Illinois Passes Law Increasing Penalties For Underpaying Employees

On July 9, 2021, Illinois Governor J. B. Pritzker signed into law House Bill 118, which amends the Illinois Wage Payment and Collection Act by increasing from two percent (2%) to five percent (5%) the per month penalties that employers face for failing to timely pay wages, final compensation, or wage supplements earned by an employee.

Under the Illinois Wage Payment and Collection Act, an employee is entitled to recover their unpaid wages and final compensation through a claim filed with the Illinois Department of Labor or in a civil action. In addition to any recovery for underpayments of wages, final compensation, and wage supplements, an employee also may recover damages of five percent (5%) of the amount of those underpayments per month following the date of payment during which the underpayments remain unpaid. The previous version of the law only allowed employees to recover two percent (2%) of the amount of the underpayments.

Employers should be careful to ensure they are paying employees their wages, final compensation, and any wage supplements as there can be significant exposure in these cases in addition to the increased penalty. For instance, employees also are entitled to recover their cost and all reasonable attorney’s fees in a civil action, and an employer could owe administrative fees to the Illinois Department of Labor that can exceed ten thousand dollars ($10,000). Periodic audits of pay practices are highly recommended to ensure compliance with applicable laws concerning the payment of wages and minimize potential risk.

The St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters for over sixty years and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.