Land of the Freelancer: Illinois sets standards for independent contractors
The Illinois Freelance Worker Protection Act is approaching its two-year mark. Illinois was one of the first states to enact a law aimed at providing meaningful legal protections to independent contractors, although cities like Los Angeles and New York had already passed ordinances covering large segments of the freelance workforce.
So what exactly does the Act do, and how has it affected the contracting landscape in Illinois?
At its core, the law defines a “freelance worker” fairly broadly. It applies to individuals who perform more than $500 worth of services or provide products, whether under a single contract or in the aggregate of multiple contracts within a 120-day period. This relatively low threshold means the Act captures a wide range of workers. However, it also contains one significant exception: independent contractors performing construction services are excluded from its protections, leaving a substantial group of workers outside the scope of the law.
The Act imposes several key requirements on businesses that engage freelance workers. First, it mandates a written agreement between the hiring entity and the freelancer. That agreement must include: (1) the names and contact information of both parties; (2) an itemized description of the services or products to be provided; (3) the rate and method of compensation; (4) the date payment is due; and (5) the dates on which services will be performed.
Most importantly for most Chicago area businesses, the Act requires that freelance workers be paid within the time specified in the written agreement, with an absolute maximum of 30 days. In practical terms, this means freelancers can now expect more timely payment, addressing one of the most common pain points in independent contracting. As I discuss later, this can have a significant impact on contract terms with freelance workers.
In terms of impact, the Act has not produced a seismic shift in the marketplace. Major gig economy platforms continue to operate in Illinois, and businesses still rely heavily on independent contractors (at least until they replace us all with autonomous self-driving consumers). However, there have been meaningful incremental changes. Independent contractors now have clearer expectations and greater leverage, particularly when it comes to payment timelines and the use of written agreements.
For businesses, compliance is generally straightforward with one large caveat. Many companies have historically used payment terms exceeding 30 days—45 or even 60 days are common in some industries. Under the Act, setting payment times longer than 30 days runs the risk of violating the Act, especially if you contract with anyone that might be considered a freelancer under the Act. Reach out for a free consultation.
The potential consequences of noncompliance can be significant. Section 30 of the Act allows freelance workers to recover double the amount of any underpayment, along with reasonable attorney’s fees. When combined with the high cost of litigation and the possibility of class claims, even relatively small payment disputes can escalate quickly. Taking proactive steps now—such as tightening contract language and ensuring timely payment—can help businesses avoid costly issues down the road. Read more about independent contractor classification in Illinois.
