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.

Keeping track of employee documentation can be tedious for employers, but it's a necessary step and can be especially helpful in a variety of situations. Various federal and state laws require employers to keep and maintain certain employee records, and if there is an employee-related issue, information in a personnel file may help establish an employer’s claim or defense in employment litigation.

But the big question is: what kind of documentation should employers file away? In comes our personnel file checklist. Below is our recommendation for what documents you should keep in personnel files and those you should keep separately.

As an update to our previous blog post on the Department of Labor’s (DOL) rule on independent contractor classifications, the DOL’s final rule (“Final Rule”) is officially in effect as of March 11, 2024.

As a reminder, the Final Rule repeals the 2021 “core factors” test and looks at the “totality of the circumstances” of six economic realities factors to determine whether a worker is classified as an employee or an independent contractor under the Fair Labor Standards Act.

Employers should carefully analyze independent contractor/employee classifications, and update their classification policies and any independent contractor agreements accordingly.

For a full understanding of employer’s obligations under the Final Rule, view our previous blog post.

What is basis? Basis is simply the amount you pay for something. Basis is sometimes adjusted by depreciation or undistributed income, but let’s keep it simple. You buy a share of stock for $100. Your basis is $100.

Why does basis matter? Basis matters because it determines the amount of income tax you pay when you sell. If you paid $100 and sell for $150 then you have a $50 gain on which income tax will be due.

Employers are quick to classify workers as independent contractors because independent contractors are not entitled to the benefits and protections afforded to employees (such as wage and hour laws, overtime pay, worker’s compensation insurance, employment taxes, employee benefits). However, there are rules employers must follow to ensure workers are classified correctly.

The most recent rule on independent contractor classification was published on January 10, 2024 by the Department of Labor (DOL) (the “Final Rule”). The Final Rule repeals the 2021 “core factors” test and becomes effective on March 11, 2024.