July 27, 2006

Recent Amendments to the Illinois Minimum Wage Law and Wage Payment and Collection Act

Holland & Knight Alert
Phillip M. Schreiber

On July 14, 2006, Governor Blagojevich signed legislation enhancing the Illinois Department of Labor’s authority to enforce the minimum wage, overtime and wage payment laws. Public Act 94-1025 (SB2339) amends the Illinois Minimum Wage Law (IMWL) and the Illinois Wage Payment and Collection Act (IWPCA). The IMWL addresses minimum wage and overtime pay issues. The IWPCA addresses payment of wages, including final compensation. The amendments are effective immediately.

The amendments to the IMWL give the Illinois Department of Labor the authority to subpoena witnesses and documents in furtherance of its investigations of wage claims, and enhance the remedies available to employees who pursue overtime claims. In addition to recovering the unpaid overtime and attorneys’ fees, employees also will be entitled to recover a penalty equal to 2 percent of the owed wages for each month those owed wages remain unpaid. Prior to the amendments, an employer was subject to a 2 percent penalty only if the action was prosecuted through the Illinois Department of Labor. The amendments also streamline the process by which the Illinois Department of Labor (but not an individual employee) can seek to recover a separate penalty of up to 20 percent of the total underpayment in an action brought by the Illinois Department of Labor by showing that the employer’s unlawful conduct is willful, repeated, or with reckless disregard of the statute.

The amendments to the IWPCA restore a penalty of 1 percent per calendar day against employers who disregard a demand from the Department of Labor to pay an employee his or her earned wages and/or final compensation.

These amendments impose potentially severe financial liability on employers who fail to comply with their minimum wage, overtime and wage payment obligations created by Illinois law. They also provide further incentives for employees and plaintiff’s counsel to bring class action lawsuits under the IMWL. Employers must comply not only with the federal Fair Labor Standards Act wage law, but also Illinois law. The recent amendments provide an excellent opportunity for Illinois employers to review their wage and hour policies to make sure they comply with federal and Illinois law.

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