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Job misclassification compromises access to workers' comp

Illinois state and federal guidelines establish strict mandates for employers, forcing them to maintain workers' comp insurance for their employees in many cases. Some employers are exempt; however, as they do not have to provide independent contractors with many of the same benefits as they do for their own workers. Consequently, a growing number of employers are attempting to cut costs and evade the law by misclassifying employees as contractors.

However illegal, misclassifying employees as independent contractors saves businesses a considerable amount of money, anywhere from between 15 to 30 percent in payroll costs according to one estimate. It is for that reason that the number of employment law disputes over the issue are on the rise across the state of Illinois and the entire country. One case involving a cleaning company misclassifying its maids as contractors resulted in a lawsuit filed by the US Department of Labor, and concluded with a verdict in favor of the employees.

The practice of misclassifying employees is becoming more prevalent in industries across the labor market, but is still a particular issue in the construction industry. The Employee Classification Act, which is intended to protect workers against such practices, is not stopping the issues from becoming a growing concern in Illinois. It is now estimated that between 10 to 20 percent of employers in the state deny employees vital access to workers' comp and other employment benefit by misclassifying them as contractors. It is also believed that some employers intentionally misclassifying employees in order to prevent them from organizing and/or joining unions.

Source: Chicago Tribune, "A growing way to cut pay: Companies treating workers as contractors," Alejandra Cancino, June 25, 2015

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