Client Alert - Employment Law Update
Illinois Department of Labor Quietly Makes Changes to Wage Regulations
On August 22, 2014, the Illinois Department of Labor revised the regulations implementing the Illinois Wage Payment and Collection Act ("the Wage Act"). It did so without so much as a press release or other customary announcement.
The Wage Act and the New Regulations
The Wage Act regulates the payment of wages by employers in Illinois. Importantly, it provides for personal liability of owners, officers, managers, and other individuals directly involved in the failure to make required wage payments. It also provides for the recovery of attorney's fees, interest, and penalties.
Under the regulations, employers must now comply with various new requirements. First, employers must notify employees of their rate of pay upon hiring, which must be in writing "whenever possible." Employers must also provide written notice every time an employee's rate of pay changes unless doing so is "impossible." In addition, employers must now keep records of time worked for both exempt and non-exempt employees, and must keep receipts for any cash payments made to employees.
With respect to separation, the regulations also now include expense reimbursements as part of compensation that is due an employee at the end of an employment relationship. In what may be the most sweeping change, the regulations now also may require severance payments upon separation if it is "an established practice of the employer" to do so.
Finally, the regulations expand on the distinction in the Wage Act between agreements and contracts. As explained in an earlier Client Alert, an employee need not show a legal contract in order to recover wages under the Wage Act. Instead, he or she must simply show an agreement, which is a far lower legal threshold. Importantly, the regulations now allow for an employer's handbook or conduct, including "past practice" to be used as evidence of such an agreement.
What to do
Given the prevalence of wage and hour litigation, employers should be mindful of ever-changing regulatory requirements. In addition to reviewing their wage payment and record-keeping policies to ensure compliance with the new regulations, employers are well served to review their practices concerning employee separation.
If you would like more information about these developments, or have questions about your employment policies and practices in general, please contact Mr. Gonzalez at 312-558-9779 or at egonzalez@elvisgonzalezltd.com.