Illinois workers’ compensation benefits are only available to claimants that have an employment relationship with the respondent (defendant). In other words, you must be an employee to obtain workers’ compensation benefits. This may seem obvious until you consider the difficulty in distinguishing employees from independent contractors.
Unfortunately, there is no simple rule for doing so. In fact, the Illinois Supreme Court has remarked that “the question of whether a person is an employee remains one of the most vexatious in the law of compensation.” Roberson v. Industrial Commission, 225 Ill. 2d 159 (2007) Google Scholar | Illinois Courts PDF.
The Illinois Workers’ Compensation Act provides lengthy definitions of the terms “employer” and “employee,” using language such as “person in service or under any contract for hire.” 820 ILCS 305/1(a)-(b) Illinois General Assembly | IWCC PDF. This does not help much because we could just as easily describe an independent contractor in this way. For example, you “hire” a mechanic to work on your car, but the mechanic is an independent contractor, not your employee.
The courts have instructed that the Illinois Workers’ Compensation Commission must look at a variety of factors to determine whether there is an employment relationship:
- Right to control the worker
- Relative nature of the business and the work
- Method of payment
- Withholding taxes
- Supplying materials and equipment
- Right to terminate the relationship
- Level of skill required
- Label the parties use
Right to Control
The right to control the worker (usually evidenced by the actual exercise of control) is the single most important factor to consider. Roberson v. Industrial Commission, 225 Ill. 2d 159 (2007) Google Scholar | Illinois Courts PDF.
Employers have the right to direct employees to perform specific tasks at specific times and in specific manners. Independent contractors, on the other hand, have significantly more leeway in determining how to complete the task that they were contracted to perform.
Generally, an independent contractor is one who undertakes to produce a given result, without being controlled as to the method by which he attains that result.
Alexander v. Industrial Commission, 72 Ill. 2d 444 (1978) Google Scholar.
[A]n employee is at all times subject to the control and supervision of his employer, whereas an independent contractor represents the will of the owner only as to the result and not as to the means by which it was accomplished.
Coontz v. Industrial Commission, 19 Ill. 2d 574 (1960) Google Scholar.
In Skzubel v. Illinois Workers’ Compensation Commission, 401 Ill. App. 3d 263 (2010) Google Scholar | Illinois Courts PDF, the Appellate Court reversed the finding of the Illinois Workers’ Compensation Commission that a newspaper courier was an independent contractor of a newspaper distributor. The Appellate Court found that the newspaper distributor “dictated both the working days and working hours of its paper couriers; it instructed on the manner in which papers were to be packed; it determined to whom papers were to be delivered; and, in some cases, it issued specific delivery instructions.”
Relative Nature of Work
The relative nature of the work – whether the employer’s general business encompasses the person’s work – is also important. The Illinois Supreme Court has stated:
Moreover, because the theory of workmen’s compensation legislation is that the cost of industrial accidents should be borne by the consumer as a part of the cost of the product, this court has held that a worker whose services form a regular part of the cost of the product, and whose work does not constitute a separate business which allows a distinct channel through which the cost of an accident may flow, is presumptively within the area of intended protection of the compensation act.
Ragler Motor Sales v. Industrial Commission, 93 Ill. 2d 66 (1982) Google Scholar.
Method of Payment
Regarding the method of payment, Illinois courts have found that employees are more likely to be paid on an hourly basis, while independent contractors are more likely to be paid a per-job commission. However, the method of payment is not dispositive. For example, in Steel & Machinery Transportation, Inc. v. Illinois Workers’ Compensation Commission, 2015 IL App (1st) 133985WC Google Scholar | Illinois Courts PDF, the Appellate Court confirmed the Commission’s finding that a truck driver was an employee despite the fact that he was paid a per-job commission.
Regarding withholding taxes, employers are more likely to withhold income and Social Security taxes. Accordingly, employees typically receive an IRS Form W-2, while independent contractors receive a Form 1040. However, the Illinois Appellate Court has recently noted that “[w]hether income tax is withheld has not been found to be a significant factor in determining whether a party is an employee or an independent contractor.” City of Bridgeport v. Illinois Workers’ Compensation Commission, 2015 IL App (5th) 140532WC (water meter reader found to be an employee) Google Scholar | Illinois Courts PDF.
Supplying Materials and Equipment
Illinois courts have also found that supplying materials and equipment is an indication that an employment relationship exists. In Alexander v. Industrial Commission, 72 Ill. 2d 444 (1978) Google Scholar, the claimant was a carpenter who was “hired” to repair a funeral home’s garage door for “$20.00 plus materials.” The claimant supplied the materials and used his own truck and tools, however, he used the funeral home’s ladder with permission and injured himself falling from the ladder. The Illinois Supreme Court rejected the claimant’s emphasis on the fact that the ladder was “furnished” by the funeral home because he “had all the tools he needed to repair the door with him except a ladder.”
Right to Terminate Relationship
Regarding the right to terminate the relationship, employment in Illinois is at-will and employers generally have the right to discharge an employee for any reason at any time. On the other hand, there may be greater protection against termination of the relationship for independent contractors in a negotiated contract. In City of Bridgeport v. Illinois Workers’ Compensation Commission, 2015 IL App (5th) 140532WC Google Scholar | Illinois Courts PDF, the claimant was classified by the respondent as an independent contractor, but the Appellate Court found that her at-will status was similar to the respondent’s other employees and that this supported the finding of an employment relationship.
Level of Skill Required
Regarding the level of skill required, Illinois courts have found that the lack of a specialized skill required to perform a job is indicative of an employment relationship. Skzubel v. Illinois Workers’ Compensation Commission, 401 Ill. App. 3d 263 (2010) (“Further indicative of an employer-employee relationship between the claimant and [respondent] was [respondent’s] ability to terminate the claimant’s services without notice and the lack of any skill required for the claimant to perform her duties.”) Google Scholar | Illinois Courts PDF.
Label the Parties Use
Illinois courts are not likely to place too great a value on the label the parties use. Employment misclassification is common, particularly in industries such as trucking and construction. In Steel & Machinery Transportation, Inc. v. Illinois Workers’ Compensation Commission, 2015 IL App (1st) 133985WC Google Scholar | Illinois Courts PDF, the Appellate Court confirmed the Commission’s finding that a truck driver was an employee even though the parties operated under an “Independent Contractor Agreement.”
In Ware v. Industrial Commission, 318 Ill. App. 3d 1117 (2000) Google Scholar | Illinois Courts, the Appellate Court even reversed the Commission’s finding that the truck driver was not an employee where the parties were operating under an “Equipment Lease Agreement Between Independent Contractor and Carrier.”
[A] contractual agreement is a factor to consider in determining a party’s status, but it does not, as a matter of law, establish an employer-employee relationship.
Wenholdt v. Industrial Commission, 95 Ill. 2d 76 (1983) Google Scholar.
Yellow Cab Co. v. Industrial Commission, 238 Ill. App. 3d 650 (1992) (noting that in cases involving taxi drivers, the following factors should be given particular weight: 1) whether the driver accepted radio calls from the company; 2) whether the driver had his radio and cab repaired by the company; 3) whether the vehicles were painted alike with the name of the company and its phone number on the vehicle; 4) whether the company could refuse the driver a cab; 5) whether the company has control over work shifts and assignments; 6) whether the company requires that gasoline be purchased from the company; 7) whether repair and tow service is supplied by the company; 8) whether the company has the right to discharge the driver or cancel the lease without cause; and 9) whether the lease contains a prohibition against subleasing the taxicab) Google Scholar.
Kirkwood v. Industrial Commission, 84 Ill. 2d 14 (1981) (construction worker found to be an independent contractor) Google Scholar.