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Are 1099 and Independent contractor entitled to overtime pay?

Independent contractor personnel are often misclassified.   Employers do this to get out of paying overtime, IDES, workers compensation, and other benefits.


In Illinois, the misclassification of employees generally refers to the illegal misclassification of employees as independent contractors by employers. Employers may attempt to label employees as “independent contractors” because of the higher costs associated with properly classifying workers as “employees, ” including paying payroll taxes, unemployment insurance, minimum wages, overtime pay, vacation pay, holiday pay, and health insurance. The Illinois Department of Labor aggressively pursues employers that misclassify employees as independent contractors. Our employment law firm represents employers and employees who are involved in misclassification disputes.


Under state and federal law, employees are generally protected in regards to wages, overtime payment, and discrimination while independent contractors are not. Therefore, being classified as an “independent contractor” when the employee is really an “employee” can be problematic.


To determine whether a worker is an independent contractor, courts look to the following factors: whether the employer has the right to control the worker as to the work done and the manner in which it is performed, whether the person performing the work is engaged in an occupation distinct or different from that of the employer, whether the work is part of the regular business of the employer, whether the employer or the worker supplies the tools and equipment required to perform the work, whether the working relationship is permanent or temporary, the location of where the work is performed, the degree of skill required to perform the work, and the method of payment the worker receives.


In addition to the above, employers may misclassify an employee by failing to properly label the employee under the Fair Labor Standards Act (“FLSA”). That is, under the FLSA, the law provides for employees who work over 40 hours to receive overtime compensation if the employee is not an “exempt” employee. Thus, in order to avoid paying employees overtime pay, an employer may attempt to illegal classify an employee as an “independent contractor.” In a situation where an employee is denied overtime pay as a result of misclassification, the employee can sue his or her employer for back pay as well as other penalties and damages.

Various government agencies, including the Illinois department of Labor, are responsible for enforcing the various state laws related to employment classification. In certain situations, misclassified employees may sue their employers for damages.


The Illinois employment laws regarding misclassification are strong. For example, under Section 40 of the Illinois Misclassification Act, it provides stat an employer that violates the law can be “subject to a civil penalty not to exceed $1,000 for each violation found in the first audit by the Department. Following a first audit, an employer or entity shall be subject to a civil penalty not to exceed $2,000 for each repeat violation found by the Department within a 5 year period.” It further provides for a private cause of action and states that “a person whose rights have been violated under this Act by an employer or entity is entitled to collect:

  1. the amount of any wages, salary, employment benefits, or other compensation denied or lost to the person by reason of the violation, plus an equal amount in liquidated damages;
  2. compensatory damages and an amount up to $500 for each violation of this Act or any rule adopted under this Act;
  3. in the case of unlawful retaliation, all legal or equitable relief as may be appropriate; and
  4. attorney’s fees and costs.”
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