Stiffer penalties for Illinois wage theft

Over the summer, the State of Illinois and the city of Chicago both took action against wage theft. The Illinois legislature proposed an amendment to the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq., which was signed into law and made effective on July 9, 2021. Employers who fail to timely pay employees their wages, final compensation or wage supplements will be required to pay not only the amount of any such underpayment but statutory damages of 5% of the amount of the underpayment for each month that payment remains unpaid. In a private civil action, the employee also can recover their costs and reasonable attorney’s fees.

These penalties can add up, especially since employees have up to 10 years to file suit. The new stiffer 5% penalty aligns the Wage Payment and Collection Act with the penalties provided by the Illinois Minimum Wage Law, 820 ILCS 105/1 et seq. In early 2019, Illinois amended the Minimum Wage Law to increase the statutory penalty on unpaid wages from 2% to 5%. In addition, in a Minimum Wage Law Act suit, employees also can recover three times the unpaid wages.

Chicago also took statutory action to protect against wage theft. The Chicago City Council indicated that its new Wage Theft Ordinance was created to “help recoup the nearly $400 million in wages stolen from Chicagoland workers each year.” On June 25, 2021, the Chicago City Council amended its Paid Sick Leave Ordinance to create a new cause of action for wage theft, 6-105-050 – 6-105-120. The new wage theft protections became effective on July 5, 2021.

The Chicago City Council explained that the Wage Theft Ordinance is a part of the Chi Biz Strong Initiative which the City Council described as “a bold plan to jumpstart business growth, protect workers, and set the marketplace on a path towards a strong, rapid, equitable, and long-lasting economic recovery.” Under the Wage Theft Ordinance, an employee can recover unpaid wages by filing claims either with the Office of Labor Standards or in a civil action filed in the state court. Employers will be liable when they fail to timely pay their employees for wages due for work performed, for time off required by the sick leave ordinance or for employee benefits required by contract. Liable employers will be required to pay the amount of the underpayment (three times in a private action) and 2% of any underpayment for each month following the date of payment during which the underpayments remain unpaid or the amount specified by the Illinois Wage Payment and Collection Act, whichever is greater.

Because the statutory penalties under the Wage Payment and Collection Act are now 5% per month, that rate will apply. In a private action, the unpaid employees can also recoup their costs of filing suit and their reasonable attorney’s fees. Chicago employers also are required to post and disseminate a new notice advising employees of their rights to seek recovery for wage theft. In addition, if employers have other wage violations with the U.S. or Illinois Departments of Labor, they might also lose their Chicago business licenses.

With these new heightened penalties, Illinois employers should take care to ensure that they timely pay their employees. For help in understanding these changes to Illinois wage law, contact a Chuhak & Tecson Employment attorney.

For more information contact Ryan Haas (312 855 4614), principal and general counsel.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.