.

 

e)         "Engaged in an independently established trade, occupation, or business" within the meaning of Section 212(C) of the Act means that the individual has a proprietary interest in the business that he or she can sell, give away or operate without hinderance from any other party.  While no one factor will determine if an individual is engaged in an independently established trade, occupation, profession or business as set out in Section 212(C) of the Act, the business reality or totality of circumstances will determine the presence of this condition.  The following types of factors indicate that the individual is engaged in an independently established trade, occupation, profession, or business, as set out in Section 212(C) of the Act:

 

1)         The individual's interest in the business is not subject to cancellation or destruction upon severance of the relationship;

 

2)         The individual has an investment of capital and owns the capital goods of the business enterprise;

 

3)         The individual gains the profits and bears the losses of the business enterprise;

 

4)         The individual makes his or her services available to the general public or the business community on a continuing basis;

 

5)         The individual includes the individual's services on a Federal Income Tax Schedule as an independent business or profession;

 

6)         The individual performs services for the employing unit under his or her own business name;

 

7)         The individual has a shop or office of his or her own;

 

8)         The employing unit does not represent the individual as an employee of the firm to its customers;

 

9)         The individual hires his or her own helpers or employees, without the employing unit's approval, pays them without reimbursement from the employing unit, and reports their income to the Internal Revenue Service;

 

10)         The individual has an account number with the Agency and reports the wages of his or her workers monthly or quarterly, as the case may be, to the Agency;

 

11)         The individual has the right to perform similar services for others on whatever basis and whenever he or she chooses;

 

12)         The individual maintains a business listing in the telephone directory or in appropriate trade journals;

 

13)         If the services require a license, the individual has obtained and paid for the license in his or her own name.

 

f)         The two factors in Section 212(B) of the Act are in the alternative.  Section 212(B) of the Act is satisfied if the service is either outside the usual course of business of the employing unit or performed outside of all the places of business of the employing unit:

 

1)         Services that merely render the place of business more pleasant or are not necessary to the employing unit's business are outside the usual course of business.

 

            EXAMPLE:  The services of a window washer engaged by an employing unit whose business is selling woolens are outside the usual course of the business of the employing unit.

 

2)         Because services are performed outside the employing unit's premises does not preclude an individual from being found to be in employment.  This decision is based upon the occupation and the factual context in which the services are performed.

 

A)        EXAMPLE:  The homes of typists who are typing manuscripts for an employing unit are places of business of the employing unit.

 

B)        EXAMPLE:  Any territory in which a salesman represents his or her employing unit's interests is the employing unit's place of business.

 

g)         "Direction or control" within the meaning of Section 212(A) of the Act means that an employing unit has the right to control and direct the worker, not only as to the work to be done but also as to how it should be done, whether or not that control is exercised.  The following are illustrative of the types of questions the Department will examine to determine whether "direction or control" exists.  The type of business subject to review and the relationship being examined will determine which questions are asked in any given review under this Section.  No one question or answer or combination of questions and answers will determine whether direction or control exists but rather the business reality or totality of circumstances will determine if direction or control exists:

 

1)         Does the employing unit issue assignments or schedule work, set quotas or time requirements;

 

2)         Does the employing unit have the right to change the methods used by the worker in performing his or her services;

 

3)         Does the employing unit require the worker to follow a routine or schedule;

 

4)         Does the employing unit require the worker to report to a specific location and/or at regular intervals;

 

5)         Does the employing unit require the worker to furnish a record of his or her time to the firm;

 

6)         Does the employing unit require the worker to perform services a specific number of hours per day or per week;

 

7)         Does the employing unit engage the worker on a permanent basis;

 

8)         Does the employing unit reimburse the worker for expenses incurred;

 

9)         Is the worker eligible for a pension, a bonus, paid vacation or sick pay;

 

10)         Does the employing unit carry workers' compensation insurance on the worker;

 

11)         Does the employing unit deduct Social Security tax from the worker's compensation;

 

12)         Does the employing unit report the worker's income to the Internal Revenue Service on Form W-2;

 

13)         Does the employing unit bond the worker;

 

14)         Does the employing unit furnish the worker with materials and supplies, tools or equipment;

 

15)         Does the employing unit furnish the worker with transportation, samples, a drawing account, business cards, an expense account, or order blanks;

 

16)         Does the employing unit allow the worker to sell noncompetitive lines or engage in other employment;

 

17)         Does the employing unit restrict the worker in terms and conditions of sale and choice of customers;

 

18)         Does the employing unit assign or limit the territory in which the individual performs;

 

19)         Does the employing unit set the price and credit terms for the products or service;

 

20)         Does the employing unit reserve the right to approve orders or contracts;

 

21)         Does the employing unit have a right to discharge;

 

22)         Does the employing unit require attendance at meetings or training courses;

 

23)         Does the employing unit have the right to appoint the individual's supervisors;

 

24)         Does the employing unit have the right to set rules and regulations;

 

25)         Does the employing unit purport to guarantee the product or service performed;

 

(Source:  Amended at 37 Ill. Reg. 7440, effective May 14, 2013)

 

Section 2732.203  The Effect Of Regulation By A Governmental Entity On "Direction Or Control" Under Section 212 Of The Act

 

In determining whether direction or control exists, the Agency shall consider the factors set forth in Section 2732.200.  Regulation or licensing of a person, organization, trade or business by a governmental entity or use of the terms "direction" and/or "control" in a regulatory or licensing requirement shall not, by operation of law or "per se", constitute a showing of "direction or control" for the purpose of Section 212 of the Act or Section 2732.200(g).

 

(Source:  Amended at 16 Ill. Reg. 8173, effective May 18, 1992)

 

Section 2732.205  Owner-Operators of Motorized Vehicles

 

a)         Section 212.1 of the Act [820 ILCS 405] applies only to services performed on or after August 8, 1995.

 

b)         The burden of proving that services are exempt, under Section 212.1, from the Act's definition of "employment" rests with the person or entity to which the individual is contracted to perform the services.

 

c)         Section 212.1 applies only to services an individual performs as an operator of a truck, truck-tractor or tractor.

 

EXAMPLE: Smith performs services for Company A, which is licensed by the Illinois Commerce Commission as a motor carrier of personal property. These services consist entirely of loading and unloading trucks at Company A's loading dock. Section 212.1 of the Act does not exempt Smith's services for Company A from the Act's definition of "employment".

 

d)         For purposes of applying Section 212.1:

 

1)         "Truck" has the meaning ascribed to it in Section 1-211 of the Illinois Vehicle Code [625 ILCS 5].

 

2)         "Truck-tractor" has the meaning ascribed to it in Section 1-212 of the Illinois Vehicle Code.

 

3)         "Tractor" has the meaning ascribed to "road tractor" in Section 1-178 of the Illinois Vehicle Code.

 

4)         "Family member" means any parent, sibling, child, sibling of a parent, or any of the foregoing relations by marriage or civil union.

 

5)         A person or entity owns, controls or operates another entity when:

 

A)        by virtue of its ownership interest in that other entity, it has the power to direct the management of the other entity;

 

B)        by virtue of its ownership interest in that other entity combined with the ownership interest of one or more others, it actually directs, by itself or in conjunction with others, the management of the other entity; or

 

C)        it has responsibility for overseeing the day-to-day operations of that other entity.

 

6)         Ownership, control or operation may be through any one or more natural persons or proxies, powers of attorney, nominees, proprietorships, partnerships, associations, corporations, trusts, joint stock companies or other entities or devices or any combination of these.

 

7)         "Person or entity" means a sole proprietorship, partnership, association, corporation or any other legal entity.

 

8)         A requirement imposed by a governmental regulatory or licensing agency with respect to services an individual performs as an operator of a truck, truck-tractor or tractor is not a requirement imposed on the individual by any person or entity to which the individual is contracted to perform the services.

 

e)         Section 212.1(a)(1) of the Act

Section 212.1(a)(1) is not satisfied unless:

 

1)         The services are performed by an individual who is registered or licensed as a motor carrier of real or personal property by the Illinois Commerce Commission, US Department of Transportation, or any successor agencies; or

 

2)         Both:

 

A)        The individual performing the services is doing so under an owner-operator lease contract; and

 

B)        The person or entity with which the individual is contracted to perform the services is registered or licensed as a motor carrier of real or personal property by the Illinois Commerce Commission, US Department of Transportation, or any successor agencies.

 

EXAMPLE:  Jones, who owns her own pickup truck, works for ABC Hardware Store. As part of the regular course of Jones' work for ABC, she uses her pickup truck to make deliveries to customers. Neither Jones nor ABC is licensed or registered as a motor carrier of property. Section 212.1 of the Act does not exempt the delivery services Jones performs for ABC from the Act's definition of "employment."

 

f)         Section 212.1(a)(2) of the Act

Section 212.1(a)(2) is not satisfied unless both subsections (f)(1) and (2) of this Section are satisfied.

 

1)         The individual performing the services must be able, with reasonable notice if required by the contract, to terminate the lease contract with the person or entity to which the individual is contracted to perform the services, prior to the termination date specified in the contract, without incurring any legal or equitable liability to that person or entity other than liability for damage to the property being carried or damage or injury caused as a result of the operation of the truck, truck-tractor or tractor.

 

A)        EXAMPLE:  The lease contract between Smith and Motor Carrier A extends from January 1, 1997 through June 30, 1997 and provides that Smith's terminating the contract prior to June 30, 1997, under any circumstances, will result in Smith's being liable for liquidated damages determined according to a formula specified in the contract. Section 212.1 of the Act does not exempt the services Smith performs pursuant to the contract from the Act's definition of "employment" because Smith does not have the right to terminate the contract as contemplated by Section 212.1(a)(2) of the Act.

 

B)        EXAMPLE:  The lease contract between Jones and Motor Carrier C extends from January 1, 1997 through June 30, 1997, but provides that Jones may terminate the lease contract prior to June 30, 1997, without incurring any liability to C other than liability for damage to the property being carried or damage or injury caused as a result of the operation of Jones' truck, on the condition that Jones provides C with reasonable notice of termination. If Jones terminates the contract without providing C with reasonable notice, Jones will be liable for liquidated damages determined in accordance with a formula specified in the contract. Under these facts, absent any other evidence that indicates C has failed to satisfy the requirements of subsections (e) through (k), the services Jones performs for C are exempt from the Act's definition of "employment".

 

2)         Following the termination of the lease contract, the individual must be able to perform the same or similar services for others, on whatever basis and whenever he or she chooses, without incurring any legal or equitable liability to the person or entity to which the individual was contracted to perform the services under the terminated lease contract.

 

EXAMPLE:  The lease between Davis and Motor Carrier B provides that, upon termination of the contract, Davis shall not, for a period of six months, perform services as an operator of a truck, truck-tractor or tractor for any other motor carrier located within a 90-mile radius of B's main office. The provision is enforceable by injunction. Section 212.1 of the Act does not exempt the services Davis performs pursuant to the contract from the Act's definition of "employment".

 

g)         Section 212.1(a)(3) of the Act

Section 212.1(a)(3) is not satisfied unless the person or entity to which the individual is contracted to perform the services imposes no requirements on the individual to perform the services, or be available to perform the services,  at a specific time or times, according to a specific schedule or for a specified number of hours. The person or entity is not considered as having imposed such a requirement when the person or entity informs the individual performing the services of a pickup or delivery time specified by the shipper or receiver of the property to be transported.

 

1)         EXAMPLE:  Adams telephones Motor Carrier A at 8:00 A.M. each day Adams is available to provide truck driving services to see whether A has any work for Adams.  After being informed that there is work, Adams must make himself available to perform the work by 9:00 A.M.  If Adams fails to make himself available by 9:00 A.M., Motor Carrier A will enter a demerit on his personnel records. If Adams accumulates five demerits during a year, Motor Carrier A will terminate its relationship with Adams.  Section 212.1 of the Act does not exempt the services Adams performs for Motor Carrier A from the Act's definition of "employment".

 

2)         EXAMPLE:  Motor Carrier B telephones Smith in each of five consecutive weeks to offer Smith work providing truck driving services for B.  Each time, Smith indicates he is not interested. B does not contact Smith after that. By itself, B's decision not  to attempt to do further business with Smith, an individual who has consistently refused B's offers of work, is not evidence that B has imposed any requirements on Smith to perform services, or be available to perform services, at a specific time or times, according to a specific schedule or for a specified number of hours.

 

3)         EXAMPLE:  ABC Produce Company has contracted with XYZ Trucking Company to deliver produce to various wholesalers every Tuesday, Thursday and Saturday; ABC has instructed XYZ the produce must be delivered to each wholesaler no later than 4 A.M. Jones is to perform the services for XYZ as the operator of a truck, transporting produce from ABC.  XYZ informs Jones of the 4 A.M. deadline imposed by ABC. It is understood that Jones' failure to meet the deadline may jeopardize his ability to drive for XYZ again. The deadline was specified by the shipper.  The fact that a carrier may be reluctant to transact future business with a driver who has failed to meet the shipper's deadline does not, by itself, indicate the carrier has failed to satisfy Section 212.1 of the Act.  Under these facts, absent any other evidence that indicates XYZ has failed to satisfy the requirements of subsections (e) through (k) of this Section, the services Jones performs for XYZ are exempt from the Act's definition of "employment".

 

4)         EXAMPLE:  White operates a truck for the ABC Produce Company.  ABC instructs White that produce picked up from ABC's terminal must be delivered to XYZ Wholesaler by 4 A.M. on the delivery date.  It is understood that White's failure to meet the deadline may jeopardize his ability to drive for ABC again. The fact that ABC may be reluctant to transact future business with a driver who has failed to meet the delivery time ABC, as the shipper, has specified does not by itself indicate ABC has failed to satisfy Section 212.1 of the Act.  Under these facts, absent any other evidence that indicates ABC has failed to satisfy the requirements of subsections (e) through (k) of this Section, the services White performs for ABC are exempt from the Act's definition of "employment".

 

5)         EXAMPLE:  Under a contract between Reynolds and ABC Construction Company, Reynolds is to deliver asphalt to a specified ABC construction site at 8 A.M. on the designated day.  Timely delivery of asphalt will require Reynolds to pick up the asphalt from the location specified by ABC no later than 7 A.M. It is understood that Reynolds' failure to pick up and deliver the asphalt on time may jeopardize his ability to drive for ABC again.  The fact that ABC may be reluctant to transact future business with a driver who has failed to meet the pickup and delivery times ABC, as the receiver, has specified does not, by itself, indicate ABC has failed to satisfy Section 212.1 of the Act.  Under these facts, absent any other evidence that indicates ABC has failed to satisfy the requirements of subsections (e) through (k) of this Section, the services Reynolds performs for ABC are exempt from the Act's definition of "employment".

 

h)         Section 212.1(a)(4) of the Act

Section 212.1(a)(4) is not satisfied unless:

 

1)         the individual performing the services leases or holds title to the truck, truck-tractor or tractor; and

 

EXAMPLE:  Smith operates a truck for ABC Trucking Company.  ABC holds title to the truck.  Section 212.1 of the Act does not exempt the services Smith performs for ABC from the Act's definition of "employment".

 

2)         the individual or entity from which the truck, truck-tractor or tractor is leased or that holds a security or other interest in the truck, truck-tractor or tractor is not:

 

A)        the person or entity to which the individual operating the truck, truck-tractor or tractor is contracted to perform the services; or

 

B)        owned, controlled or operated by or in common with, to any extent, directly, or indirectly, the person or entity to which the individual operating the truck, truck-tractor or tractor is contracted to perform the services or a family member of a shareholder, owner or partner of the person or entity with which the individual is contracted to perform the services.

 

i)          EXAMPLE:  Adams operates a truck for XYZ Trucking Company, a corporation in which Jones is the majority shareholder.  While Adams holds title to the truck, ABC Trucking Company, of which Jones is the sole proprietor, holds a lien on Adams' truck.  Section 212.1 of the Act does not exempt the services Adams performs for XYZ from the Act's definition of "employment", since ABC is owned or controlled in common with XYZ.

 

ii)         EXAMPLE:  Madison operates a truck for XYZ Trucking, a corporation in which Jefferson is a 5% shareholder.  Madison holds title to the truck, but ABC Finance Company, which is managed by the brother of Jefferson's father-in-law, holds a lien on the truck.  Section 212.1 of the Act does not exempt the services Madison performs for XYZ from the Act's definition of "employment", since the individual who operates ABC is a family member of a shareholder of XYZ.

 

iii)        EXAMPLE:  ABC Trucking Company, a corporation, is being audited by the Department to determine, among other items, whether services that Jones provided for ABC were "employment" for purposes of the Act. ABC demonstrates that Jones held title to the truck he operated in service to ABC while he was performing the services for ABC.  ABC also provides a written statement, signed by an owner or officer of ABC and attesting that the owner or officer has made reasonable inquiries into the matter and, to the best of the owner's or officer's knowledge, while Jones was performing the services for ABC, ABC did not have any interest in Jones' truck; no individual or entity that might have held an interest in Jones' truck was owned, controlled or operated by or in common with, to any extent, directly or indirectly, ABC; and no individual or entity that might have held an interest in Jones' truck was owned, controlled or operated by or in common with, to any extent, directly or indirectly, a family member of a shareholder of ABC.  The auditor is not aware of any evidence that contradicts the written statement.  These facts indicate that Section 212.1(a)(4) of the Act is satisfied with respect to the services Jones performed for ABC.

 

i)          Section 212.1(a)(5) of the Act

 

1)         Section 212.1(a)(5) is not satisfied unless the individual operating the truck, truck-tractor or tractor pays all costs of licensing and operating the truck, truck-tractor or tractor. Section 212.1(a)(5) is not satisfied if the costs of licensing or operating the truck, truck-tractor or tractor are separately reimbursed by an individual or entity other than the individual operating the truck, truck-tractor or tractor.  Costs not directly associated with the operation or licensing of the truck, including but not limited to telephone charges, expenses related to the loading or unloading of cargo and workers' compensation premiums with respect to the operator of a truck, truck-tractor or tractor do not constitute costs of licensing or operating the truck, truck-tractor or tractor.

 

A)        EXAMPLE:  Smith operates a truck for ABC Trucking Company.  At the end of each week in which Smith has performed services for ABC, the company furnishes Smith a check, accompanied by a statement itemizing the licensing and operational expenses for which Smith is being reimbursed, including wear and tear on Smith's truck.  Section 212.1 of the Act does not exempt the services Smith performs for ABC from the Act's definition of "employment".

 

B)        EXAMPLE:  Adams operates a truck for XYZ Trucking Company, which furnishes Adams with a company debit card Adams may use to purchase fuel.  XYZ covers all approved charges against the debit card and does not charge them back to Adams.  Section 212.1 of the Act does not exempt the services Adams performs for XYZ from the Act's definition of "employment".

 

C)        EXAMPLE:  Jones operates a truck for XYZ Trucking Company.  At the end of each week in which Jones has performed services for XYZ, the company furnishes Jones with a check.  Jones deposits a portion of the payment received from XYZ in a checking account she maintains to cover the costs of operating the truck.  Under these facts, absent any other evidence that indicates that XYZ has failed to satisfy the requirements of subsections (e) through (k) of this Section, the services Jones performs for XYZ are exempt from the Act's definition of "employment".

 

D)        EXAMPLE:  Reynolds operates a truck for ABC Trucking Company.  At the end of each week in which Reynolds has performed services for ABC, the company furnishes Reynolds with a check, based on a flat per mile fee.  There is no indication that any portion of the fee is intended as a separate reimbursement to cover any  costs directly associated with operating or licensing Reynolds' truck.  Under these facts, absent any other evidence that indicates that ABC has failed to satisfy the requirements of subsections (e) through (k) of this Section, the services Reynolds performs for ABC are exempt from the Act's definition of "employment".

 

E)        EXAMPLE:  Smith operates a truck for ABC Construction Company.  At the end of each week in which Smith has performed services for ABC, the company furnishes Smith with a check, based on an hourly fee for his services.  There is no indication that any portion of the check is intended as a separate reimbursement to cover any costs directly associated with operating or licensing Smith's truck.  Under these facts, absent any evidence that indicates ABC has failed to satisfy the requirements of subsections (e) through (k) of this Section, the services Smith performs for ABC are exempt from the Act's definition of "employment".

 

F)         EXAMPLE:  ABC Trucking Company pays for a customized paint job for the truck of any driver who drives over 1,000,000 miles for it without an accident, as long as the driver owns the truck.  While technically, the cost of painting a truck may be considered an operating cost, the principal purpose of the payments in this case is not to reimburse the driver for operating costs but to reward his or her safe driving record.  Under these facts, absent any other evidence that indicates that ABC has failed to satisfy the requirements of subsections (e) through (k) of this Section, the services the driver performs for ABC are exempt from the Act's definition of "employment".

 

2)         This subsection (i) does not apply if federal or State law or regulation requires that the costs of licensing or operating the truck, truck-tractor or tractor be paid by the person or entity to which the individual operating the truck, truck-tractor or tractor is contracted to perform the services.

 

j)          Section 212.1(a)(6) of the Act

 

1)         Section 212.1(a)(6) is not satisfied unless:

 

A)        the individual performing the services offers or advertises his or her services to the public; and

 

B)        the individual performing the services maintains his or her own business identity.

 

2)         Compliance with subsection (j)(1) can be demonstrated by the individual displaying his or her name on the truck, truck-tractor or tractor, or otherwise.

 

EXAMPLE: Smith has his name and address painted on the doors of his truck. While operating his truck in the performance of services for XYZ Trucking, Smith also has affixed to his truck an identification device indicating he is hauling for XYZ.  There is nothing on the truck to indicate Smith does not offer his services to the public.  Under these facts, absent any other evidence that indicates XYZ has failed to satisfy the elements of subsections (e) through (k) of this Section, the services Smith performs for XYZ are exempt from the Act's definition of "employment".

 

k)         Section 212.1(a) of the Act is not satisfied if, as a condition for retaining an individual's services as an operator of a truck, truck-tractor or tractor, the person or entity to which the individual is contracted specifies the person or entity from which the individual is to purchase the truck, truck-tractor or tractor.

 

1)         EXAMPLE:  Smith operates a truck for ABC Trucking Company.  The truck was purchased from XYZ Company, from which ABC requires anyone who wishes to drive for ABC to purchase his or her truck.  Section 212.1 of the Act does not exempt the services Smith performs for ABC from the Act's definition of "employment".

 

2)         EXAMPLE:  Jones operates a truck for XYZ Trucking Company.  Jones purchased the truck from Smith.  Previously, Adams, the owner of XYZ, had advised Jones that Smith was interested in selling the truck.  Adams had also indicated that, based on what he knew about the truck, he would have bought it if he had been in the market for a truck.  However, at no time did Adams indicate that Jones' ability to perform services for XYZ was dependent upon Jones' purchasing a truck from Smith.  Under these facts, absent any other evidence that indicates that XYZ has failed to satisfy the requirements of subsections (e) through (k) of this Section, the services Jones performs for XYZ are exempt from the Act's definition of "employment".

 

(Source:  Amended at 43 Ill. Reg. 6449, effective May 14, 2019)

 

Section 2732.210  Mandatory Jury Service

 

Mandatory service on a jury shall not constitute employment under the Act, nor shall payments made for those services constitute wages subject to the payment of contributions.

 

EXAMPLE:  A county requires that all registered voters, except those exempted by law, be available to serve on juries for the county court system.  The jurors are paid on a per diem basis for their services.  These services are not voluntary and are compelled by law.  Therefore, pursuant to this Section, the services shall not constitute employment, nor shall the per diem payments constitute wages.

 

(Source:  Amended at 43 Ill. Reg. 6449, effective May 14, 2019)

 

Section 2732.215  Exemption From The Definition Of Employment For Participants In The Americorps Program

 

Activities performed by an individual as a "participant", as that term is used in the National and Community Service Act of 1990, as amended (42 U.S.C. Sections 12501 et seq.), shall not be considered to be in employment under the Act [820 ILCS 405], and payments made to the individual for such activities shall not constitute wages subject to the payment of contributions.

 

(Source:  Added at 21 Ill. Reg. 9456, effective July 2, 1997)

 

Section 2732.220  Exemption From The Definition Of Employment For Direct Sellers Of Consumer Goods

 

a)         For the purpose of applying Section 217(b) of the Act [820 ILCS 405/217(b)], the following terms have the meanings set forth below.

 

1)         "Consumer product" means both tangible and intangible (e.g., a subscription for cable television service) personal property which is distributed in commerce and which is normally used for personal, family or household purposes (including any such property intended to be attached to or installed in any real property without regard to whether it is so attached or installed).  The term "consumer product" does not include any product used in the manufacture of another product to be distributed in commerce or any product used only incidentally in providing a service (e.g., insecticide used in a pest control service, materials used in an appliance repair business).  Where the sale of the consumer product includes the sale of a service (such as installation), such installation shall be considered incidental to the sale of the consumer product, and, therefore, not effect the exemption if the value of the installation is less than 10 per cent of the cost of the total purchase price (including installation).

 

2)         A transaction is on a "buy-sell basis" if the salesperson is entitled to retain part or all of the difference between the price at which the salesperson purchases the product and the price at which he sells the product to the consumer as part or all of the remuneration for the services.

 

3)         A transaction is on a "deposit-commission basis" if the salesperson is entitled to retain part or all of a purchase deposit paid by the consumer in connection with the transaction as part or all of the salesperson's remuneration for services.

 

4)         "Permanent retail establishment" is any retail business operating in a structure or facility that remains stationary for a substantial period of time to which consumers go to purchase consumer goods.  Examples of these establishments are grocery stores, hardware stores, clothing stores, hotels, restaurants, drug stores and newsstands.

 

            Example:  A vendor who sells consumer products in a parking lot or other property which is near to or serving a sports arena or other amusement area pursuant to an agreement which grants to the vendor or to another entity for which the vendor provides service the right to sell consumer products on such property sells consumer products in a permanent retail establishment, regardless of whether the sale is made within a permanent structure.

 

b)         The "written contract" requirement is not met unless the contract specifically states that the individual will not be treated as an employee for Federal tax purposes.  It will not be sufficient that the contract merely state that the individual will not be treated as an employee.

 

c)         Services provided prior to the later of the effective date or the date of execution of the written contract shall not be exempt under Section 217(b) of the Act.

 

d)         The "substantially all the remuneration" requirement of Section 217(b) is satisfied if at least 90 per cent of the total remuneration, including advances and draws, received by the individual for the calendar year from that employing unit for performing such services is directly related to sales or other output rather than to the number of hours worked.  Advance or draw shall not include monies which, pursuant to a binding written contract, must be repaid by the individual directly or indirectly (including by a debit against the individual's account with the employing unit).

 

(Source:  Amended at 21 Ill. Reg. 9456, effective July 2, 1997)

 

Section 2732.225  Exemption from the Definition of Employment for Freelance Editorial or Photographic Work

 

a)         For the purpose of applying Section 225(B) of the Act, the following terms have the meanings set forth in this subsection (a).

 

1)         "Freelance" means that an individual has a right to make his or her services available to the general public on an ongoing basis as distinguished from being required to perform services exclusively for one individual or entity.

 

EXAMPLE 1:  Newspaper A needs a photographer to provide pictures of a presidential visit to the State Fair.  The newspaper contracts with a Springfield photographer who regularly contracts with Newspaper A and other newspapers for specific assignments.  This photographer is providing freelance services to this newspaper.

 

EXAMPLE 2:  Newspaper A contacts a former tennis pro turned sports writer to cover the U.S. Open tennis tournament.  The assignment is for a three week period. Newspaper A allows the sports writer to take on assignments from other sources provided they do not interfere with his coverage of the Open.  This writer is providing freelance services to this newspaper.

 

2)         "Editorial" means work pertaining to the literary or artistic activities or contents of a newspaper as distinguished from the newspaper's business and advertising activities.

 

EXAMPLE 1:  Professor A is a world authority on economic theory C. Newspaper B hires professor A to write a column that explains why the President must adopt economic theory C as part of his reelection strategy. Professor A is performing editorial work for the newspaper.

 

EXAMPLE 2:  Newspaper A wishes to print a story about a local fair.  It hires a resident of the local area to write a column about the fair.  The writer of this story is performing editorial work for the newspaper.

 

EXAMPLE 3:  Newspaper A is considering raising its advertising rates. Therefore, it hires a consultant to examine all local media advertising rates and recommend a course of action.  This consultant is not performing editorial services for the newspaper.

 

b)         The application of Section 225(B) of the Act is limited to services performed for a newspaper.  Freelance editorial or photographic services performed for a magazine do not fall within this exception.

 

(Source:  Amended at 43 Ill. Reg. 6449, effective May 14, 2019)

 

Section 2732.227  Exemption for the Delivery or Distribution of Newspaper or Shopping News to the Ultimate Consumer

 

a)         For the purpose of applying Section 225(C) of the Act:

 

1)         The "substantially all the remuneration" requirement is satisfied if at least 75% of the total remuneration received by the individual for the calendar quarter from the employing unit claiming the exemption is directly related to sales, "per piece" fees, or other output rather than to the number of hours worked.  A "base fee" or other payment provided as a reasonable reimbursement for mileage and other expenses will not be included in calculating whether the requirement is met.

 

EXAMPLE 1:  An individual's compensation consists of $.05 for each newspaper that he delivers and a base fee of $50.00 per week.  The individual's weekly mileage expense is approximately $25.00 and his other expenses total approximately $10.00.  The base fee is a reasonable reimbursement for mileage and other expenses.  Therefore, since the base fee is not considered regardless of the number of newspapers delivered, 100%, therefore, "substantially all" of the individual's remuneration is directly related to output.

 

EXAMPLE 2:  An individual's compensation consists of $.05 for each newspaper that he delivers and a flat fee of $100.00 per week.  The individual's weekly mileage expense is approximately $20.00 and his other expenses total approximately $7.00.  The fee is not a reasonable reimbursement for mileage and other expenses.  The difference between the fee and the actual expenses is included in determining whether the "substantially all the remuneration" requirement is met.  The individual's output based remuneration would have to be at least 75% of the individual's total pay for the exemption to apply.

 

2)         The "written contract" requirement is not met unless the contract specifically states that the individual will not be treated as an employee for federal tax purposes.  It will not be sufficient for the contract to merely state that the individual will not be treated as an employee.  Any services provided prior to the date of the execution of the required written contract shall not be exempt under Section 225(C) of the Act; whether these services constituted employment under the Act shall be determined under Section 212 of the Act.

 

3)         Delivery or distribution to the "ultimate consumer" does not include the delivery or distribution for sale or resale, including but not limited to distribution to a newsrack or newsbox, salesperson, newstand or retail establishment.  Delivery or distribution to the "ultimate consumer" does not include the distribution for further distribution regardless of subsequent sale or resale.

 

EXAMPLE 1:  Delivery of a single newspaper to a restaurant owner who allows his customers to read the paper is delivery to the ultimate consumer.

 

EXAMPLE 2:  Delivery of several copies of a newspaper to a restaurant which provides a complimentary morning newspaper for its customers is not delivery to the ultimate consumer.

 

b)         Section 225(C) of the Act shall apply to a "delivery agent" that delivers the newspaper or shopping news to the ultimate consumer through one or more agents or carriers.

 

EXAMPLE:  Newspaper A contracts with an individual to deliver its newspapers in a specified area.  This individual hires several adult motor route carriers to actually deliver the newspaper.  Section 225(C) of the Act applies to both the individual and the adult motor route carriers because they are delivering newspapers to the ultimate consumer.

 

c)         For Section 225(C) of the Act to apply, the majority (more than 50%) of the individual's deliveries of the newspaper or shopping news must be to the ultimate consumer.  The majority of deliveries is determined by the number of establishments where deliveries are made, not by the number of newspapers or shopping news delivered to the establishment.

 

EXAMPLE 1:  An individual has a large newspaper distribution route.  On this route, 40% of his deliveries are to homes or apartments.  The remaining 60% are delivered to stores, restaurants, newsstands and other retail establishments for retail sale.  Section 225(C) of the Act does not apply to this individual.

 

EXAMPLE 2:  An individual delivers newspapers to 20 single family homes and to one drugstore.  Each home receives one newspaper while 50 newspapers are delivered to the drugstore for resale.  Because the number of establishments, not the number of newspapers, determines the majority of deliveries, the individual makes the majority of his deliveries to the ultimate consumer.

 

(Source:  Amended at 43 Ill. Reg. 6449, effective May 14, 2019)

 

Section 2732.230  Domestic Service

 

a)         For purposes of applying Sections 211.5 and 215 of the Act [820 ILCS 405/211.5 and 215], the following terms have the meanings set forth in this subsection (a):

 

1)         A "private home" is the fixed place of abode of the individual or family for whom the worker is performing services.  A separate and distinct dwelling unit maintained by an individual as a residence, such as a hotel room, boat or trailer, can be a "private home".   A room or suite in a nursing home can be a "private home", provided that the facts and circumstances of the particular case indicate that the room or suite is, in fact, the place where the individual retains his residence.  A home utilized primarily for the purpose of supplying board or lodging to the public as a business enterprise is not a "private home".

 

A)        EXAMPLE:  An individual who travels to the home of the child's parents to provide babysitting services for a child is performing services in a private home, while an individual who provides babysitting services in her own home would not be performing services in a private home.

 

B)        EXAMPLE:  A worker who provides cooking services in a bed and breakfast establishment in which the owner resides is not performing services in a private home.

 

2)         A "local college club" or "local chapter of a college fraternity or sorority" does not include an alumni club or chapter.

 

3)         "Domestic service" means service of a household nature, including service performed by cooks, waiters, butlers, housekeepers, housemothers, governesses, maids, valets, babysitters, janitors, launderers, furnacemen, caretakers, handymen, gardeners, footmen, grooms, and chauffeurs of automobiles for family use.  Service not of a household nature, such as by a private secretary, nurse, tutor, or librarian, is not domestic service.

 

EXAMPLE:  An individual who performs only caretaking services, such as bathing the individual, combing an individual's hair, reading, arranging bedding and clothing, doing laundry and preparing and serving meals is performing domestic service, even though he may be characterized as a health care worker.  Registered or licensed practical nurses, or individuals responsible for providing professional or semiprofessional services such as physical therapy or giving intravenous medication, are not performing domestic service.

 

b)         In determining whether an employing unit has paid $1,000 or more in wages in a calendar quarter for domestic service in a private home, local college club or local chapter of a college fraternity or sorority, all wages paid for domestic service in those locations to all individuals who performed domestic service in those locations for the employing unit are included.

 

EXAMPLE: Company A provides housekeepers to perform services in private homes.  Each individual housekeeper is paid $250 in each calendar quarter by Company A.  If 4 or more housekeepers are employed by Company A in a calendar quarter, their services will constitute "employment" under the Act.  In order for the services provided to Company A to be excluded from "employment" under Section 211.5 of the Act, the total wages for domestic service paid to all of the housekeepers provided by Company A must be less than $1,000 for the quarter.

 

c)         Domestic service that is performed in other than a private home, local college club or local chapter of a college fraternity or sorority is not subject to the provisions of Sections 211.5 and 215 of the Act.  However, it may be excluded from "employment" by the provisions of Section 206 of the Act if the service is not provided for an "employer" under Section 205 of the Act, or it may be excluded from "employment" under Section 212 of the Act.

 

(Source:  Amended at 43 Ill. Reg. 6449, effective May 14, 2019)

 

Section 2732.235  Effect Of Section 218 Of The Act On The Employment Status Of Certain Relatives

 

a)         In interpreting Section 218 of the Act, where the employing unit is a partnership, the term "employment" shall exclude service performed by an individual who has one of the following relationships with respect to each partner: father, mother, or spouse or a child under the age of 18.

 

            Example: Mary Jones and Sally Johnson are partners in a cleaning service. Sam Johnson is employed by the cleaning service. While Mary Jones and Sally Johnson are unrelated, Sam Johnson is under the age of 18 and the son of Mary Jones and is the husband of Sally Johnson. Because a relationship specified in Section 218 of the Act exists between Sam Johnson and each of the partners, his services are excluded from the definition of "employment."

 

b)         For purposes of Section 218 of the Act, the terms "father" and "mother" do not include a father-in-law or a mother-in-law; the term "child" includes only a natural or adopted child, a stepchild or a child who, by court order, is in the custody of the individual(s) claiming the exemption.

 

            Example: Joe's Diner is a partnership whose partners are Joe and Stella Smith, husband and wife. Jack Jones is an employee of the partnership. He is also the father of Stella Smith. The services provided by Jack Jones to the partnership constitute "employment" under the Act. Section 218 of the Act does not apply because Jack Jones does not have one of the specified relationships with Joe Smith.

 

c)         Section 218 of the Act does not apply to a corporation.

 

            Example: Mrs. Murphy is the president and sole shareholder of Corporation A. Mr. Murphy, her husband, is employed by the corporation as a janitor. Section 218 of the Act does not apply in this situation because Mr. Murphy, is employed by the corporation, not by his spouse, Mrs. Murphy.

 

(Source:  Added at 18 Ill. Reg. 16355, effective October 24, 1994)