Gov. Pritzker recently signed a bill into law, which makes employers liable for unpaid wages, final compensation, and 5% of the damages of underpayment per month. This differs from the previous 2% penalty of damages for underpayment under the Illinois Wage Payment & Collection Act (“IWPCA”). The IWPCA covers private employers as well as local government units but exempts state and federal employees.
IWPCA violations generally occur when workers file complaints with the Illinois Department of Labor (“IDOL”) after receiving no payment or an amount lower than their wages. Such violations are oftentimes unnoticed because many of these employees are low-wage workers who struggle to object to wage theft. If an employee brings a claim, the IDOL can then issue a finding as to whether the employer violated the state statute.
The IWPCA’s amendment changes only the severity of the penalty for non-compliance, not the substantive requirements imposed on employers. Among other mandates, the IWPCA generally requires that an employer must pay its employees earned wages no less than twice per month. The IWPCA also mandates employers to pay separated employees all final compensation by the next regularly scheduled payday.
A few other remedies for underpaid workers have remained in place as well. Namely, an employer who fails to timely comply with a demand or final order issued by IDOL is liable for 1) a penalty, payable to IDOL, equal to 20% of the underpayment, and 2) a penalty, payable to the employee, equal to 1% per day of the underpayment. Additionally, any officers or agents of an employer who knowingly permit such employer to violate the IWPCA is personally liable for unpaid wages and related fees.
The IDOL Director, Michael Klenick, has stated that the department is committed to ensuring workers receive their pay. He stated, “The Department always encourages mediation between employers and workers when there is a wage dispute, but the monthly penalty helps hold bad actor employers accountable when they break the law.” Rep. Will Guzzardi led this legislation in the House, and he stated, “This law is a huge step toward deterring wage theft and giving restitution to its victims.” Senate Sponsor Karina Villa also weighed in and said, “Working families across Illinois deserve to be justly compensated and should receive increased damages for cases of wage theft.”
Some have said this amendment could result in companies opting to shift jobs out of state, reduce bonuses or other employee benefits, or otherwise restructure their workforce and policies to reduce the risk of potentially massive lawsuit losses. Others focus on the incentive for Illinois employers to pay employees correctly and keep the records to demonstrate it. An employer who is faced with a wage claim may prefer the option for early settlement to avoid accruing 5% of the alleged underpayments.
The law is effective immediately. For further assistance or information relating to employers’ obligations under IWPCA, please reach out to the attorneys at Rock Fusco & Connelly, LLC.