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Illinois Trucking Companies Who Use Owner-Operators Should Do Self Audits!
Many Illinois trucking companies have independent contractor agreements for owner-operators (to help establish an independent contractor relationship between the Illinois trucking company and the owner-operators who perform services as truck drivers for the trucking company).
Illinois has an usual and precise legal definition of owner-operator of trucks as laid out in Section 212.1 of the Illinois Unemployment Insurance Act. Section 212.1 went into effect in August 1995.
Since then, the Illinois Department of Employment Security (IDES) and its auditors, Hearing Officers and officials have evaluated the independent contractor of truck owner-operators according to this highly unique law which is essentially a very strict six part test. All Illinois trucking companies who use independent contractor owner-operators should do a careful self-audit to make sure they don’t violate Section 212.1. If they are in violation of any part of Section 212.1, the trucking company will be found to have employees instead of legitimate independent contractor owner-operators.
So let us look at the key points of a self-audit under Section 212.1:
- The Illinois trucking company must have an owner-operator lease contract. One of the two parties must be licensed as a motor carrier.
- There must not be a non-compete agreement, provision or restriction of any kind in the owner-operator lease contract/independent contractor agreement.
- The Illinois trucking company cannot regulate the scheduling for the owner-operator except where a customer needs to be accommodated.
- The owner-operator has to hold title to his/her own truck or lease purchase the truck from an unrelated third party.
- The owner-operator must pay all costs directly associated with licensing and operating the truck, AND
- The owner-operator must have his/her business name and address on his/her truck.
If readers want to review the specific do’s and don’ts of Section 212.1 of the Illinois Unemployment Insurance Act, contact Legal Assistant Tammy Nelson at 630-377-1554 for a free copy of Section 212.1, its strict Regulations, and also the Questionnaire that IDES auditors use to determine who is and who is not an independent contractor under the Illinois Unemployment Insurance Act.
To discuss your potential liability in using independent contractors (as well as strategies for reducing your liability in using independent contractors) or for assistance with drafting or modifying an independent contractor agreement, please contact Attorney Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at firstname.lastname@example.org.
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