The employee and their employer must be “operating under” the Illinois Workers’ Compensation Act or Occupational Diseases Act to be eligible for workers’ compensation benefits.
Four types of employers are defined as operating under the Workers’ Compensation Act:
- Government employers
- Private employers by election or automatic application
- General contractors for employees of uninsured sub-contractors
- Borrowing-Loaning employers
The Occupational Diseases Act similarly adopts the rules of the Workers’ Compensation Act. 820 ILCS 310/2 Illinois General Assembly.
Almost all government employers in Illinois operate under the Workers’ Compensation Act, which the Act defines as:
The State and each county, city, town, township, incorporated village, school district, body politic, or municipal corporation therein.
820 ILCS 305/1(a)(1) Illinois General Assembly | IWCC PDF. See also 820 ILCS 305/2 (“The State of Illinois hereby elects to provide and pay compensation according to the provisions of this Act.”) Illinois General Assembly | IWCC PDF.
The only exceptions are Chicago police officers and firefighters, who are excluded in the Act’s definition of employee:
Every person in the service of the State . . . city, town, township, incorporated village or school district, body politic, or municipal corporation therein, whether by election, under appointment or contract of hire, express or implied, oral or written . . . except any duly appointed member of a police department in any city whose population exceeds 500,000 according to the last Federal or State census, and except any member of a fire insurance patrol maintained by a board of underwriters in this State.
Police officers and firefighters excluded from workers’ compensation benefit are eligible for similar benefits under the Illinois Public Employee Disability Act and Illinois Pension Code. 5 ILCS 345 Illinois General Assembly; 40 ILCS 5 Illinois General Assembly.
In Dodaro v. Illinois Workers’ Compensation Commission, 403 Ill. App. 3d 538 (2010) Google Scholar | Illinois Courts PDF, the Appellate Court found that a Chicago police recruit was not a duly appointed member of the department. The Court found that “the legislature intended the statutory exclusion to apply to individuals who have been formally admitted to the responsibilities and privileges of the Chicago police department.”
Similarly, in City of Chicago v. Illinois Workers’ Compensation Commission, 2014 IL App (1st) 121507WC Google Scholar | Illinois Courts PDF, the Appellate Court found that “a candidate fire paramedic in training at the Academy” was not a duly appointed member of the department and therefore entitled to workers’ compensation benefits under the Act. Once again the Court found that “the dispositive question is whether the claimant had been ‘formally admitted to the responsibilities and privileges’ of the Chicago fire department at the time of his injury.”
Private Employers – Automatic Application
The Workers’ Compensation Act defines private employers in Illinois as:
Every person, firm, public or private corporation, including hospitals, public service, eleemosynary, religious or charitable corporations or associations who has any person in service or under any contract for hire, express or implied, oral or written, and who is engaged in any of the enterprises or businesses enumerated in Section 3 of this Act . . . .
Section 3 of the Act then provides that the Act applies automatically and without election to all employers and all their employees engaged in enterprises or businesses declared to be “extra hazardous,” namely:
- The erection, maintaining, removing, remodeling, altering or demolishing of any structure.
- Construction, excavating or electrical work.
- Carriage by land, water or aerial service and loading or unloading in connection therewith, including the distribution of any commodity by horsedrawn or motor vehicle where the employer employs more than 2 employees in the enterprise or business.
- The operation of any warehouse or general or terminal storehouses.
- Mining, surface mining or quarrying.
- Any enterprise in which explosive materials are manufactured, handled or used in dangerous quantities.
- In any business or enterprise, wherein molten metal, or explosive or injurious gases, dusts or vapors, or inflammable vapors, dusts or fluids, corrosive acids, or atomic radiation are manufactured, used, generated, stored or conveyed.
- Any enterprise in which sharp edged cutting tools, grinders or implements are used, including all enterprises which buy, sell or handle junk and salvage, demolish or reconstruct machinery.
- In any enterprise in which statutory or municipal ordinance regulations are now or shall hereafter be imposed for the regulating, guarding, use or the placing of machinery or appliances or for the protection and safeguarding of the employees or the public therein; each of which occupations, enterprises or businesses are hereby declared to be extra hazardous.
- Any enterprise, business or work in connection with the laying out or improvement of subdivisions of tracts of land.
- Any enterprise for the treatment of cross-ties, switch-ties, telegraph poles, timber or other wood with creosote or other preservatives.
- Establishments open to the general public wherein alcoholic beverages are sold to the general public for consumption on the premises.
- The operation of any public beauty shop wherein chemicals, solutions, or heated instruments or objects are used or applied by any employee in the dressing, treatment or waving of human hair.
- Any business or enterprise serving food to the public for consumption on the premises wherein any employee as a substantial part of the employee’s work uses handcutting instruments or slicing machines or other devices for the cutting of meat or other food or wherein any employee is in the hazard of being scalded or burned by hot grease, hot water, hot foods, or other hot fluids, substances or objects.
- Any business or enterprise in which electric, gasoline or other power driven equipment is used in the operation thereof.
- Any business or enterprise in which goods, wares or merchandise are produced, manufactured or fabricated. 17.
- Any business or enterprise in which goods, wares or merchandise are sold or in which services are rendered to the public at large, provided that this paragraph shall not apply to such business or enterprise unless the annual payroll during the year next preceding the date of injury shall be in excess of $1,000.
It is difficult to imagine a business or enterprise that is not encompassed in this list. Section 3 of the Act does, however, provide some exceptions for domestic and agricultural workers:
- Any household or residence wherein domestic workers are employed for a total of 40 or more hours per week for a period of 13 or more weeks during a calendar year.
- Nothing contained in this Act shall be construed to apply to any agricultural enterprise, including aquiculture, employing less than 400 working days of agricultural or aquacultural labor per quarter during the preceding calendar year, exclusive of working hours of the employer’s spouse and other members of his or her immediate family residing with him or her.
Moreover, Section 3 allows corporate officers (President, Vice President, Secretary or Treasurer), sole proprietors, and members of limited liability companies to elect to withdraw themselves from operation of the Act. 820 ILCS 305/3(17)(b);(20) Illinois General Assembly | IWCC PDF.
Private Employers – Election
The Workers’ Compensation Act also defines private employers in Illinois as:
Every person, firm, public or private corporation, including hospitals, public service, eleemosynary, religious or charitable corporations or associations who has any person in service or under any contract for hire, express or implied, oral or written . . . who at or prior to the time of the accident to the employee for which compensation under this Act may be claimed, has in the manner provided in this Act elected to become subject to the provisions of this Act, and who has not, prior to such accident, effected a withdrawal of such election in the manner provided in this Act.
While nearly all private employers are automatically operating under the Act today, section 2 provides that any other employers may voluntarily elect to do so:
An employer in this State, who does not come within the classes enumerated by Section 3 of this Act, may elect to provide and pay compensation for accidental injuries sustained by himself or any employee, arising out of and in the course of the employment according to the provisions of this Act, and thereby relieve himself from any liability for the recovery of damages, except as herein provided.
Section 2 of the Act further provides procedures for making this election.
General Contractors – “Statutory Employers”
Section 1(a)(3) of the Act defines a special class of employers – sometimes referred to as “statutory employers” – that are certain general contractors who hire subcontractors that do not provide workers’ compensation insurance for their employees:
Any one engaging in any business or enterprise referred to in subsections 1 and 2 of Section 3 of this Act who undertakes to do any work enumerated therein, is liable to pay compensation to his own immediate employees in accordance with the provisions of this Act, and in addition thereto if he directly or indirectly engages any contractor whether principal or sub-contractor to do any such work, he is liable to pay compensation to the employees of any such contractor or sub-contractor unless such contractor or sub-contractor has insured, in any company or association authorized under the laws of this State to insure the liability to pay compensation under this Act, or guaranteed his liability to pay such compensation.
This section only applies to general contractors engaged in the following types of work:
- The erection, maintaining, removing, remodeling, altering or demolishing of any structure.
- Construction, excavating or electrical work.
In Cropmate Co. v. Industrial Commission, 313 Ill. App. 3d 290 (2000) Google Scholar | Illinois Courts, the claimant, who worked for his uncle, was injured while erecting a building for Cropmate. Cropmate, which “was in the business of manufacturing, selling, delivering, and applying pesticides and insecticides,” had contracted with the claimant’s uncle to erect a chemical containment building on its property. The claimant’s uncle did not provide workers’ compensation insurance so the Illinois Workers’ Compensation Commission awarded benefits against Cropmate pursuant to section 1(a)(3) of the Act.
On appeal, the Appellate Court rejected Cropmate’s argument that it was not in the business of erecting buildings as set forth in section 3 of the Act. Specifically, the Court relied on the following:
- the building being erected was to be used for storage of materials used in its business
- the building would contribute, albeit indirectly, to the company’s revenues
- the building would be a capital asset.
In sum, the Court rejected the argument that a statutory employer must be principally engaged in the businesses referred to in section 1(a)(3). See also Fefferman v. Industrial Commission, 71 Ill. 2d 325 (1978) Google Scholar; Graphic Group & KLW, Inc. v. Industrial Commission, 167 Ill. App. 3d 1041 (1988) Google Scholar.
Importantly, the statutory employer rule “does not apply in any case where the accident occurs elsewhere than on, in or about the immediate premises on which the principal has contracted that the work be done.” 820 ILCS 305/1(a)(3) Illinois General Assembly | IWCC PDF.
In statutory employer cases, the general contractor who must pay benefits is allowed to attempt to recover that amount from the sub-contractor in civil court. 820 ILCS 305/1(a)(3) Illinois General Assembly | IWCC PDF.
Section 1(a)(4) of the Act governs cases of borrowing and loaning employers:
Where an employer operating under and subject to the provisions of this Act loans an employee . . . and where such borrowing employer does not provide or pay the benefits or payments due such injured employee, such loaning employer is liable to provide or pay all benefits or payments due such employee under this Act . . . .
Where any benefit is provided or paid by such loaning employer the employee has the duty of rendering reasonable cooperation in any hearings, trials or proceedings in the case, including such proceedings for reimbursement.
This means that the borrowing employer is generally expected to pay the workers’ compensation benefits, but that if this does not occur, the loaning employer must pay and then seek reimbursement from the borrowing employer.
However, the Act further provides that:
as to such employee the liability of such loaning and borrowing employers is joint and several, provided that such loaning employer is in the absence of agreement to the contrary entitled to receive from such borrowing employer full reimbursement for all sums paid . . . .
This means that the injured worker can name both the loaning and borrowing employers as respondents to an “Application for Adjustment of Claim” with the Commission, that each are fully responsible to pay the benefits owed, and that the employers will be required to allocate responsibility between themselves separately.
To further help understand these provisions, consider the Illinois Appellate Court’s summary:
Thus, with respect to an injured employee, the loaning and borrowing employers are jointly liable, and as between the employers, the borrowing employer is primarily liable and the loaning employer is secondarily liable. The loaning employer is required to pay only when the borrowing employer fails to do so, and then is entitled to reimbursement from the borrowing employer. This right to reimbursement, however, may be waived by an agreement between the employers.
Corrugated Metals, Inc. v. Industrial Commission, 184 Ill. App. 3d 549 (1989) Google Scholar.
To facilitate resolution of these sometimes complicated cases, section 1(a)(4) contains a special provision allowing the injured worker to file a demand with the Commission that the employers admit or deny that they are loaning or borrowing employers within 7 days or be subject to penalties and attorneys’ fees. 820 ILCS 305/1(a)(4) Illinois General Assembly | IWCC PDF.
Occupational Diseases Act
The rules discussed above also govern the Occupational Diseases Act:
Where any employer in this State is automatically and without election subject to and bound by the provisions of the Workers’ Compensation Act by reason of the provisions of Section 3 thereof, as heretofore or hereafter amended, then such employer and all of his employees working within this State shall be automatically and without election subject to and bound by the compensation provisions of this Act with respect to all cases in which the last day of the last exposure to the hazards of the disease claimed upon shall have been on or after July 1, 1957.
820 ILCS 310/2 Illinois General Assembly.
Hagemann v. Illinois Workers’ Compensation Commission, 399 Ill. App. 3d 197 (2010) (grain hauler may be covered under Workers’ Compensation Act if grain hauling was “merely extraneous” to agricultural enterprise) Google Scholar | Illinois Courts PDF.
Peterson v. Industrial Commission, 315 Ill. 199 (1924) (“It cannot be said that because a man is a farmer that that fact, alone, exempts him from the operation of the Workmen’s Compensation act where he engages on his farm in an independent extrahazardous occupation which is within the terms of the act.”) (copy not available).
820 ILCS 305/1(a)(4) (“An employer whose business or enterprise or a substantial part thereof consists of hiring, procuring or furnishing employees to or for other employers operating under and subject to the provisions of this Act for the performance of the work of such other employers and who pays such employees their salary or wages notwithstanding that they are doing the work of such other employers shall be deemed a loaning employer within the meaning and provisions of this Section.”) Illinois General Assembly | IWCC PDF.