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  The ILCC Legal Division

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TPP-28:
Employment/Ownership Arrangements Between Classes of Licensees

I. Purpose

This policy defines two issues:

  1. whether employees of one class of license (manufacturer, distributor and retailer) may work for another class of license (e.g. distributor’s employees working for a retail licensee), and
  2. whether a person may own interest in different classes of licensees.

II. Policy

It is the policy of the Illinois Liquor Control Commission (ILCC) to prevent any employment or ownership arrangements between different classes of licensees which violate the “of value” provisions of 235 ILCS 5/6-5.

III. Background

The applicable statutes are 235 ILCS 5/6-4, which prohibits certain transactions and interests between different classes of licensees, and 235 ILCS 5/6-5, which prohibits the giving away “of value.”

IV. Procedure

A. Employment Arrangements

Employees of one class of licensee may not work for another class of licensee. For instance, a distributor’s employee may not work for a retail licensee.

Secs. 5/6-4 clearly prohibits relations where an officer, associate, member, partner, representative, employee, agent or shareholder owning more than 5% of the outstanding shares seeks a license, or to be affiliated with a licensee on another tier.

But actually the inquiry depends on the status and duties of the employee. While an owner, shareholder, manager, etc., on one tier can't be employed on another tier, an hourly employee for one tier may be employed as an hourly employee on another.

Again, allowance of such employment relations is dealt with on a case-by-case basis.

B. Ownership Arrangements

  1. GENERAL RULE - No distiller or wine manufacturer (or any affiliate, agent or shareholder owning more than 5% interest) may be licensed as a distributor or a retailer. No distributor or retailer (or any affiliate, agent or shareholder owning more than 5% interest) may be licensed as a distiller or wine manufacturer [235 ILCS 5/6-4(a)].

  2. EXCEPTIONS
    1. Beer Distributor exception. A distributor, which on January 1, 1985, was owned by a brewer (or any affiliate, agent or shareholder owning more than 5% interest) may own or acquire an ownership interest of more than 5% in a wine manufacturer and be issued a wine manufacturer’s license [235 ILCS 5/6-4(a)].
    2. Grandfather Clause exception. There is a grandfather clause for certain entities licensed prior to June 30, 1947. See 235 ILCS 5.6-4(b)(c)&(d).
    3. Brew Pub Exception. A brewer may receive one retailer’s license for the premises in which he actually conducts the manufacturing business. Such retailer’s license shall permit the sale of beer only on such premises.

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