When an Employee Leaves: The Illinois Wage Act

When an employee leaves an employer under less than amicable circumstances, an employer may be tempted to refuse to pay certain aspects of compensation, such as commissions, bonuses or reimbursements.  After all, an employer may believe that the employee is unlikely to sue for such items, especially if the dollar value is low.  However, the Illinois Wage Payment Act (“Wage Act”), 820 ILCS 115/1 et seq., provides a powerful tool to employees, and can make an employer’s decision to refuse payment an expensive one.

The Wage Act governs, among other things, the payment of wages upon an employee’s separation.  The Wage Act requires that “Every employer shall pay the final compensation of separated employees in full, at the time of separation, if possible, but in no case later than the next regularly scheduled payday for such employee.”   820 ILCS 115/5.  If the employer does not pay, the employee may be able to bring a claim under the Wage Act.  To be able to bring a claim, the employee must be due compensation from the employer under an employment contract or other agreement.  A written contract is not necessary under the act; rather, all that is needed is an agreement to pay wages, which can be demonstrated by past practice.  Landers-Scelfo v. Corporate Office Sys., 356 Ill. App. 3d 1060, 1068 (2d Dist. 2005).

When an Employee Leaves: The Illinois Wage ActThe Wage Act applies to a broad category of payments.  Final compensation under the Wage Act is defined as “wages, salaries, earned commissions, earned bonuses, and the monetary equivalent of earned vacation and earned holidays, and any other compensation owed the employee by the employer pursuant to an employment contract or agreement between the 2 parties.”  820 ILCS 115/2.  The Illinois Department of Labor has promulgated regulations stating that employee reimbursements are within final compensation.  Therefore, all compensation, reimbursements and other amounts due to an employee must be paid to an employee no later than the next regularly scheduled payday.

The penalties for violating the Wage Act can be harsh for an employer.  Not only can an employee receive the compensation owed, but the employer can be required to pay an additional 2% of the amount not paid per month, and the employee’s attorney fees and costs.  820 ILCS 115/14(a).  Officers of a corporation may be personally liable.  820 ILCS 115/13.   Criminal penalties are also available.  820 ILCS 115/14(a-5).
Changes in employment are often rife with legal issues, including restrictive covenants, fiduciary duties owed and questions about intellectual property.  If you are an employer or employee with questions in regard to your rights, it is always advisable to contact an attorney.
For questions regarding the Illinois Wage Act or other employer-employee matters, please contact Senior Attorney Michael Haeberle at mhaeberle@pattersonlawfirm.com or your attorney at The Patterson Law Firm.

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