HB2794 EMPLOYEE CLASSIFY-DEVELOPER | Illinois Bill

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB2794

Introduced 2/6/2025, by Rep. Edgar González, Jr.

SYNOPSIS AS INTRODUCED:

820 ILCS 185/5
820 ILCS 185/10
820 ILCS 185/20
820 ILCS 185/25
820 ILCS 185/35
820 ILCS 185/40
820 ILCS 185/42
820 ILCS 185/45
820 ILCS 185/55
820 ILCS 185/60
820 ILCS 185/63

Amends the Employee Classification Act. Provides that a developer,
general contractor, and subcontractor are jointly and severally liable for
any subcontractor's failure to properly classify persons performing
services as employees unless specified conditions are satisfied. Provides
that it is a violation for a developer or a general contractor to utilize a
subcontractor at any tier who commits a violation of the Act unless
specified conditions are satisfied. Makes conforming and other changes.
Defines terms.
LRB104 06369 SPS 16405 b

A BILL FOR

HB2794
LRB104 06369 SPS 16405 b
1

AN ACT concerning employment.

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

Section 5.
The Employee Classification Act is amended by
5
changing Sections 5, 10, 20, 25, 35, 40, 42, 45, 55, 60, 63,
6
and 990 as follows:

(820 ILCS 185/5)
8

Sec. 5.
Definitions.
As used in this Act:
9

"Construction" means any constructing, altering,
10
reconstructing, repairing, rehabilitating, refinishing,
11
refurbishing, remodeling, remediating, renovating, custom
12
fabricating, maintenance, landscaping, improving, wrecking,
13
painting, decorating, demolishing, and adding to or
14
subtracting from any building, structure, highway, roadway,
15
street, bridge, alley, sewer, ditch, sewage disposal plant,
16
water works, parking facility, railroad, excavation or other
17
structure, project, development, real property or improvement,
18
or to do any part thereof, whether or not the performance of
19
the work herein described involves the addition to, or
20
fabrication into, any structure, project, development, real
21
property or improvement herein described of any material or
22
article of merchandise. Construction shall also include moving
23
construction related materials on the job site to or from the

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1
job site.
2

"Contractor" means any individual, sole proprietor,
3
partnership, firm, corporation, limited liability company,
4
association or other legal entity permitted by law to do
5
business within the State of Illinois who engages in
6
construction as defined in this Act.
7

"Contractor" includes a general contractor and a
8
subcontractor.
9

"Department" means the Department of Labor.
10

"Developer" means any person that enters into a contract
11
with a contractor providing for the construction or renovation
12
of a structure for commercial purposes.

"Director" means the Director of the Department of Labor.
14

"Employer" means any contractor that employs individuals
15
deemed employees under Section 10 of this Act; however,
16
"employer" does not include (i) the State of Illinois or its
17
officers, agencies, or political subdivisions or (ii) the
18
federal government.
19

"Entity" means any contractor for which an individual is
20
performing services and is not classified as an employee under
21
Section 10 of this Act; however, "entity" does not include (i)
22
the State of Illinois or its officers, agencies, or political
23
subdivisions or (ii) the federal government.
24

"Interested party" means a person with an interest in
25
compliance with this Act
and includes, without limitation, any
26
labor union, worker center, or employee association that

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1
represents employees in the industry where the
2
misclassification has occurred
.
3

"Performing services" means the performance of any
4
constructing, altering, reconstructing, repairing,
5
rehabilitating, refinishing, refurbishing, remodeling,
6
remediating, renovating, custom fabricating, maintenance,
7
landscaping, improving, wrecking, painting, decorating,
8
demolishing, and adding to or subtracting from any building,
9
structure, highway, roadway, street, bridge, alley, sewer,
10
ditch, sewage disposal plant, water works, parking facility,
11
railroad, excavation or other structure, project, development,
12
real property or improvement, or to do any part thereof,
13
whether or not the performance of the work herein described
14
involves the addition to, or fabrication into, any structure,
15
project, development, real property or improvement herein
16
described of any material or article of merchandise.
17
Construction shall also include moving construction related
18
materials on the job site to or from the job site.
19
(Source: P.A. 98-106, eff. 1-1-14.)

(820 ILCS 185/10)
21

Sec. 10.
Applicability; status of individuals performing
22
service.
23

(a) For the purposes of this Act, an individual performing
24
services for a contractor is deemed to be an employee of the
25
employer except as provided in subsections (b) and (c) of this

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Section.
2

(b) An individual performing services for a contractor is
3
deemed to be an employee of the contractor unless it is shown
4
that:
5

(1) the individual has been and will continue to be
6

free from control or direction over the performance of the
7

service for the contractor, both under the individual's
8

contract of service and in fact;
9

(2) the service performed by the individual is outside
10

the usual course of services performed by the contractor;
11

and
12

(3) the individual is engaged in an independently
13

established trade, occupation, profession or business; or
14

(4) the individual is deemed a legitimate sole
15

proprietor or partnership under subsection (c) of this
16

Section.
17

(c) The sole proprietor or partnership performing services
18
for a contractor as a subcontractor is deemed legitimate if it
19
is shown that:
20

(1) the sole proprietor or partnership is performing
21

the service free from the direction or control over the
22

means and manner of providing the service, subject only to
23

the right of the contractor for whom the service is
24

provided to specify the desired result;
25

(2) the sole proprietor or partnership is not subject
26

to cancellation or destruction upon severance of the

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1

relationship with the contractor;
2

(3) the sole proprietor or partnership has a
3

substantial investment of capital in the sole
4

proprietorship or partnership beyond ordinary tools and
5

equipment and a personal vehicle;
6

(4) the sole proprietor or partnership owns the
7

capital goods and gains the profits and bears the losses
8

of the sole proprietorship or partnership;
9

(5) the sole proprietor or partnership makes its
10

services available to the general public or the business
11

community on a continuing basis;
12

(6) the sole proprietor or partnership includes
13

services rendered on a Federal Income Tax Schedule as an
14

independent business or profession;
15

(7) the sole proprietor or partnership performs
16

services for the contractor under the sole
17

proprietorship's or partnership's name;
18

(8) when the services being provided require a license
19

or permit, the sole proprietor or partnership obtains and
20

pays for the license or permit in the sole
21

proprietorship's or partnership's name;
22

(9) the sole proprietor or partnership furnishes the
23

tools and equipment necessary to provide the service;
24

(10) if necessary, the sole proprietor or partnership
25

hires its own employees without contractor approval, pays
26

the employees without reimbursement from the contractor

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1

and reports the employees' income to the Internal Revenue
2

Service;
3

(11) the contractor does not represent the sole
4

proprietorship or partnership as an employee of the
5

contractor to its customers; and
6

(12) the sole proprietor or partnership has the right
7

to perform similar services for others on whatever basis
8

and whenever it chooses.
9

(d) Where a sole proprietor or partnership performing
10
services for a contractor as a subcontractor is deemed not
11
legitimate under subsection (c) of this Section, the sole
12
proprietorship or partnership shall be deemed an individual
13
for purposes of this Act.
14

(e)
Contractors, subcontractors,

Subcontractors or
lower
15
tiered contractors
at any level, and developers
are subject to
16
all provisions of this Act.
17

(f) A contractor shall not be liable under this Act for any
18
subcontractor's failure to properly classify persons
19
performing services as employees, nor shall a subcontractor be
20
liable for any lower tiered subcontractor's failure to
21
properly classify persons performing services as employees.
22

(g) The developer, general contractor, and subcontractor
23
are jointly and severally liable under this Act for any
24
subcontractor's failure to properly classify persons
25
performing services as employees, except that:
26

(1) the developer is not liable if the developer

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1

demonstrates that the developer was not aware of the
2

misclassification and could not have been aware of the
3

misclassification through the exercise of reasonable
4

diligence and that the developer took all reasonable steps
5

to prevent any misclassification on the job or project;
6

and
7

(2) the general contractor is not liable if the
8

general contractor demonstrates that the general
9

contractor was not aware of the misclassification and
10

could not have been aware of the misclassification through
11

the exercise of reasonable diligence and that the general
12

contractor took all reasonable steps to prevent any
13

misclassification on the job or project.

14
(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/20)
16

Sec. 20.
Failure to properly designate or classify
17
individuals performing services as employees.
18

(a)
It is a violation of this Act for an employer or entity
19
not to designate an individual as an employee under Section 10
20
of this Act unless the employer or entity satisfies the
21
provisions of Section 10 of this Act.
22

(b) It is a violation of this Act for a developer or a
23
general contractor to utilize a subcontractor at any tier who
24
commits a violation described in subsection (a), except that:
25

(1) the developer is not deemed to have committed a

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violation if the developer demonstrates that the developer
2

was not aware of the misclassification and could not have
3

been aware of the misclassification through the exercise
4

of reasonable diligence and that the developer took all
5

reasonable steps to prevent any misclassification on the
6

job or project; and
7

(2) the general contractor is not deemed to have
8

committed a violation if the developer demonstrates that
9

the developer was not aware of the misclassification and
10

could not have been aware of the misclassification through
11

the exercise of reasonable diligence and that the general
12

contractor took all reasonable steps to prevent any
13

misclassification on the job or project.
14
(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/25)
16

Sec. 25.
Enforcement.
17

(a) Any interested party may file a complaint with the
18
Department against an entity or employer covered under this
19
Act if there is a reasonable belief that the entity or employer
20
is in violation of this Act. It shall be the duty of the
21
Department to enforce the provisions of this Act. The
22
Department shall have the power to conduct investigations in
23
connection with the administration and enforcement of this Act
24
and any investigator with the Department shall be authorized
25
to visit and inspect, at all reasonable times, any places

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1
covered by this Act and shall be authorized to inspect, at all
2
reasonable times, documents related to the determination of
3
whether an individual is an employee under Section 10 of this
4
Act. The Director of Labor or his or her representative may
5
compel, by subpoena, the attendance and testimony of witnesses
6
and the production of books, payrolls, records, papers, and
7
other evidence in any investigation and may administer oaths
8
to witnesses. Within 120 days of the filing of a complaint, the
9
Department shall notify the employer in writing of the filing
10
of a complaint and provide the employer the location and
11
approximate date of the project or projects, affected
12
contractors, and the nature of the allegations being
13
investigated.
14

(b) Whenever the Department believes upon investigation
15
that there has been a violation of any of the provisions of
16
this Act or any rules or regulations promulgated under this
17
Act, the Department may: (i) issue and cause to be served on
18
any party an order to cease and desist from further violation
19
of the Act, (ii) take affirmative or other action as deemed
20
reasonable to eliminate the effect of the violation, (iii)
21
collect the amount of any wages, salary, employment benefits,
22
or other compensation denied or lost to the individual, and
23
(iv) assess any civil penalty allowed by this Act.
24

(c) If, upon investigation, the Department finds cause to
25
believe that Section 20 or Section 55 of this Act has been
26
violated, the Department shall notify the
developer,

HB2794
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LRB104 06369 SPS 16405 b
1
contractor, including general contractor,
employer
, or entity
,
2
in writing, of its finding and any proposed relief due and
3
penalties assessed and that the matter will be referred to an
4
Administrative Law Judge to schedule a formal hearing in
5
accordance with the Illinois Administrative Procedure Act.
6

(d) The
developer, contractor, including general
7
contractor,
employer
, or entity
has 28 calendar days from the
8
date of the Department's findings to answer the allegations
9
contained in the Department's findings. If an employer fails
10
to answer all allegations contained in the Department's
11
findings, any unanswered allegations or findings shall be
12
deemed admitted to be true and shall be found true in the final
13
decision issued by the Administrative Law Judge. If, within 30
14
calendar days of the final decision issued by the
15
Administrative Law Judge, the employer files a motion to
16
vacate the Administrative Law Judge's final decision and
17
demonstrates good cause for failing to answer the Department's
18
allegations, and the Administrative Law Judge grants the
19
motion, the employer shall be afforded an opportunity to
20
answer and the matter shall proceed as if an original answer to
21
the Department's findings had been filed.
22

(e) A final decision of an Administrative Law Judge issued
23
pursuant to this Section is subject to the provisions of the
24
Administrative Review Law and shall be enforceable in an
25
action brought in the name of the people of the State of
26
Illinois by the Attorney General.

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1
(Source: P.A. 98-106, eff. 1-1-14.)

(820 ILCS 185/35)
3

Sec. 35.
Contempt.
Whenever it appears that any
developer,
4
contractor, including general contractor,
employer
,
or entity
5
has violated a valid order of the Department issued under this
6
Act, the Director of Labor may commence an action and obtain
7
from the court an order commanding the employer or entity to
8
obey the order of the Department or be adjudged guilty of
9
contempt of court and punished accordingly.
10
(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/40)
12

Sec. 40.
Penalties.
13

(a) An employer or entity that violates any of the
14
provisions of this Act or any rule adopted under this Act shall
15
be subject to a civil penalty not to exceed $1,000 for each
16
violation found in the first audit by the Department.
17
Following a first audit, an employer or entity shall be
18
subject to a civil penalty not to exceed $2,000 for each repeat
19
violation found by the Department within a 5 year period. For
20
purposes of this Section, each violation of this Act for each
21
person and for each day the violation continues shall
22
constitute a separate and distinct violation. In determining
23
the amount of a penalty, the Director shall consider the
24
appropriateness of the penalty to the employer or entity

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1
charged, upon the determination of the gravity of the
2
violations.
3

(b) The amount of the penalty, when finally determined,
4
may be recovered in any administrative proceeding or a civil
5
action filed in any circuit court by the Director of Labor, or
6
a person aggrieved by a violation of this Act or any rule
7
adopted under this Act.
8

(1) The Department shall distribute to all affected
9

employees 10% of the civil penalty recovered as a result
10

of any administrative proceeding or civil action brought
11

by the Department. The remaining 90% of the amount
12

recovered shall be submitted to the Director of Labor.
13

(2) In any civil action brought by an interested party
14

pursuant to this Section, the circuit court shall award
15

the interested party 10% of the amount recovered. In such
16

case, the remaining amount recovered shall be submitted to
17

the Director of Labor.
18

(d) This Section applies to subcontractors, general
21
contractors, and developers.

22
(Source: P.A. 98-106, eff. 1-1-14.)

(820 ILCS 185/42)
24

Sec. 42.
Debarments.
For any second or subsequent
25
violation determined by the Department which is within 5 years

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1
of an earlier violation, the Department shall add the employer
2
or entity's name to a list to be posted on the Department's
3
official website. Upon such notice, the Department shall
4
notify the violating employer or entity. No state contract
5
shall be awarded to an employer or entity appearing on the list
6
until 4 years have elapsed from the date of the last violation.
7
This Section applies to subcontractors, general contractors,
8
and developers.

9
(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/45)
11

Sec. 45.
Willful violations.
12

(a) Whoever willfully violates any of the provisions of
13
this Act or any rule adopted under this Act or whoever
14
obstructs the Director of Labor, or his or her
15
representatives, or any other person authorized to inspect
16
places of employment under this Act shall be liable for
17
penalties up to double the statutory amount.
18

(b) Whoever willfully violates any of the provisions of
19
this Act or any rule adopted under this Act shall be liable to
20
the employee for punitive damages in an amount equal to the
21
penalties assessed in subsection (a) of this Section.
22

(c) The penalty shall be imposed in cases in which an
23
employer or entity's conduct is proven by a preponderance of
24
the evidence to be willful. The penalty may be recovered in a
25
civil action brought by the Director of Labor in any circuit

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1
court. In any such action, the Director of Labor shall be
2
represented by the Attorney General. Any uncollected amount
3
shall be subject to the provisions of the Illinois State
4
Collection Act of 1986.
5

(d)
Any developer, contractor, including general
6
contractor,

An
entity
,
or employer that willfully violates any
7
provision of this Act or any rule adopted under this Act
8
commits a Class C misdemeanor.
Any developer, contractor,
9
including general contractor,

An
entity
,
or employer that
10
commits a second or subsequent violation within a 5 year
11
period commits a Class 4 felony.
12
(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/55)
14

Sec. 55.
Retaliation.
15

(a) It is a violation of this Act for
a developer,
16
contractor, including general contractor,

an
employer
,
or
17
entity, or any agent of
a developer, contractor, including
18
general contractor,

an
employer
,
or entity, to retaliate
19
through discharge or in any other manner against any person
20
for exercising any rights granted under this Act. Such
21
retaliation shall subject
a developer, contractor, including
22
general contractor,

an
employer
,
or entity to civil penalties
23
pursuant to this Act or a private cause of action, or both.
24

(b) It is a violation of this Act for
a developer,
25
contractor, including general contractor,

an
employer
,
or

HB2794
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1
entity to retaliate against a person for:
2

(1) making a complaint to
a developer, contractor,
3

including general contractor,

an
employer
,
or entity, to a
4

co-worker, to a community organization, before a public
5

hearing, or to a State or federal agency that rights
6

guaranteed under this Act have been violated;
7

(2) causing to be instituted any proceeding under or
8

related to this Act; or
9

(3) testifying or preparing to testify in an
10

investigation or proceeding under this Act.
11
(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/60)
13

Sec. 60.
Private right of action.
14

(a) An interested party or person aggrieved by a violation
15
of this Act or any rule adopted under this Act by
a developer,
16
contractor, including general contractor,

an
employer
,
or
17
entity may file suit in circuit court, in the county where the
18
alleged offense occurred or where any person who is party to
19
the action resides, without regard to exhaustion of any
20
alternative administrative remedies provided in this Act.
21
Actions may be brought by one or more
interested parties or

22
persons for and on behalf of themselves and other persons
23
similarly situated.
An interested party or person aggrieved by
24
a violation of this Act or any rule adopted

A person whose
25
rights have been violated
under this Act by an employer or

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1
entity is entitled to collect:
2

(1) the amount of any wages, salary, employment
3

benefits, or other compensation denied or lost to the
4

person by reason of the violation, plus an equal amount in
5

liquidated damages;
6

(2) compensatory damages and an amount up to $500 for
7

each violation of this Act or any rule adopted under this
8

Act;
9

(3) in the case of unlawful retaliation, all legal or
10

equitable relief as may be appropriate; and
11

(4) attorney's fees and costs.
12

(b) The right of an interested party or aggrieved person
13
to bring an action under this Section terminates upon the
14
passing of 3 years from the final date
on which any person
15
performed

of performing
services
on the project for

to
the
16
employer or entity. This limitations period is tolled if an
17
employer or entity has deterred a person's exercise of rights
18
under this Act.
19
(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/63)
21

Sec. 63.
Individual liability.
In addition to an
22
individual who is an employer pursuant to Section 5 of this
23
Act, any officer of a corporation or agent of a corporation who
24
knowingly permits such employer to violate the provisions of
25
this Act may be held individually liable for all violations

HB2794
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1
and penalties assessed under this Act. This Section shall not
2
apply to an individual who is an officer or agent of a
3
corporation which on the project under investigation satisfies
4
the responsible bidder requirements set forth in the Illinois
5
Procurement Code.
An individual officer or agent of an
6
incorporated developer or general contractor who knowingly
7
permits an employer to violate this Act may be held
8
individually liable for all violations and penalties assessed
9
under this Act.

10
(Source: P.A. 98-106, eff. 1-1-14.)

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EMPLOYEE CLASSIFY-DEVELOPER

Plain English Breakdown

EMPLOYEE CLASSIFY-DEVELOPER

What This Bill Does

Limits and Unknowns

Bill History

Official Summary Text

Current Bill Text