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Wage Claims Now Pose Greater Threat to Illinois Employers

Labor & Employment Alert Ellen Girard Georgiadis, Andrew F. Hettinga

Employers beware: Illinois employees claiming wage violations are now armed with extra ammo.

Following recent amendments to the Illinois Wage Payment and Collection Act ("IWPCA"), employees can now go straight to state court and file lawsuits without first exhausting an administrative process. And, even if the employee chooses to go to the Illinois Department of Labor ("IDOL"), the IDOL can now - for the first time - adjudicate small wage claims of less than $3,000 and issue penalties.

The amendments also add several enticements designed to make wage claims more appetizing for plaintiffs' attorneys. The amendments now allow employees prevailing on IWPCA claims to recover attorney fees and costs. They also expressly authorize employees to file class action lawsuits, upgrading the appeal of smaller claims. And while the IWPCA always prohibited discrimination against employees who filed claims, the amendments now expressly add an anti-retaliation provision and award attorneys' fees to victorious retaliation claimants.

The IWPCA amendments also create stiffer penalties for "employers" found in violation, especially for repeat offenders. Significantly, the IWPCA's definition of "employer" includes "any individual, partnership, association, corporation, limited liability company … or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee, for which one or more persons is gainfully employed." "Employers" found liable for illegally withholding wages under $5,000 are now guilty of a Class B misdemeanor, and over $5,000 are now guilty of a Class A misdemeanor (up to one year in jail and/or a fine of up to $2,500). Should any "employer" violate the law a second time within two years, the offender is guilty of a Class 4 felony (between one and three years in a state penitentiary and/or a fine of up to $25,000).

Employers who run afoul of Illinois' wage payment law can expect more lawsuits, quicker judgments, and stiffer monetary (and even criminal) penalties. To avoid these landmines, employers should keep in mind some key provisions under the IWPCA:

  • Employers must pay all of the final compensation owed to departing employees - including any wages, bonus payments or earned commissions - in a single payment due by the next regularly scheduled payday after the employee leaves, but no more than two weeks after the end of the departing employee's last pay period.
  • Employers who provide paid vacation must pay departing employees as part of their final compensation for any unused vacation days they've accrued to date.
  • Employers may not make deductions, such as for vacation taken but not yet earned or lost or stolen company equipment, from employee pay (including that final paycheck) without the employee's express written consent
    at the time of the deduction.

Given all of these changes, now is an opportune time for employers to review their practices and procedures for making final payments to departing employees, as well as to take a look at their overall compensation, vacation pay and wage payment systems, to ensure compliance with the IWPCA. If you have questions about these issues or would like help in reviewing your practices, please contact Andy Hettinga at (312) 715-5086 / [email protected], Ellen Girard at (312) 715-5051 / [email protected] or your Quarles & Brady Labor & Employment attorney.

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