Appeal from the Circuit Court of Cook County. No. 01 L 3189 The Honorable Paddy H. McNamara, Judge Presiding.
The opinion of the court was delivered by: Presiding Justice Gordon
Following an informal investigative conference, plaintiff-appellant the People of the State of Illinois ex rel. Illinois Department of Labor (Department), concluded that nurses working for defendants-appellees MCC Home Health Care, Inc. (MCC) and Eduardo Cortez were employees rather than independent contractors. The Department ordered MCC and Cortez to pay the nurses back overtime pursuant to the Illinois Minimum Wage Law (Act) (820 ILCS 105/4(a) (West 2000)) in the amount of $193,560.46. MCC and Cortez withheld payment, and the cause proceeded to trial. The trial court disagreed with the findings of the Department and entered an order granting summary judgment to MCC and Cortez, concluding that the nurses were independent contractors and not employees entitled to overtime pay pursuant to the Act. The Department appeals from the trial court's grant of summary judgment in favor of MCC and Cortez, asking that we reverse the court's order and remand the cause for further proceedings. For the following reasons, we reverse and remand.
MCC is a nursing referral agency that contracts with the State of Illinois, the Illinois Department of Public Aid and the University of Illinois Division of Specialized Care for Children (collectively, the State) to place pediatric nurses in private patient homes to administer home health care. Cortez is the president of MCC, but is not a health care professional. The State reimburses MCC according to the hours its nurses work, and MCC in turn pays the nurses a set hourly rate, taking into consideration its overhead costs.
In 1999, the Department began an investigation based on allegations that MCC and Cortez were in violation of section 4(a) of the Act, which mandates that employers pay their employees a rate of time and one-half their regular hourly wage for hours worked in excess of 40 hours per week. See 820 ILCS 105/4(a) (West 2000). The allegations asserted that between July 1996 and September 1998, MCC and Cortez failed to pay overtime wages to the 65 nurses on its referral roster. A compliance officer from the Department conducted an inspection of MCC's time sheets and pay books and concluded in his audit that MCC and Cortez had violated the Act and were required to pay a total of $193,560.46 in back overtime pay.
On September 23, 1999, an informal investigative conference was held before a Department hearing officer to obtain further evidence and identify the issues in dispute. Although a transcript of that hearing is not included in the record on appeal, the hearing officer's written determination, issued on December 23, 1999, reveals the following.
At the hearing, Cortez testified on behalf of MCC with respect to its daily operations, asserting that the nurses that work for MCC are independent contractors, not employees, and thus, he is not required to pay them overtime pursuant to the Act. In support, Cortez stated that the nurses on MCC's referral roster are free to accept or decline an assignment and that a patient's parent or guardian can accept or decline a specific nurse. Cortez also stated that the nurses record the time they work, and MCC verifies the time and pays the nurses an hourly rate. The nurses maintain their own hours and neither MCC nor Cortez tells the nurses how to perform their duties at the patients' homes. He did state, however, that MCC visits the homes to see if the patient and parent or guardian are satisfied with the services rendered. Cortez testified that these visits are conducted when the assigned nurse is not present at the home. Cortez stated that each nurse is responsible for maintaining his or her own licensing and must provide his or her own uniform. Cortez further testified that nurses do not stay with MCC for "a long time" and that there is no exclusive employment relationship between MCC and the nurses.
Ila Rubens, a nurse who worked for MCC and Cortez, also testified at the Department's informal hearing. She stated that she worked full time for MCC and was paid on an hourly basis. She testified that she was assigned to a supervisor and was told that if she had any problems, she was to seek assistance from that supervisor. Rubens also testified that while she was free to choose her assignments, she worked with only one family for over a two-year period. As for her supplies, Rubens testified that although she received the majority of her nursing supplies from the State, MCC told her what supply company to contact if she needed any other supplies. Rubens also stated that MCC had paid her for vacation time in the past, and she had received an "employee manual."
In its written decision, the Department hearing officer determined that the issue was whether the nurses are employees of MCC, and thereby eligible for overtime pay under the Act, or independent contractors, and thereby exempt from receiving overtime pay under the Act. The hearing officer cited section 210.110 of the Illinois Administrative Code (Code) and stated that the Department's regulations under this Code section concerning the Act require the use of the following six-part test to determine whether an individual is an employee or an independent contractor:
"The Director [of the Department] will consider the following factors as significant when determining whether an individual is an employee or an independent contractor:
[(1)] the degree of control the alleged employer exercised over the individual;
[(2)] the extent to which the services rendered by the individual are an integral part of the alleged employer's business;
[(3)] the extent of the relative investments of the individual and alleged employer;
[(4)] the degree to which the individual's opportunity for profit and loss is determined by the alleged employer;
[(5)] the permanency of the relationship;
[and (6)] the skill required in the claimed independent operation." 56 Ill. Adm. ...