Bartlow v. Costigan , 2012 IL App (5th) 110519 ( 2012 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Bartlow v. Costigan, 2012 IL App (5th) 110519
Appellate Court RHONDA BARTLOW and JACK BARTLOW, d/b/a Jack’s Roofing,
Caption RYAN TOWLE, d/b/a Jack’s Siding and Windows, and CHARLES
ERIC MODGLIN, Plaintiffs-Appellants, v. JOSEPH COSTIGAN, in His
Capacity as Director of Labor, State of Illinois, Defendant-Appellee.
District & No. Fifth District
Docket No. 5-11-0519
Filed August 21, 2012
Rehearing denied September 20, 2012
Held The Illinois Employee Classification Act, which establishes criteria for
(Note: This syllabus determining whether an individual performing services for a construction
constitutes no part of contractor is an employee or an independent contractor, is not facially
the opinion of the court unconstitutional under the due process clause, it does not improperly
but has been prepared delegate legislative authority, it is not unconstitutionally vague, and it
by the Reporter of does not violate the equal protection clause or the prohibition against
Decisions for the special legislation.
convenience of the
reader.)
Decision Under Appeal from the Circuit Court of Franklin County, No. 10-CH-35; the
Review Hon. Robert W. Lewis, Judge, presiding.
Judgment Affirmed.
Counsel on Jana Yocom, of Jana Yocom, P.C., of Mt. Vernon, for appellants.
Appeal
Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro,
Solicitor General, and Mary E. Welsh, Assistant Attorney General, of
counsel), for appellee.
Marc R. Poulos, Melissa L. Binetti, and Kara M. Principe, all of Indiana,
Illinois, Iowa Foundation for Fair Contracting, of Countryside, amicus
curiae.
Panel JUSTICE STEWART delivered the judgment of the court, with opinion.
Justices Goldenhersh and Chapman concurred in the judgment and
opinion.
OPINION
¶1 This appeal concerns the constitutionality of the Illinois Employee Classification Act (the
Act) (820 ILCS 185/1 to 999 (West 2008)). On March 12, 2010, the plaintiffs, Rhonda
Bartlow and Jack Bartlow, doing business as Jack’s Roofing, Ryan Towle, doing business
as Jack’s Siding and Windows, and Charles Eric Modglin, filed a complaint in the circuit
court of Franklin County, Illinois, for a declaratory judgment and for injunctive relief against
the defendant, Joseph Costigan, in his capacity as the Director of the Illinois Department of
Labor1 (the Department). The plaintiffs alleged in their complaint that the Department is
attempting to enforce the Act against them, but the Act is facially unconstitutional and
unenforceable. The circuit court granted the Department’s motion for a summary judgment.
We affirm.
¶2 BACKGROUND
¶3 The Act was enacted on January 1, 2008, and it establishes criteria to determine whether
an individual performing services for a construction contractor is an employee of the
contractor or is an independent contractor. The Act seeks to ensure that workers in the
construction industry are offered protections under numerous labor laws, including minimum
wage, overtime, workers’ compensation, and unemployment insurance, and are not
misclassified as independent contractors by the contractor in order to avoid tax and labor law
1
As a matter of law, Joseph Costigan, the current Director of the Illinois Department of
Labor, has been substituted as a party in place of Catherine M. Shannon, the originally named
defendant and Costigan’s predecessor. 735 ILCS 5/2-1008(d) (West 2010).
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obligations. 820 ILCS 185/3 (West 2010); 56 Ill. Adm. Code 240.100 (2008).
¶4 Rhonda and Jack Bartlow are spouses and general partners in a general partnership that
has been doing business as Jack’s Roofing since 1977. The Bartlows are in the business of
installing siding, windows, seamless gutters, and roofs. Ryan Towle and Charles Eric
Modglin perform siding, window, and roof installation services for the Bartlows. The
Bartlows maintain that Towle and Modglin are not their employees, but are subcontractors
who operate their own businesses as sole proprietors. At the time of the lawsuit, the
Department was investigating whether the Bartlows had misclassified Towle, Modglin, and
others as independent contractors when they should have been classified as employees under
the Act.
¶5 On September 3, 2008, the Department sent the Bartlows a “notice of investigation and
request for documents.” The Department’s request for documents sought documents
concerning their relationship with Towle, Modglin, and other persons who the Department
“contends are or were [Jack’s Roofing] employees,” not subcontractors. The investigation
was identified as “File Number: 2009-CA-JD08-0017.” On October 15, 2008, the Bartlows
furnished the Department numerous documents it had requested. They did not have
possession of documents related to the capitalization of their subcontractors, information
concerning other customers of the subcontractors, or the subcontractors’ income tax
compliance. In April 2009, a conciliator working for the Department conducted a telephone
interview with Rhonda Bartlow and with various individuals who had contracted with the
Bartlows.
¶6 On February 16, 2010, the Department sent the Bartlows a “Notice of Preliminary
Investigative Findings,” stating that it had made a preliminary determination that the
Bartlows “had failed properly to classify ten subcontractors in violation of the Act.” The
notice also stated that the Bartlows “may be assessed a fine of $1,683,000” and requested a
response within 30 days of the date of the notice. The notice further stated that “upon receipt
and review of the response, [the Department would] issue a written decision informing the
parties of the final determination in the matter.”
¶7 On March 1, 2010, the Department sent the Bartlows a notification of a second
investigation “of a complaint regarding work done at 311 West Grand, Carterville, Illinois.”
In this second notification, the Department requested “production of documents within 15
calendar days of the date of the letter” and identified the second investigation as “File No.
2010-CA-RT12-0050.”
¶8 On March 12, 2010, the Bartlows, Towle, and Modglin filed a complaint against the
Department, requesting a declaratory judgment and injunctive relief. They alleged that the
Department had not provided them an “opportunity for hearing,” that their telephone calls
to the Department requesting settlement discussions had not been returned, and that the Act
and the pending investigations have created uncertainty concerning how they are to conduct
their business.
¶9 The plaintiffs’ five-count complaint maintained that the Act violates the due process
clauses of the United States and Illinois Constitutions, the special legislation clause of the
Illinois Constitution, the equal protection clauses of the United States and Illinois
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Constitutions, and the prohibition of bills of attainder in the United States Constitution. The
plaintiffs also filed a motion for a temporary restraining order (TRO) and a preliminary
injunction, requesting the court to enjoin the enforcement of the Act during the pendency of
the action.
¶ 10 On March 15, 2010, the circuit court conducted a contested hearing on the plaintiffs’
request for a TRO and denied the motion. The plaintiffs filed an interlocutory appeal
pursuant to Illinois Supreme Court Rule 307 (eff. Feb. 26, 2010). On March 25, 2010, on the
expedited timetable required by Rule 307(d), we reversed the circuit court’s denial of the
plaintiffs’ TRO request. Bartlow v. Shannon, 399 Ill. App. 3d 560, 927 N.E.2d 88 (2010).
We concluded that the plaintiffs’ complaint raised a “fair question” concerning whether the
Act violated procedural due process by granting the Department the power to assess fines,
penalties, and sanctions without affording the plaintiffs with a meaningful hearing. Id. at 571,
927 N.E.2d at 98. We did not determine the merits of the plaintiffs’ due process claim, only
that it raised a “fair question.” In addition, we did not address any of the plaintiffs’ other
constitutional claims. We remanded the case and directed the circuit court to enter a TRO
until it conducted a full hearing on the plaintiffs’ request for a preliminary injunction.
¶ 11 On remand, the plaintiffs did not request a hearing on their motion for a preliminary
injunction. Instead, the plaintiffs and the Department each filed cross-motions for summary
judgment, and the parties agreed that no evidentiary hearing was necessary to determine the
plaintiffs’ constitutional issues. On October 20, 2011, the circuit court entered a
memorandum of decision with respect to the parties’ cross-motions for a summary judgment,
finding that the Act did not violate the guarantees of due process and equal protection or the
prohibitions against special legislation and bills of attainder.
¶ 12 The court noted in its memorandum that the Act granted the Department the power to
assess penalties and sanctions and that there is no provision in the Act for any type of
administrative hearing. However, the court ruled as follows:
“The instant case presents a facial challenge only. No as applied challenge is
presented in Plaintiffs’ Second Amended Complaint. The Department is not precluded
from giving Plaintiffs notice and a hearing if it so chooses. Therefore, *** the court finds
[the Act] is not facially unconstitutional.”
¶ 13 On November 14, 2011, the circuit court entered its final order based on its memorandum
of decision. The court’s final order found that the Act was not unconstitutional special
legislation, did not violate the equal protection clause of the Illinois or United States
Constitution, does not constitute a bill of attainder, and is not facially unconstitutional under
the due process clauses of the United States and Illinois Constitutions. The court entered a
judgment on all counts of the plaintiffs’ complaint in favor of the Department. The plaintiffs
filed a timely notice of appeal.
¶ 14 DISCUSSION
¶ 15 The plaintiffs argue that the circuit court erred in granting the Department’s motion for
summary judgment and denying their motion for summary judgment because the Act is
facially unconstitutional under both the due process and equal protection clauses of the
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United States and Illinois Constitutions. The plaintiffs also argue that the Act is an
unconstitutional special legislation in violation of the Illinois Constitution. The plaintiffs
appeal the circuit court’s judgment granting a summary judgment in favor of the Department
on their constitutional challenges and denying their motion for summary judgment.
¶ 16 “Summary judgment is proper when the pleadings, depositions, and affidavits
demonstrate that no genuine issue of material fact exists and that the moving party is entitled
to judgment as a matter of law.” Schultz v. Illinois Farmers Insurance Co., 387 Ill. App. 3d
622, 625, 901 N.E.2d 957, 960 (2009). “The court must construe the evidence strictly against
the movant and liberally in favor of the opponent.” (Internal quotation marks omitted.) Gatlin
v. Ruder, 137 Ill. 2d 284, 293, 560 N.E.2d 586, 589 (1990). The review of the grant of
summary judgment is de novo. Ioerger v. Halverson Construction Co., 232 Ill. 2d 196, 201,
902 N.E.2d 645, 648 (2008).
¶ 17 In addition, applicable to our review in the present case, we note that the constitutionality
of a statute is a question of law that we review de novo. Irwin Industrial Tool Co. v.
Department of Revenue, 238 Ill. 2d 332, 340, 938 N.E.2d 459, 465 (2010). “Statutes are
presumed to be constitutional, and we must construe a statute so as to uphold its
constitutionality if it is reasonably possible to do so. The party challenging the validity of a
statute has the burden of clearly establishing a constitutional violation.” Id.
¶ 18 I.
¶ 19 The Statutory and Regulatory Framework of the Act
¶ 20 We begin our analysis of the constitutionality of the Act by first outlining the statutory
and regulatory framework of the Act. As noted above, the Act is designed to address
problems in the construction industry that arise when contractors improperly classify
employees as independent contractors in order to avoid certain laws and regulations that are
designed to protect employees. The Act grants the Department the power to conduct
investigations in connection with the administration and enforcement of the Act and provides
that the Department has the duty to enforce the provisions of the Act. 820 ILCS 185/25
(West 2008).
¶ 21 A.
¶ 22 The Department’s Investigatory Powers
¶ 23 An investigation under the Act begins when an interested party files a complaint with the
Department against an employer if there is a reasonable belief that the employer is in
violation of the Act. 820 ILCS 185/25 (West 2008). The Department itself may also file a
complaint alleging a violation of the Act. 56 Ill. Adm. Code 240.200 (2008).
¶ 24 Upon the filing of a complaint, the Department reviews the complaint to determine
whether there is cause for an investigation. 56 Ill. Adm. Code 240.220(a) (2008). If the
Department determines that there is cause for an investigation, it is obligated to investigate
to ascertain the facts relating to the alleged violation and determine whether a violation has
occurred. 56 Ill. Adm. Code 240.300 (2008). The Department may investigate using “any
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method or combination of methods deemed suitable at the discretion of the Department.” 56
Ill. Adm. Code 240.300 (2008). “The investigation shall include a written notice to the
contractor of the substance of the complaint and an opportunity to present any information
the contractor wishes the Department to consider in reaching its determination.” 56 Ill. Adm.
Code 240.300 (2008). If a contractor refuses to cooperate with an investigation, “the
Department may make a finding that the Act has been violated based upon the evidence
available to the Department.” 56 Ill. Adm. Code 240.300(a) (2008).
¶ 25 “Before making a final determination of a violation, the Department shall notify the
contractors of the substance of the Department’s investigation and afford the contractors an
opportunity to present any written information, within 30 calendar days, for the Department
to consider in reaching its determination.” 56 Ill. Adm. Code 240.300(d) (2008). “As part of
its investigation, the Department may convene a fact-finding conference in person or by
telephone for the purpose of obtaining additional information or evidence, identifying the
issues in dispute, ascertaining the positions of the parties and exploring the possibility of
settlement.” 56 Ill. Adm. Code 240.310 (2008). All parties are to be given notice of the fact-
finding conference at least 15 days prior to the conference, and each party may be
accompanied by the party’s attorney. 56 Ill. Adm. Code 240.310(a), (b) (2008).
¶ 26 B.
¶ 27 The Department’s Enforcement Powers Following Its Investigation
¶ 28 The Act and its regulations not only grant the Department the power to investigate
alleged violations of the Act, but also give the Department a list of enforcement remedies it
may seek once it determines that there has been a violation of the Act. Section 25(b) of the
Act provides as follows:
“Whenever the Department believes upon investigation that there has been a violation
of any of the provisions of this Act or any rules or regulations promulgated under this
Act, the Department may: (i) issue and cause to be served on any party an order to cease
and desist from further violation of the Act, (ii) take affirmative or other action as
deemed reasonable to eliminate the effect of the violation, (iii) collect the amount of any
wages, salary, employment benefits, or other compensation denied or lost to the
individual, and (iv) assess any civil penalty allowed by this Act. The civil penalties
assessed by the Department as well as any other relief requested by the Department shall
be recoverable in an action brought in the name of the people of the State of Illinois by
the Attorney General.” 820 ILCS 185/25(b) (West 2010).
¶ 29 The regulations further provide that the Department may seek a voluntary settlement with
the contractor that eliminates the unlawful practice and provides appropriate relief;
recommend the commencement of a civil action; issue a cease-and-desist order; assess civil
penalties; collect denied or lost wages, salary, employment benefits, or compensation owed
to the employee; place the contractor on a debarment list pursuant to section 42 of the Act
(820 ILCS 185/42 (West 2010)); and/or take any other reasonable action to eliminate the
unlawful practice and/or remedy the effect of the violation. 56 Ill. Adm. Code 240.510
(2008).
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¶ 30 When the Department makes a decision that a violation has occurred and has determined
to seek remedies for the violation, it must send a notice to all parties. 56 Ill. Adm. Code
240.500(c) (2008). The Act’s regulations require the Department to “seek voluntary
compliance by the contractor for any violations of the Act,” but if “the contractor fails to pay
the penalties or comply with the remedies specified in the notice within 30 calendar days, the
Department may within 180 days refer the matter to the Attorney General for enforcement.”
56 Ill. Adm. Code 240.500(d) (2008). Section 35 of the Act states that, if a contractor refuses
to obey a “valid order of the Department issued under this Act,” the Department can obtain
a court order commanding the contractor to obey the order or be adjudged guilty of contempt
of court and punished accordingly. 820 ILCS 185/35 (West 2010).
¶ 31 The contractor can seek a review of the Department’s final determination by filing a
written request for an “informal conference” with the Director of the Department. 56 Ill.
Adm. Code 240.500(e) (2008). The informal conference will be conducted by the Director
and/or the Department’s chief legal counsel. 56 Ill. Adm. Code 240.500(e)(1) (2008). At the
informal conference, the contractor can “present written or oral information and arguments
as to why the Department’s final determination should be amended or reconsidered.” 56 Ill.
Adm. Code 240.500(e)(1) (2008).
¶ 32 Section 42 of the Act provides that when the Department determines that the contractor
has committed a second or subsequent violation within five years of an earlier violation, the
Department must place the contractor on a debarment list posted on its official website. 820
ILCS 185/42 (West 2010). Specifically, “the Department shall add the employer or entity’s
name to a list to be posted on the Department’s official website. Upon such notice, the
Department shall notify the violating employer or entity. No state contract shall be awarded
to an employer or entity appearing on the list until 4 years have elapsed from the date of the
last violation.” 820 ILCS 185/42 (West 2010); 56 Ill. Adm. Code 240.530 (2008).
¶ 33 II.
¶ 34 Procedural Due Process
¶ 35 The plaintiffs maintain that the statutory and regulatory scheme under the Act is facially
unconstitutional under the due process clauses of the United States Constitution and the
Illinois Constitution. The plaintiffs do not challenge the Act as applied, only on its face.
Specifically, the plaintiffs maintain that the Act and its regulations grant the Department the
power to impose significant penalties and sanctions upon its finding of a violation of the Act,
but the Act does not provide an accused with a sufficient hearing during the Department’s
investigative process.
¶ 36 We begin our constitutional analysis with the presumption that the statute is
constitutional. Irwin Industrial Tool Co., 238 Ill. 2d at 340, 938 N.E.2d at 465. A statute is
facially unconstitutional only if “ ‘no set of circumstances exists under which the Act would
be valid. The fact that the [statute] might operate unconstitutionally under some conceivable
set of circumstances is insufficient to render it wholly invalid’ ” except in the context of the
first amendment. In re C.E., 161 Ill. 2d 200, 210-11, 641 N.E.2d 345, 350 (1994) (quoting
United States v. Salerno, 481 U.S. 739, 745 (1987)). “[A] challenge to the facial validity of
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a statute is the most difficult challenge to mount successfully ***.” People v. One 1998
GMC, 2011 IL 110236, ¶ 20, 960 N.E.2d 1071.
¶ 37 While we must construe a statute so as to uphold its constitutionality if it is reasonably
possible to do so (Irwin Industrial Tool Co., 238 Ill. 2d at 340, 938 N.E.2d at 465), this rule
of construction is not a license to rewrite legislation. In re Branning, 285 Ill. App. 3d 405,
410, 674 N.E.2d 463, 467 (1996). Nonetheless, we will resolve any doubt as to the statute’s
construction in favor of its validity. People v. Boeckmann, 238 Ill. 2d 1, 6-7, 932 N.E.2d 998,
1001 (2010).
¶ 38 The plaintiffs’ due process challenge raises procedural due process concerns. The due
process clauses of the United States and Illinois Constitutions provide that the State may not
“deprive any person of life, liberty, or property, without due process of law.” U.S. Const.,
amend. XIV; Ill. Const. 1970, art. I, § 2. The guarantee of due process normally compels the
government to provide notice and an opportunity to be heard before a person is deprived of
property. United States v. James Daniel Good Real Property, 510 U.S. 43, 47 (1993).
¶ 39 “Procedural due process claims concern the constitutionality of the specific procedures
employed to deny a person’s life, liberty or property.” Segers v. Industrial Comm’n, 191 Ill.
2d 421, 434, 732 N.E.2d 488, 496 (2000). Procedural due process is meant to protect people
from the mistaken or unjustified deprivation of life, liberty, or property, not from the
deprivation itself. Id. “To survive a facial challenge, the procedures a statute incorporates
must at least be adequate to authorize the deprivation with respect to some of the persons
subject to it.” In re Marriage of Beyer, 324 Ill. App. 3d 305, 318, 753 N.E.2d 1032, 1043
(2001). “At a minimum, due process requires that a deprivation of property cannot occur
without providing notice and an opportunity for a hearing appropriate to the nature of the
case.” Id.
¶ 40 “Due process of law is served where there is a right to present evidence and argument in
one’s own behalf, a right to cross-examine adverse witnesses, and impartiality in rulings
upon the evidence which is offered.” Piotrowski v. State Police Merit Board, 85 Ill. App. 3d
369, 373, 406 N.E.2d 863, 866 (1980). “Before a person is deprived of a protected interest,
he must be afforded opportunity for some kind of a hearing, ‘except for extraordinary
situations where some valid governmental interest is at stake that justifies postponing the
hearing until after the event.’ ” Board of Regents of State Colleges v. Roth, 408 U.S. 564, 570
n.7 (1972) (quoting Boddie v. Connecticut, 401 U.S. 371, 379 (1971)). A fundamental
requirement of due process is the opportunity to be heard “at a meaningful time and in a
meaningful manner.” Armstrong v. Manzo, 380 U.S. 545, 552 (1965).
¶ 41 In evaluating procedural due process claims, the court uses a three-part test, under which
the court (1) asks the threshold question whether there exists a liberty or property interest
which has been interfered with by the State, (2) examines the risk of an erroneous deprivation
of such an interest through the procedures already in place, while considering the value of
additional safeguards, and (3) addresses the effect the administrative burden would have on
the State’s interest. Segers, 191 Ill. 2d at 434, 732 N.E.2d at 496. However, as the
Department notes, these procedural safeguards are not triggered unless and until an agency
is adjudicating legal rights. Securities & Exchange Comm’n v. Jerry T. O’Brien, Inc., 467
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U.S. 735, 742 (1984) (the due process clause is not implicated when an administrative
agency, without notifying a person under investigation, uses its subpoena power to gather
evidence; the due process clause is not implicated under such circumstances because an
administrative investigation adjudicates no legal rights).
¶ 42 In response to the plaintiffs’ procedural due process argument, the Department maintains
that its role under the Act is limited to an investigatory function and that it has no power to
adjudicate any claim that a contractor has misclassified an employee. The Department notes
that it is not authorized to issue a final administrative determination that is subject to judicial
review under the Administrative Review Law (735 ILCS 5/3-101 to 3-113 (West 2010)).
Instead, the Department argues that if its investigation leads it to a finding that there is a
violation of the Act, it may take reasonable action to eliminate or remedy the violation by
seeking, among other things, a voluntary settlement, issue a cease-and-desist order, assess
civil penalties, or collect the employee’s lost wages or benefits. 820 ILCS 185/25(b) (West
2010). It argues that these powers are not adjudicatory powers. The Department cites World
Painting Co. v. Costigan, 2012 IL App (4th) 110869, 967 N.E.2d 485, in support of its
argument that it has no adjudicatory powers, only investigative powers, under the Act.
¶ 43 In World Painting Co., the trial court enjoined the Department from enforcing the Act
against the plaintiffs based on our decision in Bartlow v. Shannon, 399 Ill. App. 3d 560, 927
N.E.2d 88 (2010). On appeal, the World Painting Co. court noted that the requirements of
notice and the opportunity to be heard are not implicated by executive action that cannot
result in an administrative adjudication of rights. World Painting Co., 2012 IL App (4th)
110869, ¶ 15, 967 N.E.2d 485. In that case, the Department entered into an agreement with
the plaintiff that, under the Act, it could “only conduct a no-consequences investigation.” Id.
¶ 22, 967 N.E.2d 485. The court described the parties’ agreed interpretation of the Act as
follows:
“Defendants liken the Department’s role to that of the police in a criminal investigation.
The Department, according to defendants, may subpoena witnesses and documents and
inspect businesses toward determining whether to recommend the commencement of an
action for civil or criminal penalties in the trial court. If the Department found a
violation, defendants’ interpretation would allow the Department to conduct informal
negotiations with a firm toward settling on a penalty. However, if the firm were unwilling
to negotiate, the Department’s sole recourse would be in ‘de novo’ court proceedings in
which the Department’s findings would be inadmissible. Defendants argue the
Department’s investigation under the Act does not require due-process protections such
as notice and an opportunity to be heard because the Department itself cannot adjudicate
a firm’s rights or liabilities.” Id. ¶ 22, 967 N.E.2d 485.
¶ 44 The World Painting Co. court reversed the trial court’s injunction because “[t]he parties
have agreed to a constitutional plan for conducting their interaction as the Department
investigates plaintiff’s possible violations of the Act.” Id. ¶ 24, 967 N.E.2d 485. Under the
parties’ agreement, “the Department is forbidden from making any adjudicatory findings of
plaintiff’s liability.” Id. Accordingly, the court concluded that “due process is not implicated
by the Department’s investigation in this case.” Id.
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¶ 45 When the present case came before this court in Bartlow, the Department argued that the
Act met the requirements of procedural due process because any party can request an
“informal conference” after the Department issues its final determination, and the contractor
may present written or oral information and arguments at this informal conference. Bartlow,
399 Ill. App. 3d at 572, 927 N.E.2d at 99. We concluded that this procedure appeared to be
inadequate because the Act authorized the Department, upon its finding of a violation, to
issue cease-and-desist orders, assess civil penalties, and levy other sanctions, but the informal
conference did not provide the contractor with an opportunity to confront accusers, examine
witnesses, or inspect the evidence offered against it. Id.
¶ 46 In the present appeal, the Department advances an interpretation of the Act that is similar
to the parties’ agreed interpretation in World Painting Co. The Department maintains that
it has no adjudicatory power; it investigates but has no authority outside of court to enforce
any finding that there has been a violation of the Act. In addition, any circuit court
proceeding to enforce the Act is a de novo proceeding in which the Department has the
burden of proving a violation of the Act. Also, the Department maintains that, pursuant to
section 80 of the Act (820 ILCS 185/80 (West 2010)), its finding that there has been a
violation of the Act is not admissible in a court proceeding seeking sanctions for a violation
of the Act. The Department describes its investigative power as a “no consequences power,”
meaning that there are no consequences as a result of its investigation and no change in
status. The Department’s power to assess fines under the Act, the Department argues, is
merely the power to ask the contractor to settle the matter outside of court. Its assessment of
fines can be ignored by the contractor with no consequences. Once the Department brings
an action in the circuit court and proves that a violation of the Act has occurred, the circuit
court will decide whether any fines or sanctions should be assessed and, if so, what they
should be.
¶ 47 The circuit court disagreed with the Department’s interpretation of the statute because,
under its reading of the Act, it grants the Department the power to assess penalties and
sanctions. Nonetheless, the circuit court cited East St. Louis Federation of Teachers, Local
1220 v. East St. Louis School District No. 189 Financial Oversight Panel, 178 Ill. 2d 399,
687 N.E.2d 1050 (1997), and held that the Act was not facially unconstitutional because
“[t]he Department is not precluded from giving Plaintiffs notice and a hearing if it so
chooses.”
¶ 48 In East St. Louis, the supreme court addressed a statute that gave an oversight panel the
authority to remove school board members from their office for failure to follow a valid
order of the panel. Id. at 405-06, 687 N.E.2d at 1055-56. The supreme court held that when
the oversight panel exercised its power to terminate the term of a school board member’s
term of office, it must afford the office holder due process. Id. at 418-19, 687 N.E.2d at 1061.
However, the court noted that the statute did not provide any notice and procedure
requirements, which created a great risk of erroneous deprivation of a school board member’s
rights. Id. at 419, 687 N.E.2d at 1062. The court held that the school board member was
entitled to notice of the panel’s pending decision to remove him or her from office and was
entitled to procedural safeguards. Id. at 420, 687 N.E.2d at 1062.
¶ 49 Nonetheless, the supreme court held that the statute was not unconstitutional on its face
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because nothing in the statute prevented the panel from giving the school board member
notice and a hearing before removing him from office. Id. at 421, 687 N.E.2d at 1063. The
court stated, “Given that the Panel was free to give notice or hearing if it so chose, [the
statute] is not facially unconstitutional.” Id.
¶ 50 In the present case, the Department agrees that if the Act authorized it to adjudicate
liability, procedural safeguards would be necessary. We share the circuit court’s concern that
the language of the statute grants the Department more than investigatory powers. However,
as the supreme court emphasized in East St. Louis, we must interpret statutes as
constitutional if we can reasonably do so. Id. Therefore, we adopt the interpretation of the
Act offered by the Department and hold that the statute is not facially unconstitutional under
the due process clause.
¶ 51 Under the Department’s interpretation of the Act, it functions only in an investigative
role. If it finds that a violation of the Act has occurred, it has no power to assess any fines or
impose any sanctions, but can only seek a voluntary settlement with and compliance by the
contractor. If the Department cannot reach an agreement with the contractor, it must seek any
penalties, sanctions, or other remedies by bringing an action in the circuit court. The
Department has the burden of proving a violation of the Act, and the circuit court decides if
penalties or sanctions are justified and what penalties, sanctions, or other remedies to impose.
¶ 52 Section 80 of the Act states that the Department’s “finding made pursuant to this Act is
for the purpose of enforcing this Act and may not be admissible or binding against a party
in any other proceeding.” (Emphasis added.) 820 ILCS 185/80 (West 2010). The Department
interprets section 80 of the Act to mean that its findings are not admissible in any court
proceeding, including an action brought by the Department pursuant to the authority provided
in section 25 of the Act. In addition, although the Act authorizes the Department to serve “an
order to cease and desist from further violation of the Act,” under the Department’s
interpretation of the Act, this is a no-consequences order that does not change the status of
the parties.
¶ 53 The Department’s interpretation of the Act clearly meets due process requirements
because a contractor accused of violating the Act is afforded all of the due process
protections contained in the Code of Civil Procedure (735 ILCS 5/1-101 to 22-105 (West
2010)) and the Code of Criminal Procedure of 1963 (725 ILCS 5/100-1 to 126-1 (West
2010)) before he or she can be deprived of life, liberty, or property. Accordingly, we affirm
the circuit court’s decision, holding that the Act is not facially unconstitutional under the due
process clauses of the United States and Illinois Constitutions.
¶ 54 III.
¶ 55 Vagueness/Unlawful Delegation of Legislative Power
¶ 56 The next argument the plaintiffs raise is that the Act is unconstitutionally vague under
the due process clauses of the United States and Illinois Constitutions. U.S. Const., amend.
XIV; Ill. Const. 1970, art. I, § 2. The plaintiffs also argue that the statute’s criteria for
nonemployees are so vague, indefinite, and uncertain that they impermissibly delegate
legislative power to the Department. See Ill. Const. 1970, art. II, § 1 (“No branch shall
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exercise powers properly belonging to another.”). We disagree with the plaintiffs’ assertions.
¶ 57 The issue of vagueness as it relates to due process and the question of unlawful
delegation of legislative authority are issues that are intertwined. People v. Gurell, 98 Ill. 2d
194, 210, 456 N.E.2d 18, 25 (1983). A statute is unconstitutionally vague if it does not
provide sufficient standards to guide the administrative body in the exercise of its functions.
Id. A statute must be sufficiently clear to (1) provide people of ordinary intelligence with
reasonable opportunity to understand what conduct it prohibits so that one may act
accordingly and (2) provide reasonable standards to restrict the discretion of governmental
authorities who apply the law. Owens v. Department of Human Rights, 403 Ill. App. 3d 899,
928, 936 N.E.2d 623, 647 (2010).
¶ 58 With respect to unlawful delegation of legislative power, the statute in question must
identify three factors: (1) the persons or activities potentially subject to regulation, (2) the
harm sought to be prevented, and (3) the general means available to the administrator to
prevent the identified harm. Gurell, 98 Ill. 2d at 210-11, 456 N.E.2d at 25. “While the
legislature cannot delegate its legislative power to determine what the law should be, it may
delegate the authority to execute the law.” East St. Louis, 178 Ill. 2d at 423, 687 N.E.2d at
1063.
¶ 59 In the present case, the Act is neither unconstitutionally vague nor an unlawful delegation
of legislative power. The statute clearly defines the persons subject to its regulation. 820
ILCS 185/5 (West 2010). It contains detailed standards to guide the Department and the
circuit court in determining whether a contractor has misidentified an employee as an
independent contractor. 820 ILCS 185/10 (West 2010). The language of the Act provides a
contractor of reasonable intelligence the opportunity to understand what conduct it prohibits
and is specific enough to restrict arbitrary and discriminatory enforcement by the
Department. 820 ILCS 185/20 (West 2010). The harm sought to be prevented by the Act is
clearly defined (820 ILCS 185/3 (West 2010)) and is also evident from its provisions.
¶ 60 As noted above, the Department’s role under the Act is limited to an investigative role.
Its enforcement powers are limited to either a settlement with the contractor or the filing of
a de novo court proceeding in which it has the burden of proving a violation of the Act. If the
Department proves a violation, the fines, sanctions, and remedies that the circuit court can
order are spelled out in section 25 of the Act. 820 ILCS 185/25 (West 2010). This legislative
scheme sets out sufficient standards and is not an improper delegation of legislative authority
or unconstitutionally vague.
¶ 61 Section 10(a) of the Act states that “an individual performing services for a contractor
is deemed to be an employee of the employer except as provided in subsections (b) and (c)
of this Section.” 820 ILCS 185/10(a) (West 2010). Subsection (b) provides that an
“individual performing services for a contractor is deemed to be an employee of the
contractor unless it is shown that:
(1) the individual has been and will continue to be free from control or direction
over the performance of the service for the contractor, both under the individual’s
contract of service and in fact;
(2) the service performed by the individual is outside the usual course of services
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performed by the contractor; and
(3) the individual is engaged in an independently established trade, occupation,
profession or business; or
(4) the individual is deemed a legitimate sole proprietor or partnership under
subsection (c) of this Section.” 820 ILCS 185/10(b) (West 2010).
¶ 62 Subsection (c) provides that the
“sole proprietor or partnership performing services for a contractor as a subcontractor is
deemed legitimate if it is shown that:
(1) the sole proprietor or partnership is performing the service free from the
direction or control over the means and manner of providing the service, subject only
to the right of the contractor for whom the service is provided to specify the desired
result;
(2) the sole proprietor or partnership is not subject to cancellation or destruction
upon severance of the relationship with the contractor;
(3) the sole proprietor or partnership has a substantial investment of capital in the
sole proprietorship or partnership beyond ordinary tools and equipment and a
personal vehicle;
(4) the sole proprietor or partnership owns the capital goods and gains the profits
and bears the losses of the sole proprietorship or partnership;
(5) the sole proprietor or partnership makes its services available to the general
public or the business community on a continuing basis;
(6) the sole proprietor or partnership includes services rendered on a Federal
Income Tax Schedule as an independent business or profession;
(7) the sole proprietor or partnership performs services for the contractor under
the sole proprietorship’s or partnership’s name;
(8) when the services being provided require a license or permit, the sole
proprietor or partnership obtains and pays for the license or permit in the sole
proprietorship’s or partnership’s name;
(9) the sole proprietor or partnership furnishes the tools and equipment necessary
to provide the service;
(10) if necessary, the sole proprietor or partnership hires its own employees
without contractor approval, pays the employees without reimbursement from the
contractor and reports the employees’ income to the Internal Revenue Service;
(11) the contractor does not represent the sole proprietorship or partnership as an
employee of the contractor to its customers; and
(12) the sole proprietor or partnership has the right to perform similar services for
others on whatever basis and whenever it chooses.” 820 ILCS 185/10(c) (West
2010).
¶ 63 The language of section 10 provides contractors with sufficient guidance to allow them
to meet the requirements of the Act. A person working for a contractor can qualify as an
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independent contractor under subsection (b) or subsection (c). The contractor can determine,
prior to entering into a subcontract, whether a person performing work qualifies as an
independent contractor under either section. If not, then the person has to be treated as an
employee. Although some of the information in subsection (c) is solely within the control of
the potential subcontractor at the time the contracts are entered into, the plaintiffs do not
explain why a contractor cannot require the subcontractor to furnish the information before
entering into the subcontract to ensure that he or she is properly classified as either an
independent contractor or an employee.
¶ 64 Accordingly, the Act provides contractors of ordinary intelligence with a reasonable
opportunity to understand what conduct it prohibits and provides reasonable standards to
restrict the discretion of governmental authorities who apply the law. Because the language
of the statute defines the individuals who are potentially subject to its regulation, the harm
it seeks to prevent, and the general means available to the Department to prevent the
identified harm, it does not improperly delegate legislative authority and is not
unconstitutionally vague.
¶ 65 IV.
¶ 66 Equal Protection/Special Legislation
¶ 67 The plaintiffs’ final arguments are that the Act violates the special legislation clause of
the Illinois Constitution and the equal protection clauses of the United States and Illinois
Constitutions.
¶ 68 “The special legislation clause [(Ill. Const. 1970, art. IV, § 13)] expressly prohibits the
General Assembly from conferring a special benefit or exclusive privilege on a person or a
group of persons to the exclusion of others similarly situated.” Best v. Taylor Machine
Works, 179 Ill. 2d 367, 390-91, 689 N.E.2d 1057, 1069 (1997). The special legislation clause
is designed to prevent arbitrary classifications by the legislature that discriminate in favor of
a select group without a sound, reasonable basis. Id. at 391, 689 N.E.2d at 1069-70. A special
legislation challenge and an equal protection challenge are generally judged under the same
standards. Id. at 393, 689 N.E.2d at 1070.
¶ 69 The equal protection clauses in the federal and Illinois constitutions (U.S. Const., amend.
XIV; Ill. Const. 1970, art. I, § 2) require the government to treat similarly situated individuals
in a similar manner. Byrd v. Hamer, 408 Ill. App. 3d 467, 490, 943 N.E.2d 115, 136 (2011).
The analysis is the same under both the United States and Illinois Constitutions. Jacobson
v. Department of Public Aid, 171 Ill. 2d 314, 322, 664 N.E.2d 1024, 1028 (1996). The
guarantee of equal protection “does not preclude the State from enacting legislation that
draws distinctions between different categories of people, but it does prohibit the government
from according different treatment to persons who have been placed by a statute into
different classes on the basis of criteria wholly unrelated to the purpose of the legislation.”
Id.
¶ 70 The parties agree that the court is to employ a rational basis review in reviewing the
plaintiffs’ equal protection challenge. See Clark v. Jeter, 486 U.S. 456, 461 (1988). To
withstand rational basis scrutiny, the statutory classification must be rationally related to a
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legitimate government purpose. Id. Under the rational basis test, we give high deference to
the judgments made by the legislature. Village of Lake Villa v. Stokovich, 211 Ill. 2d 106,
125, 810 N.E.2d 13, 26 (2004). “So long as there is a conceivable basis for finding the statute
rationally related to a legitimate state interest, the law must be upheld.” Id. at 126, 810
N.E.2d at 26. The “standards used to determine an equal protection claim are also applicable
when evaluating a claim that the statute constitutes special legislation under our Illinois
constitution.” American National Bank & Trust Co. of Chicago v. Anchor Organization for
Health Maintenance, 210 Ill. App. 3d 418, 425, 569 N.E.2d 128, 133-34 (1991).
¶ 71 The plaintiffs argue that the Act is unconstitutional because it creates differential
treatment of laborers in the construction industry as opposed to laborers in other fields, and
this differential treatment is not rationally related to the goals of the legislation. We disagree
and believe that the statute passes constitutional muster under equal protection and special
legislation standards.
¶ 72 As noted above, the Act was enacted “to address the practice of misclassifying employees
as independent contractors.” 820 ILCS 185/3 (West 2008). The State has a legitimate interest
in preventing employee misclassification because employees who are misclassified as
independent contractors lose the benefit of worker protection laws, including minimum
wage, discrimination, and occupational safety laws. In addition, the State has an interest in
the revenue it loses from the misclassification, including unemployment insurance
contributions and payroll taxes. The State also has an interest in seeing that contractors who
properly classify employees are not at a competitive disadvantage to contractors who
misclassify employees. The provisions of the Act are rationally related to these legitimate
interests.
¶ 73 The Act creates an incentive for contractors to properly classify individuals as employees.
Although the statute is limited to the construction industry, this limitation does not establish
an equal protection or special legislation violation. The legislature was not required to
address misclassification across all industries before it could address misclassification in any
industry. Equal protection does not require “the legislature to address all areas of a problem
that it seeks to reform.” In re Petition to Adopt O.J.M., 293 Ill. App. 3d 49, 64, 687 N.E.2d
113, 123 (1997). The legislature is entitled to implement reform one step at a time. Harris
v. Manor Healthcare Corp., 111 Ill. 2d 350, 372-73, 489 N.E.2d 1374, 1384 (1986). The
General Assembly could rationally believe that statutory intervention was more urgently
needed for employees in the construction industry. Id. at 372, 489 N.E.2d at 1384.
¶ 74 Whether the issue of misclassification is most prevalent in the construction industry is
a policy decision that we must defer to the legislature because “we are not concerned with
the wisdom of the statute or even if it is the best means to achieve the goal, but only with
whether there is any sort of conceivable basis for finding the statute rationally related to a
legitimate state interest.” People v. Gale, 376 Ill. App. 3d 344, 359, 876 N.E.2d 171, 186
(2007). In addition, the legislature “ ‘may confine its restrictions to those classes of cases
where the need is deemed to be the clearest.’ ” Chicago Real Estate Board v. City of
Chicago, 36 Ill. 2d 530, 545, 224 N.E.2d 793, 803 (1967) (quoting Gadlin v. Auditor of
Public Accounts, 414 Ill. 89, 98, 110 N.E.2d 234, 238 (1953)). Accordingly, in the present
case, the legislature was free to limit the application of the Act to the construction industry
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without offending the equal protection clauses or violating the prohibition against special
legislation. Williamson v. Lee Optical of Oklahoma, Inc., 348 U.S. 483, 489 (1955) (“The
legislature may select one phase of one field and apply a remedy there, neglecting the
others.”).
¶ 75 CONCLUSION
¶ 76 For the foregoing reasons, we affirm the circuit court’s judgment granting a summary
judgment in favor of the Department.
¶ 77 Affirmed.
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