Under Illinois law, employers need to provide employees with timely and complete payment of earned wages or final compensation without retaliation from employers. Accordingly, the Illinois Wage Payment and Collection Act (IWPCA) imposes various wage-related obligations on employers, such as paying employees within specific time periods and prohibiting deductions from wages without express written consent given at the time of the deduction.
Please note that this is not an article about the minimum wage laws, which have requirements and possible penalties. If you have questions about your rights under the IWPCA or your responsibilities as an employer under Illinois employment laws, please call us at 630-324-6666 to schedule a consultation.
Who Is An Employee For Purposes Of The Wage Payment And Collection Act?
Under the IWPCA, the coverage for employees is very broad. It includes any individual permitted to work by an employer in an occupation. However, the act does differentiate between employees and contractors. To meet the test for a contractor is a high burden, but it can be done. The definition of employee does not include an employee who:
- He has been and will continue to be free from control and direction over his work performance, both under his contract of service with his employer and in fact.
- Who performs work outside the usual course of business or is performed outside all of the places of business of the employer unless the employer is in the business of contracting with third parties for the placement of employees.
- Who is in an independently established trade, occupation, profession or business.
All three prongs must be met for an employee to be considered an independent contractor under the IWPCA.
What Should Be Paid To The Employee Upon Separation?
Upon separation, an employer should pay the “final compensation” to employees. This is defined as wages, salaries, earned commissions, earned bonuses, pay-out earned vacation days and any other benefit that would accrue to the employee based on a contract, employee handbook, or agreement. This also includes any business expense incurred by the employee for the benefit of the business. During the Covid epidemic, this includes the use of personal cellphones, computers, electricity, and Wi-Fi for business use.
Are There Any Requirements For The Creation Of These Payments?
An IWPCA claim must be based on a valid contract or employment agreement. Illinois courts have explained that the concept of an employment agreement under the IWPCA is broader than a contract and requires only a manifestation of mutual consent. Requiring an employee to have a valid, enforceable contract before invoking the act would render the IWPCA meaningless. In addition, employers and employees can manifest their assent to conditions of employment by conducting alone. This means that e-mails, employee handbooks, internal procedures, and actual agreements or contracts between the employer and the employees can create rights for reimbursement or compensation under the IWPCA. However, not all employees may qualify for these benefits. The IWPCA makes an exception for workers who meet three criteria that indicate whether they are independent contractors. All three criteria must be met for the exemption to apply. The IWPCA provides that an employee is someone:
- who has been and will continue to be free from control and direction over the performance of his work, both under his contract of service with his employer and, in fact; and
- who performs work which is either outside the usual course of business or is performed outside all of the places of business of the employer unless the employer is in the business of contracting with third parties for the placement of employees; and
- Who is in an independently established trade, occupation, profession, or business?
This is one of the defenses an employer can bring up for alleged violations of the IWPCA.
Is There A Penalty For Not Making This Payment?
Any employee not timely paid wages, final compensation, or wage supplements by their employer is entitled to recover the amount of any such underpayments and damages of 2% of the amount of any such underpayments for each month is underpaid. In other words, the employer would be liable for $2 in penalties per month for every $100 that they owe their employees.
How Long After The Employee Leaves Can They Bring A Lawsuit Against The Business?
The act allows for the recovery of these underpayments for a period of 10 years.
If you have questions about your rights under the IWPCA or your responsibilities as an employer under Illinois employment laws, please call us at 630-324-6666 to schedule a consultation.
.avif)
.svg){kind=small}
