HB1289ham001 99TH GENERAL ASSEMBLY

Rep. Robert Martwick

Filed: 4/5/2016

09900HB1289ham001 LRB099 05151 JLS 46403 a

AMENDMENT TO HOUSE BILL 1289

AMENDMENT NO. ______. Amend House Bill 1289 by replacing everything after the enacting clause with the following:

"Section 1. Short title. This Act may be cited as the Independent Contractor Prompt Payment Act.

Section 5. Definitions. In this Act:

"Department" means the Department of Labor.

"Director" means the Director of Labor.

"Client" includes a corporation, limited liability company, partnership, association, or non-profit organization contracting with an independent contractor in any occupation, industry, trade, business, or service for compensation equal to or greater than $600. The term "client" does not include a governmental entity including, but not limited to, any agency, board, department, or commission of the State or any political subdivision thereof and does not include a person. The term "client" does not include the owners of one-family dwellings and 2-family dwellings.

"Compensation" means the earnings of an independent contractor. The term "compensation" also includes reimbursement for expenses.

"Construction contractor" means any person, sole proprietor, partnership, firm, corporation, limited liability company, association, or other legal entity who by oneself or through others offers to undertake, holds oneself out as being able to undertake, or does undertake a construction project.

"Construction project" means the providing of any labor or services, and the use of any materials or equipment in order to alter, build, excavate, add to, subtract from, improve, repair, maintain, renovate, move, wreck, or demolish any bridge, building, highway, road, railroad, land, tunnel, sewer, drainage or other structure, project, development, or improvement, or the doing of any part thereof, including the erection of scaffolding or other structures or works in connection therewith.

"Independent contractor" means a sole proprietor who is not an employee and who is hired or retained by a client for an amount equal to or greater than $600; but does not include a construction contractor.

Section 10. Payment of independent contractors. An independent contractor shall be paid the compensation earned in accordance with the agreed work terms. If an independent contractor and client did not agree on a date for payment of compensation earned, the independent contractor shall be paid the compensation earned not later than the last day of the month following the month in which the compensation is earned. The agreed work terms shall be reduced in writing, signed by both the client and the independent contractor, kept on file by the client for a period of not less than 6 years and made available to the Department upon request. The writing shall include a description of how compensation earned and payable shall be calculated. The failure of a client to produce such written work terms, upon request of the Department, shall give rise to a presumption that the terms that the independent contractor has presented are the agreed terms.

Section 15. Investigation and adjustment of controversies.

(a) The Department shall investigate and attempt to adjust equitably controversies between clients and independent contractors relating to this Act.

(b) The Department may take assignments of claims for compensation from independent contractors or third parties in trust for such independent contractors or for the various funds for such independent contractors. Those assignments shall run to the Department. The Department may sue clients on compensation claims assigned to it. The Department may join in a single action any number of compensation claims against the same company.

(c) An independent contractor may file with the Department a complaint regarding a violation of this Act for an investigation of such complaint and statement setting the appropriate remedy, if any. Failure of a client to keep adequate records shall not operate as a bar to the filing of a complaint by an independent contractor. In such a case the client in violation has the burden of proving that the complaining independent contractor was paid compensation.

(d) On behalf of any independent contractor paid less than the compensation to which he or she is entitled under the agreed work terms under the provisions of this Act, the Department may bring any legal action necessary, including administrative action, to collect such claim and as part of such legal action, in addition to any other remedies and penalties otherwise available under this Act, the Department shall assess against the client an additional amount as liquidated damages, unless the client proves a good faith basis for believing that its underpayment of compensation was in compliance with the law. Liquidated damages shall be calculated by the Department as no more than 100% of the total amount of compensation found to be due. In any action instituted in the courts upon a compensation claim by an independent contractor or the Department in which the independent contractor prevails, the court shall allow such independent contractor all reasonable attorney's fees, prejudgment interest as required under the civil practice law and rules, and, unless the client proves a good faith basis to believe that its underpayment of compensation was in compliance with the law, an additional amount as liquidated damages equal to 100% of the total amount of compensation found to be due. The remedies provided by this article may be enforced simultaneously or consecutively so far as not inconsistent with each other.

(e) Notwithstanding any other provision of law, an action to recover upon a liability imposed by this Act must be commenced within 6 years after the completion of the work. An independent contractor has the right to recover full compensation accrued during the 6 years previous to the commencing of the action, whether the action is instituted by the independent contractor or by the Department.

(f) An independent contractor who files a complaint regarding a violation of this Act shall be provided with a written description of the anticipated processing of the complaint, including investigation, case conference, potential civil and criminal penalties, and collection procedures.

(g) An independent contractor and his or her representative shall be notified in writing of any case conference before it is held and given the opportunity to attend. An independent contractor and his or her representative shall be notified in writing of any award and collection of back compensation and civil penalties, and of any intent to seek criminal penalties. If criminal penalties are sought, the independent contractor and his or her representative shall be notified of the outcome of prosecution.

Section 20. Determination of violation; order directing compliance.

(a) If the Department determines that a client has violated a provision of this Act, or a rule adopted under this Act, by failing to pay the compensation of its independent contractors, the Department shall issue to the client an order directing compliance, which shall describe particularly the nature of the alleged violation, and order the payment of interest at the rate of interest then in effect as prescribed under the Interest Act from the date of the underpayment to the date of the payment. In addition to directing payment of compensation found to be due, an order issued to a client who previously has been found in violation of this Act or rules or to a client whose violation is willful or egregious shall direct payment to the Department of an additional sum as a civil penalty in an amount equal to double the total amount found to be due.

(b) A client who does not pay the compensation of all of its independent contractors in accordance with the provisions of this Act and the officers and agents of any client who knowingly permit the client to violate this Act by failing to pay the compensation of any of its independent contractors in accordance with the provisions this Act shall be guilty of a Class A misdemeanor for the first offense and upon conviction therefor shall be fined not less than $500 nor more than $20,000 or imprisoned for not more than one year, and, if any second or subsequent offense occurs within 6 years after the date of conviction for a prior offense, shall be guilty of a Class 4 felony for the second or subsequent offense, and upon conviction therefor, shall be fined not less than $500 nor more than $20,000 or imprisoned for not more than one year plus one day or punished by both such fine and imprisonment, for each such offense.

Section 25. Representation by the Attorney General.

(a) Penalties and fees assessed under this Act may be recovered in a civil action brought by the Department in the circuit court or in an administrative action.

(b) The Attorney General shall represent the Department in administrative proceedings and civil actions brought under this Act.

Section 30. Rules. The Department is authorized to adopt rules necessary for the administration of this Act.

Section 35. Inapplicability. This Act does not apply to:

(1) real estate brokers, associate brokers, or salespersons licensed pursuant to the Real Estate License Act of 2000;

(2) work performed on one-family dwellings or 2-family dwellings; or

(3) construction contractors or construction projects.".