Illinois More than Doubles Penalties for Wage & Hour Violations

Franczek P.C.

Franczek P.C.

Wage and hour violations in Illinois just got a lot more expensive. On Friday, July 9, 2021, Governor Pritzker signed an amendment to the Illinois Wage Payment and Collection Act that increases the penalty for underpaying wages from 2% of the amount of the underpayment per month to 5%. That may not sound like a lot, but it adds up fast.

Suppose a former employee claims that their employer failed to pay them $5,000 in vacation pay upon separation from employment. Employees have up to 10 years to file a lawsuit under the Act, so it may be several years before the claim is even filed, let alone before it works its way through the legal system. Assume optimistically that the claim is filed immediately and is resolved in the employee’s favor two years after the employee’s termination. Previously, the employee would be entitled to recover the original $5,000 plus an additional $2,400 (2% of $5,000 per month x 24 months) in statutory penalties. Under the amended law, the penalties would be $6,000, more than double the original amount due. The employer would also be on the hook for the employee’s attorneys’ fees, in addition to its own defense costs and other penalties.

This change brings the penalty provisions of the Wage Payment and Collection Act in line with earlier amendments to the Illinois Minimum Wage Law. However, the Minimum Wage Law provides for employees to recover triple the amount of any wages due, in addition to the 5% penalty. The amendment to the Wage Payment and Collection Act does not include a treble damages provision.

The message for Illinois employers is clear: wage and hour claims can cost you dearly. Make sure you pay your employees correctly and keep the records to prove that you did so.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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