October 22, 2014

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October 20, 2014

Employers Beware: The Illinois Wage Payment and Collection Act Is Now More Expansive

With the new year came approximately 200 new statutes and amendments to existing law in Illinois. Employers should take note that among the new and revised laws, the Illinois Wage Payment and Collection Act (IWPCA) has been amended in ways that expand its coverage, increase penalties for violations by employers and make enforcement easier for the Illinois Department of Labor (IDOL).

The IWPCA requires employers to pay their employees within a specific number of days after compensation is earned. For employees who have quit or been terminated, the act also requires employers to pay final compensation at the time of separation (if possible) but no later than the next regularly scheduled payday. Finally, the IWPCA prohibits employers from withholding any amount unless an employee has authorized the withholding in writing. The only exceptions are sums owed pursuant to a valid wage assignment or wage deduction order, as well as insurance and pension payments.

New Small Claims Powers

Prior to the recent amendment, the claims process for alleged violations of the IWPCA moved at a snail's pace. The IDOL investigated claims and subsequently issued findings that addressed whether or not an employer owed wages to a complainant. The findings could only be enforced by the Illinois Attorney General's office.

Now, however, the IDOL has been granted the power to adjudicate claims and enforce judgments totaling less than $3,000 per employee. Alternatively, a claimant may bypass the IDOL altogether and file a complaint in Circuit Court.

Increased Damages and Recovery of Attorney's Fees

Successful claimants are now entitled to recover legal costs, attorney's fees and 2 percent interest from the date the wages are due. This change in the law not only will cost an employer more money, but also is likely to be an incentive for attorneys to represent plaintiffs in IWPCA cases.

Criminal Provisions

The amended IWPCA increases the severity of criminal provisions for violations of the act. An employer—including officers and agents of the employer who knowingly permit violations—that willfully refuses to pay wages or falsely denies the amount or validity of a wage claim can be found guilty of a Class B misdemeanor for unpaid wages totaling $5,000 or less, and a Class A misdemeanor for unpaid wages exceeding $5,000. Additionally, individuals who violate the criminal provisions of the IWPCA a second time in a two-year period may be guilty of a Class 4 felony.

Precautions for Employers

Illinois employers should not take the expansion of the IWPCA lightly. It is more important than ever to ensure that your pay practices are in compliance with the amended law, especially regarding withholdings from employee pay and the handling of an employee's final paycheck. If you have questions about your company's policies, procedures and practices, contact your Much Shelist attorney or a member of the firm's Litigation & Dispute Resolution practice group.

Editor's note: For a more detailed discussion of IWPCA amendments and their effect on employers, see "Illinois Employers Get Ready: New 'Wage Theft' Law Arms Employees with New Weapons in Wage Disputes."

© 2014 Much Shelist, P.C.

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