Important Change to the Illinois Equal Pay Act

California Fair Pay Act vs Equal Pay Act, What's the Difference?

An amendment to the Illinois Equal Pay Act (“Illinois EPA”) that took effect January 1, 2022 clarified that the Illinois EPA does not prohibit employers from discussing with job applicants the unvested equity or deferred compensation that the applicant would forfeit upon resigning from the applicant’s current employer.

While the Illinois EPA continues to restrict employers’ ability to ask applicants questions about their compensation, the amendment clarifies that employers may discuss unvested equity and deferred compensation, only if an applicant for employment voluntarily discloses that the applicant would forfeit unvested equity and/or deferred compensation by resigning from their current employer. If an applicant voluntarily discloses that they will forfeit unvested equity or deferred compensation, employers may request that the applicant verify the aggregate amount of such compensation.

Employers and employment recruiters should be cognizant of this important change to the Illinois EPA, particularly given the current labor market. Further, employers and employment recruiters should be careful to not violate the Illinois EPA if the applicant does not voluntarily disclose compensation from his or her prior employer.

Having an experienced employment attorney evaluate your employment issues is critical to avoiding problems resulting from failing to comply with state and federal law. For more information regarding these or similar issues, please contact Mitchell S. Chaban at mchaban@lgattorneys.com or (312) 368-0100.

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Illinois Minimum Wage Law Update – Higher Wages and Stiffer Penalties

On February 19, 2019, newly elected Governor J.B. Pritzker fulfilled a campaign promise and signed legislation that will raise the Illinois Minimum Wage. The law made two major changes:

  • Raised the minimum wage to $15.00 per hour by 2025
  • Significantly increased the penalties for violations of the act – including misclassifying independent contractors

Minimum Wage

Under the new law, the minimum wage will increase annually for all employees over 18. For those employees that are under 18 and work no more than 650 hours in a calendar year, they will be subject to a lower minimum wage.

Businesses that have employees in Chicago or certain Cook County municipalities will need to continue to follow the local minimum wage ordinances which are higher than the Illinois state law. Both the local ordinances update on July 1 and the state law is tied to a Calendar year.

A breakdown of the relevant wage rates is below.

Significant Increase in Penalties for Violations

In addition to the increase in minimum wages across the state, the changes that went into effect on February 19, 2019, significantly increased the penalties for employers that fail to properly pay minimum wage or overtime. This is particularly important for employers that misclassify their workers as independent contractors and may be subject to significant liability as a result of that misclassification.

Under the new law, if an employee is underpaid, they can recover “treble” (three times) the amount of the underpayment. In addition to the treble damages, the statutory monthly damages penalty increases from 2 percent to 5 percent. Finally, there is now an additional penalty of $1,500.00 payable to the Department of Labor’s Wage Theft Enforcement Fund.

Example. If an employee is underpaid $7,500.00 and the employee receives a judgment two years later, the employer will have to pay $33,000 to the employee. The damages are broken down as follows:

  • $22,500 in treble damages for the $7,500.00 of unpaid wages
  • $9,000.00 (at least) in the 5 percent damage penalty
  • $1,500.00 to the Department of Labor

These damages do not include attorneys’ fees, as well as other potential damages under the Federal minimum wage law (FLSA) and the local ordinances.

What does this mean for employers?

Given the significant risk if you are underpaying employees you should evaluate your pay policies and ensure that your company is in compliance. It is important to annually conduct a wage and hour audit to proactively mitigate risk.

Please contact us if you need any assistance complying with the Illinois or Federal Minimum wage and overtime laws at 312-368-0100 or Walker R. Lawrence at wlawrence@lgattorneys.com

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