Illinois Significantly Increases Penalties For Wage Payment Violations

Saul Ewing Arnstein & Lehr LLP

Saul Ewing Arnstein & Lehr LLP

On May 25, 2021, the Illinois legislature passed an amendment to the Illinois Wage Payment and Collection Act that more than doubles the possible damages an employee can be awarded for a wage violation.

The IWPCA generally mandates that an employer must pay its employees all earned wages no less than twice per month and must pay separated employees all final compensation no later than the next regularly scheduled payday. Currently, employers who violate the IWPCA are liable for the amount of any such underpayments and statutory penalties of 2% of the amount of any underpayments for each month during which the amount remains unpaid, as well as attorneys’ fees and costs.

The amendment, once signed by Governor Pritzker, more than doubles the permissible damages, up from 2% per month to 5% per month. The law is effective immediately upon the Governor’s signature.

The spike in potential damages greatly increases an employer’s exposure for a violation of the IWPCA and serves as a reminder to ensure that all wages are properly and timely paid. Moreover, employers who are faced with a wage claim may prefer to explore an early settlement to avoid accruing 5% of the alleged underpayments throughout the life of the case in the event of an unfavorable judgment.

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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