The Illinois Wage Payment and Collection Act (the “Act”) requires employers to pay every employee all wages earned. Upon separation from employment, the employer is required to pay the final compensation of the employee in full, if possible, but no later than the next regularly scheduled payday. Should an employer fail to make such payment, the Act imposes penalties and individual corporate officers may be held personally liable for such non-payment of wages.

The Amendment

On July 9, 2021, Governor Pritzker signed an amendment to the Act that will substantially increase penalties for businesses and employers who violate the Act. Prior to the amendment, an employee who was not timely paid wages could recover 2% of the underpayment for each month it remained unpaid. That penalty amount is now 5%.

A claim for violation of the Act may be filed through a private civil action or with the Illinois Department of Labor. In a civil action, if the employer is deemed liable, the employee may also recover costs and attorneys’ fees. The employee has five (5) years to file a claim under the Act. Other penalties under the Act allow for misdemeanor charges. Repeated offenders under the Act may be found guilty of a Class 4 felony, if the violation occurs within a two (2) year period of a prior conviction under the Act. These penalties can apply to business owners as well as anyone involved in the hiring and payment process.

Collectively, these penalties and potential punishments are especially important to consider, now more than ever, with the substantial employee turnover occurring in the marketplace in 2021. Businesses of all sizes need to familiarize themselves with the Act and ensure they are paying employees appropriately.

The Act Underlined

Final compensation includes unused vacation time and holidays, as-of-yet unpaid wages and commission, earned bonuses, and other contractually negotiated compensation the employee would have earned. The Act requires this compensation to either be paid at the time of the employee’s departure or within the next payment cycle.

Employees are also guaranteed compensation for necessary business expenditures, which are reasonable expenses directly related to employment duties for the benefit of the employer. This covers expenses authorized by the employer, and does not extend to losses that were not authorized, losses due to theft, and losses that stem from one’s own negligence. Expenses incurred by employees in the remote work environment, all of which were necessary for the discharge of their employment duties, are arguably covered by the Act.

Any deductions to an employee’s paycheck and to final compensation are subject to strict limitations. Deductions not expressly permitted by the Act or required by law are prohibited.

Finally, the Act stipulates that employers must disclose wages and rates of pay at the time of hiring, and notify employees before any changes to wages occur.

If you have any questions about the Illinois Wage Payment & Collection Act, or are interested in conducting an audit of your employment practices to ensure compliance with the law, Golan Christie Taglia’s Employment Law team is available to assist.