What’s New This Year for Employers

Many employers may not be aware of this law, called the Illinois Wage Payment and Collection Act, which limits the authority of the employer to withhold compensation from employees.  This law, which has been on the books for many years and was recently amended, requires that employers pay their employees compensation within a certain number of days following the pay period in which the compensation is earned.  In addition, the law requires employers to pay all employees who have quit or have been terminated their final compensation at the time of their separation from their job or by the next regularly scheduled payday for their employees.  Final compensation includes wages, salaries, earned commissions, earned bonuses, the monetary equivalent of earned vacation days and holidays and any other compensation due to the employee.

This may seem pretty straightforward, but where many problems appear under this law is where the employer attempts to withhold any amounts from those wages.  The law only allows the employer to withhold taxes and other withholdings required by law, insurance or pension payments or other sums that benefit the employee, sums pursuant to a valid wage assignment or wage deduction order, such as a garnishment for child or spousal support.  In addition, the law allows the employer to deduct from wages any amounts that the employee voluntarily agreed to in writing to be withheld.  The employer is not allowed to deduct any cash or inventory shortages, vacation pay advances or loans unless the employee has previously agreed to such withholding in writing.

What some people may not know is that the officers of a corporation who knowingly permit the employer to violate the act are personally liable under the law.  A former employee files a claim with the Illinois Department of Labor and if that agency agrees, the Illinois Department of Labor will issue a wage order against the employer.  Although this order may be appealed to the circuit court, the employer cannot bring in any evidence before that court.  Instead, under the new law, the employer will try the case before the Illinois Department of Labor in order to preserve their rights.

If the employer does not comply with the final decision issued by the Illinois Department of Labor, there are financial penalties assessed.  In addition, for employees who prevail in a private civil action, these employees are entitled to attorneys’ fees and costs, plus damages of two percent of any underpayment of wages in the decision for each month that such amounts are unpaid.  The employee can also try claims of retaliation before the Illinois Department of Labor or state circuit courts.  If the employee prevails, they may be entitled to money damages, in addition to equitable relief, and attorneys’ fees and costs.  There are also criminal penalties that involve jail time, as well.

It is important for employers to review and update employment policies, contracts with individual employees and collective bargaining agreements to make sure that these comply with the law.  In addition, the employer should make sure that any forfeiture provisions of pay or caps on vacation days comply with this law and make sure that all wages and bonuses are paid out according to this law.  It is also important to make sure that the employee has a copy of all policies or documents concerned with this law and have a signed copy of a receipt that the employee received a copy of the same.

When there is personal liability for the officers of the business, and there may be jail time in the event that the law is not followed, it is important to make sure that you comply with this law.