Employee Classification Act - Illinois

Effective January 1, 2008 a new Workers Compensation law went into effect in Illinois. The short title of this act is the "Employee Classification Act". This Act is intended to address the practice of misclassifying employees as independent contractors to avoid paying proper taxes. Several highlights (or low lights) of this act include:

• all subcontractors are presumed to be employees of the general contractor


• the burden of proof that a subcontractor is truly independent lies on the general contractor


• the "test" of subcontractors vs. employees have become more strict


• fines start at $1500 and can double


• a 1st offense is a misdemeanor; additional offenses can be a felony


• a general contractor can be turned in by anyone; if a fine results the whisleblower receives 10% of the fine as a reward


• a legal opinion I have heard recommends hiring only subcontractors that are corporations or LLC's since they are already subject to state regulation.


• information can be shared between IRS, insurance companies and the Dept of Labor in attempts to catch violators.

What does this all mean? If you hire sub's you need to make sure that you conform to the new law. If you are a sub you may want to incorporate or form a LLC to protect yourself.

More information can be obtained by contacting me: Jeff Luken, CPCU

jeffluken@lukeninsurance.com

ph. 618-462-9211

Here is a link to the new law: http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=095-0026

This Blog's Vacation is Over

It is January 7, 2008. With today being the 1st Monday of the 1st full week of January 2008, it is time to get back to business: Renewed energy towards insurance sales and service; My kids are back to college; New Years resolutions to start (diets start; regular excersie) and posting to my Blog to restart.

I started this blog in Dec 2006 as an assignment for my Master in Insurance Management through Boston University. Last January I took a break from blogging; I never intended for it to last this long. So I am rededicating myself to this blog and to posting to it at least twice a week. I also hope to develop a group of readers and bloggers to form discussion groups. It is much more fun when there are readers and posters to interact with, haha.

I am looking forward to a very productive 2008. Good luck to you as well.

Jeff Luken, CPCU, MSIM

Putting My BU Experience to Use

I am pleased to announce that I have been retained by the Embanet Corporation, an online education service provider, to serve as an online teaching facilitator for the Master of Science in Insurance Management program through Boston University. What this means is I will be a facilitator (teaching assistant) for an online class through BU. The upcoming class is titled International Business, Economics and Cultures. For the next seven weeks I will be working with approximately 15 students out of the approximately 150 students enrolled in the class. All of this is done over the Internet and after normal office hours.

I am not sure many of us have realized the power of a quality online education. Access to programs, instructors, and other students is limitless through the Internet. There are no boundaries for enrollment and no student parking fees to pay. Online educational programs can be made meaningful and many highly respected institutions are participating in online learning. For example, besides Boston University which offers several different Masters programs, Rutgers University and Texas Tech both offer PhD programs online.

With the use of the Internet we have only scratched the surface of online learning and I want to be there to help scratch the itch.

Can You Hear That? The Fat Lady is Singing

Well its over, I have completed my exam in eCommerce through Boston University and I am on the plane heading home. What follows are several random thoughts on the entire educational experience.

I am happy that I took the time and went to the expense to travel to Boston University. Even though it was only for a few days, I can say I attended BU. I am looking forward to returning to Boston in May with my wife Carla for graduation.

I plan to offer BU some ideas on how to improve their online educational experience. For example; they should sponsor visits to campus like what I just did. They could arrange accommodations; meal cards; visits to local attractions, and they could charge a fee to even make it profitable. BU needs to adjust their online course schedule slightly to take a few major holidays into account. Most notably would be Easter and Thanksgiving. Both of those holidays usually fall during a course and no allowance is made for family time.

I also plan on putting to use some of the management skills I have learned. I want to further develop our agencies website, possibly offering customers the chance to register as members. Members would be offered additional benefits such as a newsletter; access to coverage explanations, etc. I want to improve our customer service model and our marketing techniques. Its not that I want to be the biggest agency I town, I just want to be the best. When someone has an insurance need they come to me because we provide over-the-top service. I’ll keep you posted as to the progress we make.

Today is Test Day

Well today is test day. I have been studying eCommerce exclusively for the last 3 days. The exam is online and needs to be completed by 11:59PM December 17th. Our group project; an eCommerce website to sell college textbooks has been launched. If interested you can view our site as well as other student's sites for this class by going to: www.ecommerceclass.org In the drop down select: Brian's Class Click Go Section I; Team 3 is our site: University Bookseller.com

Feel free to browse the other Sections (classes) and Teams sites. Several sites are quite good. Not bad for 3 weeks of the class devoted to web development. I know of 1 error in our site, can you find it? Where there more errors? If so, let me know.

As you know, I have been studying at Boston University. It has been interesting. I guess I have been lucky to avoid real winter weather, but knowing my interest in severe weather, I could have enjoyed a real Nor'easter.

Most of the students (kids) have ignored me, but a few have viewed me with curiosity. They have asked if I am faculty, someone doing research, or someone taking college classes late in life. They seem surprised and encouraging when I explain what I am doing (working on a masters degree). The funniest moment came when a cashier at the cafeteria did not believe me when I said I was a student; she gave me the faculty discount. Needless to say I went through her line as often as possible.

It has been fun experience and I need to thank my wife Carla for her support throughout this program and her encouraging me to actually take my last exam at Boston University.

Blog On Vacation? Not Quite

To all of my loyal readers, I will be posting to this blog rather sporadically for the next week to 10 days. You see, I am in my final week of my final class in a Masters program through Boston University. The degree (if I get through this last week) will be a Masters of Science in Insurance Management.

Currently I am in an eCommerce course building a website as a team project. What better example of the power of the internet than this online Masters program. It is interesting to have classmates and team members from all around the world. Although most students are from the U.S. currently I have a classmate from France and I have had a class facilitator (instructor) from Argentina. My current team members working on the website project are from Kentucky, Michigan, 2 from Pennsylvania, and I am in Illinois.

I will try to keep you updated on my team project, and my studying progress. Although it is not required, I am going to the Boston University campus for the last 4 days of this course to study and experience BU. If I have a degree from Boston University, I want to be able to say I have been there, done that.

Wish me luck!

Commercial Insurance Rates Continue to Fall

The commercial insurance market continues to enjoy an outstanding year of profits. The lack of hurricanes this season and increased rates for catastrophe prone areas and has sent profits soaring. With soaring profits insurance companies are lowering rates to retain clients and attrack new clients. According to one market study, insurance rates have fallen for the last 5 quarters and the average rate decrease for October 2006 was 9%.

Every client is different, but in general, if you have had few to no claims for the past year or two, and you have made money for your insurance carrier, you should be seeing a lower premium for your business insurance. If not, talk to your agent, or better yet, talk to me.

For you personal lines clients, pricing on auto and home insurance does not flucuate like it does on business insurance. I will make a note to discuss this again in the future.