Many companies in Illinois attempt to limit their exposure to liability through the use of independent contractors or subcontractors. However, the theory of “apparent agency” has long been recognized in Illinois law as a way to extend liability to the principals for the actions of these contractors. Although the doctrine of apparent agency has a long history, Illinois courts have seldom had the chance to review the law on an appellate level, but an Illinois Appellate Court case provided the Court with the opportunity to review the theory of apparent agency in the context of claims brought under the Illinois Wage Payment and Collection Act.
New amendments to the Illinois Wage Payment and Collection Act allow a successful plaintiff to obtain both attorneys’ fees and 2% interest per month on the amount of wages owed to the plaintiff. In Thomas v. Weatherguard Construction Co.,[1] the plaintiff sued Weatherguard in order to recover over $50,000.00 in damages. However, the plaintiff was not actually employed by Weatherguard, but rather was employed by a marketing firm that Weatherguard had hired to draw in customers. The trial court subsequently found the plaintiff to be an employee of Weatherguard, not the marketing firm, and entered a judgment in the plaintiff’s favor for less than $10,000.00 in damages. However, the trial court denied the plaintiff an award of his attorneys’ fees and the 2% per month interest penalty.
On appeal, the appellate court discussed the elements of apparent agency and determined that apparent agency existed. Specifically, the three elements are as follows: first, whether the principal business acted in a manner that would lead a reasonable person to believe the individual at fault was an employee or agent of the principal; second, whether the principal had knowledge of or acquiesced in the agent’s acts; and, third, whether the injured party acted in reliance on the principal’s conduct. The appellate court affirmed the district court’s ruling that plaintiff and Weatherguard had an apparent agency relationship because the marketing firm for which plaintiff worked used Weatherguard’s logos on business cards and uniforms as well as occupying shared office space.
Because plaintiff’s lawsuit arose before the amendments to the Illinois Wage Payment Collection Act were enacted, the trial court stated that the plaintiff was not able to recover attorneys’ fees or the 2% per month interest penalty. The appellate court agreed in part because traditionally statutes cannot be retroactively applied when a statute exposes a defendant to new liabilities. However, Illinois courts do agree that if a statute does not subject the defendant to new liabilities or substantially change the law, then the new statute can be applied retroactively. In this case, the plaintiff was still entitled to attorneys’ fees under the Illinois Attorneys Fees in Wage Actions Act at the time of filing. However, the Court found that the 2% per month interest penalty subjected Weatherguard to new liabilities and hence could not be applied. The appellate court ultimately affirmed the trial court’s award for damages and sent the case back to the trial court to award the appropriate attorneys’ fees.
This case makes clear that a company cannot limit its liability purely through the use of an independent contractor or sub-contractor – the relationships and actions between the parties matter and can be costly for Illinois businesses. The attorneys at Rock Fusco & Connelly are able to provide comprehensive risk management evaluations to avoid these types of costly and unexpected mistakes.
[1] 2015 IL App (1st) 142785