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IDES Audits for Independent Contractor Truck Drivers
HIDDEN DANGERS IN ILLINOIS UNEMPLOYMENT INSURANCE LAW
DEFINING INDEPENDENT CONTRACTOR STATUS FOR TRUCK DRIVERS
By Nancy E. Joerg, Esq.
Section 212.1 of the Illinois Unemployment Insurance Act defines when truck owner-operators are independent contractors and not employees for Illinois Department of Employment Security (IDES) purposes. All requirements of Section 212.1 must be met! If the Carrier is not in compliance with Section 212.1, the painful result (ignorance of the law is no excuse!) is that the frustrated Carrier will owe the IDES for back unemployment insurance contributions plus interest (a whopping 24% per year). Be prepared!!! The following is a rough summary of only some of the key points of Section 212.1:
OWNERSHIP: Do the drivers hold title to their vehicles or lease them from third-party (stranger) leasing companies and not the Carrier? The independent contractor must be the owner of the truck or must be leasing the truck from an unrelated third-party leasing company. Many carriers express surprise and anger that such a restriction exists under Section 212.1. Why can’t drivers lease-purchase a truck from whomever they wish? The bottom line is that the so-called independent contractors will likely be reclassified upon IDES audit to employee status if they lease-purchase their trucks from the Carriers for whom they haul, or amazingly, even if they lease-purchase the trucks from a family member of a shareholder or owner of, or partner in, the company for whom they haul. Further, the Carrier cannot specify the person or entity from which the driver is to lease or purchase the equipment.
SCHEDULING: Who sets the schedule for the drivers? Section 212.1 indicates that the shipper or receiver can set those times, but the Carrier cannot.
LICENSING AND OPERATING EXPENSES: Do the drivers pay all costs directly associated with licensing and operating the equipment (e.g., paying for fuel, or wear and tear), without being separately reimbursed? If the Carrier pays for or reimburses any costs directly associated with operating and licensing the drivers’ equipment, except when federal or state law or regulation requires the Carrier to pay, then Section 212.1 has been violated.
IDENTIFICATION ON TRUCK: Do the drivers have their name and address as owner on their trucks? Section 212.1 requires that the drivers maintain a separate business identity by displaying their name and address on their equipment or otherwise. We don’t know yet how the IDES will interpret “or otherwise.” We strongly recommend that the drivers put their businessname and business address as owner on their trucks.
NON-COMPETE AGREEMENTS ARE FORBIDDEN: Does the lease contract contain a covenant not to compete? The answer must be “No.” Following the termination of the lease contract, the driver must be able to perform the same or similar services for others, on whatever basis and whenever the driver chooses, without incurring any liability to the Carrier to which the driver was contracted.
HOW TO OBTAIN FREE INFORMATION ABOUT SECTION 212.1: Readers who wish a free copy of Section 212.1 and its regulations should contact Legal Assistant Tammy Nelson at the St. Charles, Illinois office of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. at 630-377-1554. Also, let Tammy know if you would like to purchase a 32-minute audio cassette tape by Nancy E. Joerg in discussion format, which explains in plain English the key provisions of Section 212.1, and provides valuable legal insight on the “do’s” and “don’ts” under Section 212.1. The price is affordable — $20 each plus shipping and handling. Nancy Joerg also has a very popular audio tape called “Hot Tips Regarding Independent Contractor Truck Drivers: Survival Guide for Trucking Management.” The price is $36 plus shipping and handling. These tapes will help you to know about state and federal tests.
Biographical Information for Nancy E. Joerg
Nancy E. Joerg is a senior attorney and shareholder at Wessels Sherman Joerg Liszka Laverty Seneczko P.C. , a labor and employment law firm concentrating exclusively in the representation of management. Wessels Sherman Joerg Liszka Laverty Seneczko P.C. maintains offices in St. Charles and Chicago, Illinois; Oconomowoc; Davenport, Iowa; and Minneapolis, Minnesota. (Ms. Joerg can be reached at the St. Charles, Illinois office at 630-377-1554.)
Ms. Joerg defends trucking companies before the IRS and various state agencies (including the Illinois Department of Employment Security) on the issue of independent contractor status and other issues of employment law. She also reviews and drafts IDES owner-operator leases.
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