November 5, 2025 | Katie Sluman, J.D.
Misclassification Mistakes Could Cost You Big In Many States & Territories. Here’s What Illinois Employers Should Know.
Worker misclassification should be at the forefront of every employer’s mind. Not only can misclassification lawsuits result in extreme financial penalties like 24% interest on insurance trust contributions, back wages and attorneys’ fees, owners may also face misdemeanor and felony charges. Recently, in California, a class action lawsuit has been filed against streaming giant, Netflix.1 A recent cast member of the show “Love is Blind” has filed the lawsuit claiming that the participants in the show were misclassified as independent contractors despite the production exercising “excessive control over the manner, means, and timing” of their activities. The lawsuit claims the cast members should be eligible for overtime pay and minimum wage as they worked 20-hour days, got no sleep, were barely fed, and were forced to drink alcohol. This lawsuit is only the beginning of what is expected to be a growing number of high-profile misclassification lawsuits nationwide.
Misclassification occurs when an employer treats a worker as an independent contractor when they are an employee. The Fair Labor Standards Act (“FLSA”) utilizes six factors to determine a worker’s classification. These factors are: (1) Opportunity for profit or loss depending on managerial skill, (2) Investments by the worker and potential employer, (3) Degree of permanence of the relationship, (4) Nature and degree of control by employer, (5) Extent to which the work performed is an integral part of the potential employer’s business, and (6) Skills and initiative.2 Illinois utilizes these six factors as well as three others that were created by the Illinois Department of Employment Security (“IDES”), the primary authority of misclassification suits in Illinois.
The IDES states that services performed by an individual for an employer shall be deemed to be employment unless all of the following factors have been found: (1) Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and (2) Such service is either outside the usual course of business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and (3) Such individual is engaged in an independently established trade, occupation, profession, or business.3 The IDES takes these factors in combination with the FLSA factors when making decisions on misclassification.
In addition to the IDES factors, Illinois has enacted specific laws to classify members of the armed forces and those in construction or construction-related roles. These are the Service Member Employment and Reemployment Rights Act and the Illinois Employee Classification Act.
When it comes to misclassification issues, it is important to remember that it does not matter what employers call their staff. Decisions are made solely on the factors described above, regardless of what someone thinks a worker should be classified as. If you are unclear whether or not you are in compliance with any of the above-mentioned laws, please contact Handler Law, LLP for assistance.
1 The Netflix case is still pending; in another recent case, a federal court ruled against Amazon for misclassifying its drivers as independent contractors, https://law.justia.com/cases/wisconsin/court-of-appeals/2023/2022ap000013.html.
2 29 CFR 795.110
3 Illinois Department of Employment Security, Employee Misclassification Hurts Businesses and Employees, IDES (2025), https://ides.illinois.gov/employer-resources/taxes-reporting/employee-misclassification.html.