An Illinois independent contractor agreement establishes the terms of employment between the contractor and the client. The independent contractor operates outside the client’s normal business activity and can be an individual, business, or corporation.
The document outlines the services performed by the contractor, the amount and schedule of payment, and an expiration date for the contract and is signed by both parties.
- Worker Classification: ABC Test
- Tax Structure: Flat Income Tax
- Definition: (820 ILCS 185/) Employee Classification Act
- At-Will Employment: Yes
Independent Contractor Definition
In Illinois, an employee is any individual working for wages or other compensation who does not meet the exclusions of the ABC test. An employer is responsible for paying employees’ wages according to their employment contract and providing benefits such as insurance, vacation, or pension plans.
In addition, employers may be held liable for the actions of an employee in the scope of their employment [1] .
Worker Classification Test
The Employee Classification Act broadly includes the ABC test, which helps determine whether a person is an employee or an independent contractor. A person is an independent contractor if they meet the following criteria:
- The work they perform is free from the employer’s control and direction.
- The service performed is outside the employer’s usual course and off the employer’s site.
- The individual is engaged in an independent profession, trade, or business.
Before executing a final independent contractor agreement, parties should seek legal advice for cases in which there is a discrepancy between the language of the Illinois statute and that of federal regulation.
Rights and Responsibilities
Independent contractors have limited rights as workers, though they are protected by Federal laws against misclassification [2] . Independent contractors have the right to:
- Choose where and how they will complete their work.
- Choose who they will work for.
- Obtain their own health insurance at their preferred rates.
- Hire others to work for them or with them on the job.
Employers may not classify workers as independent contractors merely to avoid paying taxes or providing benefits. An employee who believes they have been misclassified as an independent contractor, or vice versa, should contact the Illinois Department of Labor. Independent contractors treated as employees are entitled to the same wages and benefits as employees [3] .
State Taxes
Independent contractors must pay their own payroll taxes. Illinois has a state income tax, so independent contractors are required to pay those taxes annually or quarterly if registered as a sole proprietorship [4] .
Filing for Unemployment
A 10-99 employee in Illinois is not necessarily an independent contractor. The Illinois Department of Employment Security (IDES) recommends that if you believe you are eligible for unemployment, you should file since IDES makes the determination of benefits based on factors other than your 10-99 status [5] .
Officers and employees who willfully prevent their businesses from making payments to the Unemployment Insurance system can be held personally liable for those payments. Additional penalties exist for employers who misclassify construction workers as independent contractors.
Sample
Below, you can download a free Illinois independent contractor agreement template in PDF or Word format:
