No. 1-02-1408

FIRST DIVISION
May 5, 2003

PRESIDING JUSTICE GORDON delivered the opinion of the court:

Following an informal investigative conference, plaintiff-appellant the People of the Stateof Illinois ex rel. Illinois Department of Labor (Department), concluded that nurses working fordefendants-appellees MCC Home Health Care, Inc. (MCC) and Eduardo Cortez were employeesrather than independent contractors. The Department ordered MCC and Cortez to pay the nursesback overtime pursuant to the Illinois Minimum Wage Law (Act) (820 ILCS 105/4(a) (West2000)) in the amount of $193,560.46. MCC and Cortez withheld payment, and the causeproceeded to trial. The trial court disagreed with the findings of the Department and entered anorder granting summary judgment to MCC and Cortez, concluding that the nurses wereindependent contractors and not employees entitled to overtime pay pursuant to the Act. TheDepartment appeals from the trial court's grant of summary judgment in favor of MCC andCortez, asking that we reverse the court's order and remand the cause for further proceedings. For the following reasons, we reverse and remand.

BACKGROUND

MCC is a nursing referral agency that contracts with the State of Illinois, the IllinoisDepartment of Public Aid and the University of Illinois Division of Specialized Care forChildren (collectively, the State) to place pediatric nurses in private patient homes to administerhome health care. Cortez is the president of MCC, but is not a health care professional. TheState reimburses MCC according to the hours its nurses work, and MCC in turn pays the nurses aset hourly rate, taking into consideration its overhead costs.

In 1999, the Department began an investigation based on allegations that MCC andCortez were in violation of section 4(a) of the Act, which mandates that employers pay theiremployees a rate of time and one-half their regular hourly wage for hours worked in excess of 40hours per week. See 820 ILCS 105/4(a) (West 2000). The allegations asserted that between July1996 and September 1998, MCC and Cortez failed to pay overtime wages to the 65 nurses on itsreferral roster. A compliance officer from the Department conducted an inspection of MCC'stime sheets and pay books and concluded in his audit that MCC and Cortez had violated the Actand 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 aDepartment 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'swritten 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, andthus, he is not required to pay them overtime pursuant to the Act. In support, Cortez stated thatthe nurses on MCC's referral roster are free to accept or decline an assignment and that a patient'sparent or guardian can accept or decline a specific nurse. Cortez also stated that the nursesrecord the time they work, and MCC verifies the time and pays the nurses an hourly rate. Thenurses maintain their own hours and neither MCC nor Cortez tells the nurses how to performtheir duties at the patients' homes. He did state, however, that MCC visits the homes to see if thepatient and parent or guardian are satisfied with the services rendered. Cortez testified that thesevisits are conducted when the assigned nurse is not present at the home. Cortez stated that eachnurse is responsible for maintaining his or her own licensing and must provide his or her ownuniform. Cortez further testified that nurses do not stay with MCC for "a long time" and thatthere 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'sinformal 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, shewas to seek assistance from that supervisor. Rubens also testified that while she was free tochoose her assignments, she worked with only one family for over a two-year period. As for hersupplies, Rubens testified that although she received the majority of her nursing supplies fromthe 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 waswhether 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. Thehearing officer cited section 210.110 of the Illinois Administrative Code (Code) and stated thatthe Department's regulations under this Code section concerning the Act require the use of thefollowing six-part test to determine whether an individual is an employee or an independentcontractor:

"The Director [of the Department] will consider the following factors assignificant 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. Code