The Illinois Wage Payment and Collection Act protects the rights of employees to receive their due compensation. The Act requires employers to pay all wages due, including hourly and salary pay, no later than the employee’s regular payday, regardless of whether the employee has been terminated. In cases of termination, the reason for separation cannot be used as a reason to withhold payment. For example, an employer cannot withhold an employee’s final paycheck because the employee did not complete enough work or because the employing unit did not like something the employee said. Final paychecks also cannot be withheld because the employee did not give notice.

The Act also covers unused vacation pay, commissions, bonuses, and fringe benefits. The monetary equivalent of any unused vacation days must be paid to an employee on the day the employee receives his final paycheck. Any bonuses, commissions, and benefits due to the employee must also be paid at that time.

Wage payments must be made on a semi-monthly basis, according to the Act. Exceptions are executives, administrative, and professional employees as defined by the Federal Fair Labor Standards Act of 1938. Employers are also required to disclose the amount of pay and when payments will be disbursed at the time of hire. Employers must also post notices indicating where and when paychecks are disbursed.

The law also prohibits employers from making deductions from an employee’s paycheck except under specific circumstances. Deductions are permitted if the law requires them, to the employee’s benefit, part of a valid wage deduction, by certain entities for certain debts, to correct an overpayment, or with the employee’s consent.

Who is covered by the Act?

This law governs all Illinois employers and local government units. State and federal employees are exempt from this requirement, but they are covered by other state and federal regulations.

For the Act to apply, the employee must have performed the work in Illinois. For example, an Illinois truck driver who works outside of Illinois would not be covered under the law; however, it is important for employers to note that the truck driver’s pay will be covered under other regulations, either at the state of federal levels.

Independent contractors are also not covered by the Act; however, just because the employing unit classifies a worker as an independent contractor does not necessarily mean that the worker is an independent contractor within the meaning of the Act. The Illinois Department of Labor makes its determination as to what constitutes independent contractor status.

What are the penalties for violating the Act?

If an employer is found liable under the Act, it must pay the wages plus interest of 2% per month. The employer also bears responsibility for the plaintiff’s legal costs. Company officers or agents can also be held individually liable for violations.

Claims under the Act can be brought through the Illinois Department of Labor or filed in state court. To have a defensible position, the employer must show that they have paid the employee all monies due and that any additional money claimed is not due within the meaning of the Act. For assistance with employment law issues, we recommend contacting the Chicago law firm of Roth Fioretti (www.rothfioretti.com).