Page 15 - John Hundley 2014

New Developments Update

Sharp Thinking

No. 114 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. May 2014

Employee Classification Act Amended, Sustained

The Employee Classification Act (820 ILCS 185) has been amended to address the defects found
in Bartlow v. Shannon, 399 Ill.App.3d 560 (5th Dist. 2010), and, as amended, has been sustained by
the Illinois Supreme Court. Bartlow v. Costigan, 2014 IL 115152.

Effective January 1, this act was amended to require the Department of Labor to provide notice
and to conduct formal investigative hearings (Pub. Act 98-106), steps that were not required in the
original act. See Sharp Thinking No. 11 (Aug. 2008); No. 38 (Oct. 2010). See also No. 77 (Nov.
2012); No. 84 (Feb. 2013).

Reasoning that proceedings in Bartlow had not progressed beyond the investigative stage and
that the amended act would apply to any further proceedings, the Supreme Court found that the
plaintiffs were not challenging the act “as applied” to them, but were making only facial challenges to
its constitutionality. It found the procedural due process problems with the statute cured and rejected
an argument that the act was impermissibly vague. The special-legislation issue which we thought
meritorious (see No. 11 (Aug. 2008)) was declared forfeited due to plaintiffs’ failure to brief it properly.

The act sets considerably tougher standards for classification of workers as independent
contractors in the construction industry than in other fields.

Future Compensation May Not Be “Final Compensation”

Unpaid future compensation for the remainder of a terminated employment contract is not “final
compensation” which must be promptly paid under the Illinois Wage Payment & Collection Act (820
ILCS 115) (“IWPCA”) where there is a question as to whether the employee was terminated for
cause, a panel in the Appellate Court's First District has held.

Moreover, the panel came to that conclusion in Majmudar v. House of Spices (India), Inc., 2013
IL App (1st) 130292, even though the trial court had found that the plaintiff had been terminated
without cause – a finding which was not reversed on appeal. The court seemed to think that the
terminated employee's claim for breach of contract was a sufficient remedy, as it said the additional
remedies under the IWPCA “would create an unfair burden on employers that may have a reasonable
employment dispute with separated employees”.

The trial court had limited the contract remedy to two years of compensation, finding that plaintiff
had not mitigated his damages by adequately seeking other work. It appeared to think that this setoff
would not have been available if it found the full contractual period of compensation due and owing by
the 13th day after the end of the last active pay period, as required by the IWPCA.

While Majmudar thus perhaps effected rough justice in the case before it, its standing as good
law for other cases seems dubious. It repeatedly distinguishes and rejects Illinois precedent –

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
Thinking shall be construed to create an attorney-client relation where none previously has existed, nor with respect to any particular matter. The perspectives herein
constitute educational material on general legal topics and are not legal advice applicable to any particular situation. To establish an attorney-client relation or to obtain legal
advice on your particular situation, contact a Sharp lawyer at the phone number or one of the addresses provided on page 2 of this newsletter.