New State Law Protecting Independent Contractors in Fee Disputes Can Lead To Hefty Damages: August 2023 IC Legal News Update
Last month, Illinois became the first state to enact legislation requiring companies using independent contractors to offer contracts to ICs with prescribed terms and to pay such freelance contractors all of their fees within a specified number of days. The legislation follows on the heels of similar laws passed by several cities, including New York City, Los Angeles, and Minneapolis. While all of these laws are a bit different in terms of their coverage and obligations imposed on companies engaging independent contractors, more importantly each provide for substantial damages and penalties if a freelance independent contractor is not paid his or her fees within a relatively short period of time after service are rendered. We describe below many of the features of this new Illinois law including a number of legislative defects. On the one hand, these laws address the need to protect freelancers, yet on the other hand many class action lawyers continue to bring independent contractor misclassification cases such as the two new cases filed last month, which we summarize below. Those lawsuits claim that workers classified as independent contractors are misclassified employees and entitled to minimum wage and overtime compensation available under federal and state wage and hour laws. Businesses that use independent contractors in Illinois and these other jurisdictions can minimize their exposure to contractor pay dispute and misclassification lawsuits by using a process such as IC Diagnostics (TM) to enhance compliance with both types of laws.
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