2015 IL App (1st) 133227
Ill. App. Ct.2015Background
- McMahon Window Washing operates a call center that schedules residential window- and gutter-cleaning jobs; individual window washers were paid on a 50/50 split and signed "independent contractor" agreements and received 1099s.
- IDES audited McMahon for 2006–2008 and determined the window washers were employees under the Illinois Unemployment Insurance Act, assessing unpaid employer contributions and interest.
- McMahon protested and an administrative hearing was held; testimony described the hiring process (crews call in for work), use of McMahon invoices and business cards, pricing set by McMahon, payment through McMahon, and McMahon’s right to require remedial work before payment for complaints.
- Some washers had separate businesses and advertised independently; many provided their own equipment, vehicles, and insurance (though a number lacked personal insurance during the audit period).
- The Director adopted a recommended decision finding the workers were employees under section 212 of the Act; the Cook County circuit court affirmed. McMahon appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether window washers were "free from control" (§212(A)) | McMahon: washers controlled manner/time; no required hours, no training, supply own tools, can take other clients, no supervision | Dept: evidence of control in practice (pricing, invoicing, payment rules, remedial work requirement) | Court: Did not need to decide §212(A) because other §212 failures dispositive; agency findings entitled to deference |
| Whether services were "outside usual course of business" (§212(B) — usual course) | McMahon: it operates a call center connecting customers to independent washers; washing is done off-premises so outside McMahon’s usual course | Dept: window washing is McMahon’s core business — business would not exist without washers | Court: Held services were within McMahon’s usual course of business; McMahon failed this §212(B) factor |
| Whether services were performed "outside all places of business" (§212(B) — place) | McMahon: on-site residences are not McMahon places of business; workers do not represent McMahon’s interests on-site | Dept: workers represent McMahon at customer sites (business cards, invoices, work to McMahon specs) | Court: Held workers represented McMahon at customer premises; those locations extended McMahon’s place of business and §212(B) failed |
| Whether washers were engaged in "independently established business" (§212(C)) | McMahon: many washers had separate businesses, advertised, and worked for others | Dept: overall facts (payment, invoicing, reliance on McMahon bookings, lack of consistent independence) show no established independent trade for exemption | Court: Did not need to resolve §212(C) after §212(B) failure; agency finding upheld as not clearly erroneous |
Key Cases Cited
- AFM Messenger Service, Inc. v. Department of Employment Security, 198 Ill. 2d 380 (supreme court of Illinois) (explains Act’s broad definition of "employment" and burden on party claiming independent-contractor exemption)
- Carpetland U.S.A., Inc. v. Illinois Department of Employment Security, 201 Ill. 2d 351 (supreme court of Illinois) (analyzes §212(B) factors — "usual course" and "place of business")
- Cinkus v. Village of Stickney Municipal Officers Electoral Board, 228 Ill. 2d 200 (supreme court of Illinois) (agency-review principles)
- Chicago Messenger Service v. Jordan, 356 Ill. App. 3d 101 (appellate court of Illinois) (burden on employer claiming exemption)
- Jones v. Department of Employment Security, 276 Ill. App. 3d 281 (appellate court of Illinois) (purpose of the Act)
- United States v. United States Gypsum Co., 333 U.S. 364 (U.S. Supreme Court) (standard for reviewing mixed questions of law and fact)