Does your business engage independent contractors to provide products or services in Illinois, or is your business located in Illinois? If so, the Freelance Worker Protection Act imposes new obligations on contracting entities and gives freelance workers various remedies and rights for violations.
Illinois enacted the Freelance Worker Protection Act effective July 1, 2024. The Act applies to freelance workers providing products or services in Illinois or to a contracting entity located in Illinois. Contracting entities must have a written agreement with freelance workers for contracts taking effect after July 1, 2024.
A freelance worker is an individual being hired or retained as an independent contractor to provide products or services of at least $500 in a single contract, or in the aggregate for all contracts within 120 days. Freelance workers do NOT include employees, individuals performing construction services, as defined by the Illinois Employee Classification Act, or construction workers who are employees of contractors.
The Illinois Department of Labor will soon provide a model agreement for freelance workers but the minimum requirements include:
- Name and contact information for both parties, including mailing address for the contracting entity,
- Itemized list of all products and services to be provided by the freelance worker, the value of such products and services, and the rate and method of compensation for such,
- Date payments are due, which shall be no later than 30 days after the products or services are delivered,
- If required for payment, the date the freelance worker must submit a list of products or services rendered to the contracting entity, if needed for the contracting entity to process payment.
Parties are not allowed to waive any provision of the Act in the written agreement. The freelance worker should be given a copy of the signed agreement either electronically or via paper copy. Signed freelance agreements must be kept for at least two years from execution.
Contracting entities must refrain from threatening, intimidating, disciplining, harassing, denying an opportunity to, or taking any other action that, penalizes a freelance worker from exercising, attempting to exercise, or is reasonably likely to deter a freelance worker from, exercising any right guaranteed by the Act. Once a freelance worker begins providing products or services, the Act prohibits the contracting entity from conditioning timely payment on the freelance worker’s acceptance of less than the contract amount.
A freelance worker who claims a violation of the Act may file a complaint with the Illinois Department of Labor. The Department will send the complaint via certified mail to the contracting entity, who will have 20 days from receipt to provide a response. Contracting entities must timely respond to the complaint within 20 days of receipt to avoid a rebuttable presumption in a civil action that the contracting entity committed the violations.
Alternatively, freelance workers have the option to go straight to filing a civil action, or may file on behalf of a similarly situated class of freelance workers, and may seek remedies, including double damages for underpayments, injunctive relief, and reasonable attorney’s fees. Finally, the Illinois Attorney General may initiate or intervene in a civil action based upon a reasonable belief that a contracting entity is engaged in a pattern and practice prohibited by the Act and may seek monetary damages, restitution, equitable relief such as an injunction or temporary restraining order, and a civil penalty not to exceed $5000 for each violation or $10,000 for each repeated violation in a 5 year period.
The Act raises many issues for businesses to consider, such as:
- Are individuals properly classified as employees or independent contractors?
- Does the business engage independent contractors that fall within the definition of freelance worker?
- Does the business have a written freelance agreement satisfying the requirements of the Act?
- Are payment mechanisms in place to process payments no later than 30 days from completion of services?
- Are document retention policies in place to retain the freelance written agreements for at least 2 years?
Gutwein Law is here to help you with compliance with the Act. Please reach out to Shannon Middleton or Tessa Doyle if we can assist you.
