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Points of Business Interest – April 2004

Points of Business Interest

»» Landlord – Tenant Rights

The Illinois Appellate Court recently held that a landlord cannot, in a lease, contract with the tenants’ statutory right to interest in a security deposit. The statutory right cannot be waived by an individual in a written lease.

»» Warning To Business Owners

Three new cases show some concerns that business owners should have. As you probably know, the business owner owes a duty of care to maintain his or her premises in reasonably safe conditions, but that duty does not extend to conditions that are “open and obvious.” Recently the Illinois Supreme Court held that the duty may arise even when the hazardous condition is open and obvious if it is foreseeable that the injured party’s attention would be distracted by an intervening event. In Green v. Jewel Food Stores, the plaintiff left the grocery store and encountered a ridge between the sidewalk and the parking lot. While the ridge was open and obvious, the party also encountered an unattended shopping cart coming at her, which she claimed distracted her, causing her to trip over the ridge. As a shopping cart was a reasonably anticipated distraction in a grocery store parking lot, the “open and obvious” exception did not apply and the grocery store could be held liable.

If you are having construction done, and there is a problem giving rise to a claim, you must make sure that all insurers are directly notified of the claim to protect coverage. In another case, there were two insurance companies, one insuring a sub-contractor and the other insuring a sub-sub-contractor, each naming the general contractor as an additional insured. The sub-contractor’s insurance company was able to avoid coverage because it did not receive direct notice of the general contractor’s claim for coverage for a Structural Work Act claim filed against it by someone working for the sub-sub-contractor. The court held that an insurer is entitled to notice of a claim for coverage from the party seeking coverage, and the contractor cannot justifiably rely upon a third party, such as the sub-contractor, to give such notice. In conclusion, if you are an additional insured on a policy, do not rely upon someone else to notify the insurance company. Do so immediately and do it directly.

Many owners seek to save worker’s compensation premiums by having officers withdraw from Worker Compensation Act coverage even though they are also employees. Make sure you read the form closely, as a recent Appellate Court case held that officers who signed the form waiving insurance coverage did not waive coverage under the Worker’s Compensation Act. In this case, it was good because the insurance carrier had to cover the claim, even though the officer’s salary was not included in the premium. The flip side of the coin is that you can be assessed a premium because you failed to adequately exclude officers from coverage under the Worker’s Compensation Act.

»» New and Improved Statutes from the General Assembly

The Equal Pay Act
The Equal Pay Act of 2003 became effective January 1, 2004, and applies to all private employers who employ four or more employees in Illinois, as well as all public employers. The Act prohibits employers for discriminating between employees on wages on the basis of gender, and contains protections, including protection from discrimination or retaliation for employees who pursue relief under the Act. The Act essentially duplicates protections already existing in the Illinois Human Rights Act, but brings these protections to smaller businesses, as the Human Rights Act applies only to employers with fifteen or more employees. It also extends the time frame for bringing claims from 180 days under the Human Rights Act to 3 years.

Construction requirements
The Prevailing Wage Act now requires that contractors or construction managers engaged in prevailing wage protests must post prevailing wage rates in effect for the project at the job site. Another statute on the same topic requires contractors on prevailing wage jobs to insert specific language concerning the Prevailing Wage Act into subcontracts and specifies records that must be kept for audit purposes requiring retention of these records for three years.

»» New Rules on Supplying Information on Employees

Public offices, such as the Illinois Department of Public Aid, obtain location information from employers, labor unions, and others about putative fathers and other non-custodial parents in order to establish paternity or to establish and enforce or modify an existing child support obligation. Many employers have received inquiries in the past concerning employees, but there is now a $100 per day penalty for failure to respond.

»» What to Deduct?

According to the Illinois Wage Payment and Collection Act, an employer can deduct from an employee’s wages or final compensation only deductions that are 1) required by law; 2) to the benefit of the employee, such as health insurance premiums; 3) valid wage assignment or wage deduction order; 4) deductions made with the express written consent of the employee, given freely at the time the deduction is made; or 5) deductions made that are relevant only in the City of Chicago. Accordingly, if you wish to enter into an agreement with an employee to deduct additional money, it must be made by express written consent, freely given at the time the deduction is made. This comes into play in the event that an employee borrows money from the employer or wants to purchase items from a retailer or wants to use company property, such as a cellular telephone or copy machine, for personal use. Rather than offset compensation, which can be dicey, I suggest that the employee pay for the use directly.