Client Alert - Employment Law Update
New Illinois Law Increases Penalties for Unpaid Wages
On July 30, 2010, Governor Pat Quinn signed into law the Wage Theft Enforcement Act, which amends parts of the Illinois Wage Payment and Collection Act (the Wage Payment Act). The new law takes effect January 1, 2011, and will affect all Illinois employers.
Under the Wage Payment Act, employers that fail to pay earned wages and final compensation when due are subject to harsh sanctions, including the personal liability of their agents, and can be required to pay the attorney's fees of their former employees. Those sanctions have just become harsher.
Enhanced Criminal Penalties
Under the new law, the willful failure to pay wages will now be a class B misdemeanor for amounts under $5,000 and a class A misdemeanor for larger amounts. Each day during which a violation occurs is considered a separate offense. Repeat offenses within two years of a criminal conviction will be a class 4 felony.
Enhanced Civil Remedies
The new law also expands employers' exposure to class action suits, and claims of retaliation. In addition to eliminating the requirement that an employer "knowingly" discriminated against or discharged an employee for complaining about the nonpayment of wages, the new law adds complaints at "public hearings" or to "community organizations" to protected activities. Most importantly, claimants may now file suit directly in state court for alleged retaliation, and can recover attorney's fees.
Enhanced Administrative Remedies and Additional Penalties
The new law also authorizes the Illinois Department of Labor (IDOL) to establish administrative procedures in order to make binding determinations in cases under $3,000. Previously, the IDOL only had the authority to convene informal conferences to resolve disputes over unpaid wages. In addition, the new law allows the recovery of interest at the rate of 2 percent from the date the wages were due. It imposes an additional penalty of 20 percent of the total amount owed, which must be paid to the IDOL, and a penalty of 1 percent, which must be paid to a claimant, if sums ordered paid are not satisfied or appealed within 15 days. Employers are also required to pay an administrative fee.
What to Do
Wage litigation has always posed risks to employers. However, this new law places increased importance on understanding the potential liability associated with these claims, not just for employers, but also for their officers and members of management.
If you have any questions about how this legislative enactment will affect your business or have questions about your employment policies and practices in general, please contact Mr. Gonzalez at 312-558-9779 or at egonzalez@elvisgonzalezltd.com
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