Illinois New Minimum Wage Law - Business Owners, Be Aware!
Update - just the day after I posted this, on 2/19/19, the governor signed this bill into law.Much has been written on both sides as to the pros and cons of the new $15 minimum wage and how it is phased in under the Illinois Senate Bill 1, which is currently pending signature by the governor and will soon be law. I’m not writing this post to chime in one way or the other about that. The reason for this post is to alert business owners about other provisions of the bill that have been less publicized but are very important. The current Illinois Minimum Wage Act is codified at 820 ILCS 105.
Section 7 of the Act now expressly authorizes the State to randomly audit employers for compliance.
Section 10 authorizes the Department of Labor to make emergency rules under the Administrative Procedures Act to implement the new law as appropriate for enforcement.
Section 11 of the Act already provided for potential criminal charges against an employer (or business owner or officer) for certain violations. The new law classifies as such a criminal offense, a failure to keep payroll records showing compliance with the act and sets a minimum fine of $100 per impacted employee. Note, the changes to Section 7 and 11 combined mean that an employer who does not even have an employee make a claim, could nevertheless be audited and found not to be in compliance in terms of keeping adequate payroll records, and thus be fined under the Minimum Wage Act without having actually underpaid any employees. It is akin to placing the burden of proof on employers who are audited, to prove to the State that you are complying with the law, even if there is no employee alleging to be underpaid. If the employer does not have the records to prove compliance, they could be fined, without needing to prove any underpaid wages.
Section 12 already provides civil damages to an employee who raises a successful claim for underpayment of wages under the Act. The new law beefs this up by increasing the damages from the amount of the underpayment to “treble” (3 times) the amount, and by increasing interest on such underpaid wages from 2% to 5% per month, and says that in addition to paying the employee, the employer/agent also will owe the state a $1,500 as “an additional penalty.” Note Section 12 also already provides for recovery of attorney’s fees.
In short, there were already severe penalties in Illinois law for failing to pay minimum wage, but those penalties are significantly stronger under the new act. It is critical for employers to prepare in advance, not just for scaling in the actual wage increases called for in the new law, but also to make sure proper records are in order and employers are prepared to handle a potential audit, even if no employee has claimed to actually be underpaid.