As employment attorneys serving Chicago and throughout Illinois, we frequently meet with workers who have been misclassified as independent contractors. Misclassification is not a harmless mistake and carries serious consequences. When a worker is treated as an independent contractor instead of an employee, the employer avoids paying payroll taxes, unemployment insurance, and workers’ compensation coverage. The worker loses rights under both federal and Illinois law, including the right to overtime pay, minimum wage, and protections against discrimination.
This issue is far more common than many realize. Construction workers, drivers, delivery personnel, IT professionals, and healthcare workers are among those most frequently affected. Illinois and federal laws have clear standards for determining whether a worker is an employee or an independent contractor. Courts closely examine the actual working relationship rather than the title assigned by the employer. By understanding the legal framework and available remedies, workers can effectively protect their rights and recover damages when they are misclassified.
The federal government enforces worker classification primarily through the Fair Labor Standards Act (FLSA), 29 U.S.C. §201 et seq. Under the FLSA, employees are entitled to minimum wage, overtime pay, and other protections. Independent contractors are not. To determine status, courts use the “economic realities” test, examining factors such as:
If the economic reality shows dependence on the employer, the worker is likely an employee, regardless of the label used in a contract.
Illinois has its own strong protections. The Illinois Employee Classification Act (820 ILCS 185/1 et seq.) primarily applies to the construction industry but sets a strict test that many courts view as guidance for other industries. The Act presumes that a worker is an employee unless the employer proves all three conditions of the “ABC test”:
If the employer fails to meet these conditions, the worker is considered an employee. Misclassification under this Act can result in civil penalties, back wages, and liability for unpaid contributions to unemployment insurance and workers’ compensation funds.
Misclassification also raises tax issues under both federal and Illinois law. Employers must pay employment taxes for employees under the Internal Revenue Code and Illinois state tax law. By labeling workers as independent contractors, employers shift the tax burden to the workers, who must pay self-employment taxes and often face unexpected IRS liability. If misclassification is proven, employers can be forced to pay back taxes, penalties, and interest.
Employees in Illinois are entitled to workers’ compensation benefits under the Illinois Workers’ Compensation Act and unemployment benefits under the Unemployment Insurance Act. Independent contractors are not. Workers who are misclassified may be denied benefits after an injury or job loss. However, when the misclassification is challenged, courts and agencies can order coverage and benefits, along with penalties against the employer.
Employees are protected against discrimination and harassment under federal law, including Title VII of the Civil Rights Act of 1964, and Illinois law, such as the Illinois Human Rights Act. Independent contractors do not enjoy the same protections. A worker misclassified as an independent contractor may lose the right to file claims for discrimination, wrongful termination, or retaliation. Correct classification ensures full access to these critical protections.
When a worker is misclassified, multiple remedies may be available, including:
Courts and administrative agencies can order employers to pay damages, penalties, and attorneys’ fees. These remedies not only compensate the worker but also deter future misclassification practices.
When misclassification occurs, action is critical. Workers should:
Employers often fight misclassification claims aggressively, so legal support is essential to build a strong case and protect rights.
An employee is under the direction and control of the employer, works within the employer’s business, and does not operate an independent trade. An independent contractor controls the work, performs services outside the employer’s usual business, and maintains an independent business. Illinois law presumes employee status unless the employer proves otherwise under 820 ILCS 185.
Yes. Under the Illinois Minimum Wage Law (820 ILCS 105/1 et seq.) and the FLSA, employees must be paid overtime for hours worked beyond forty in a week. Misclassified workers who were denied overtime can file claims to recover back pay, liquidated damages, and attorneys’ fees.
Workers who are misclassified as independent contractors may be denied workers’ compensation benefits after a job-related injury. If the worker can prove employee status under the Illinois Workers’ Compensation Act, benefits such as medical care, disability payments, and rehabilitation services may be recovered.
Yes, if employee status is proven. Misclassified workers often face denial of unemployment benefits. By challenging the classification under the Illinois Unemployment Insurance Act, a worker may be eligible for back benefits and may also require the employer to make the required contributions.
Yes. Misclassified workers are forced to pay self-employment taxes that the employer should have covered. The IRS and Illinois Department of Revenue can investigate and require employers to pay back taxes, penalties, and interest when misclassification is proven.
Employers who violate the Illinois Employee Classification Act may face civil penalties of up to $1,500 per violation and additional damages to workers. They may also be liable for back wages, unpaid benefits, and contributions to state funds.
Not typically. Independent contractors generally do not have protection under Title VII or similar laws. Proving employee status under Illinois or federal law is critical to ensuring the right to file discrimination or harassment claims.
Yes, but the label is not determinative. Courts and agencies examine the actual working relationship, rather than the contract language. If the employer controls the work and the worker is dependent on the employer, the law will likely treat the worker as an employee.
A worker can file a complaint with the Illinois Department of Labor under the Employee Classification Act, pursue wage claims under state or federal law, or bring a lawsuit in court. Legal representation helps identify the strongest claims and pursue maximum recovery.
Employers often defend misclassification aggressively to avoid paying taxes, benefits, and damages. An attorney ensures that claims are properly filed, evidence is preserved, and remedies are pursued under both Illinois and federal law.
At the Law Office of Michael T. Smith & Associates, we fight for employees misclassified as independent contractors. Misclassification robs workers of wages, benefits, and legal protections. Our legal team aggressively pursues remedies under both Illinois and federal law to recover what has been lost and hold employers accountable.
To receive your free consultation, contact our Chicago employment law lawyer at the Law Office of Michael T. Smith & Associates when you call (847) 450-1103. We proudly represent workers throughout Chicago and across Illinois.
We're ready to listen. Get started now by filling out the attached form.
