The new year brings tougher penalties for Illinois employers facing employee claims for unpaid wages as amendments to the Illinois Wage Payment and Collection Act (IWPCA) go into effect on January 1, 2011.
New Causes of Action, Available Remedies
The amendments specifically authorize class actions under the state wage statute, expressly protect employees from retaliation for reporting alleged violations of the IWPCA, and enable employees to recover attorneys’ fees and costs associated with pursuing a wage claim. Prior to the amendments, employees seeking to recover attorneys’ fees in connection with an IWPCA wage claim were required to follow the pre-litigation demand requirements of the Illinois Attorneys Fees in Wage Actions Act and had to recover at least as much in unpaid wages as they had demanded of the employer prior to the litigation before a court could award attorneys’ fees.
In addition to their actual lost wages, attorneys’ fees and costs, prevailing employees also will be entitled to a penalty of two percent of the lost wages for each month following the date of the violation until the wages are paid.
Employees are not the only ones to profit from the amendments, as the administrative penalties have increased. Historically, an employer could ignore an order from the Illinois Department of Labor (IDOL) awarding an employee wages and wait for the agency to sue in state court. Now, under the amendments, if an employee is awarded unpaid wages, whether by the IDOL or a state court, the employer will be subject to a $250 “administrative fee,” payable to the IDOL. Additionally, if the employer fails to comply with either an IDOL demand or court order to pay wages due within 15 days of the demand or order (or fails to timely appeal the IDOL determination), it may be assessed a penalty payable to IDOL of 20 percent of the wages owed and a penalty payable to the aggrieved employee of one percent of the outstanding wages per calendar day, without any cap.
Stiffer Criminal Penalties
The amendments increase the severity of the criminal penalties available under the IWPCA. Employers (including officers or agents of the employer who knowingly permit violations to occur) that willfully refuse to pay owed wages or falsely deny the amount or validity of a wage claim will be found guilty of a Class B misdemeanor (which carries a sentence of up to six months and/or a fine of up to $1,500) if the amount in question is $5,000 or less, and a Class A misdemeanor (which carries a sentence of up to one year and/or a fine up to $2,500) if the amount in question is more than $5,000. For the first time ever, the IWPCA provides for the prospect of a felony conviction, making offenders who are convicted twice within a two-year period guilty of a Class 4 felony (which carries a sentence of one to three years and/or a fine of up to $25,000 for individuals and $50,000 for corporations).
IDOL Adjudicative and Enforcement Powers Over Small Wage Claims
The amendments authorize the IDOL to process and adjudicate wage claims of up to $3,000. Historically, IDOL determinations were not self-enforcing and an employee had to file suit in state court or seek the assistance of the Attorney General’s office to recover under an IDOL determination.
