The Wage Act: What is it? Are you in compliance?

Most people are unaware of the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et. seq.  However, this statute is designed to ensure that employees and employers are able to contract for their compensation agreement (including salary, deferred comp, stock options, commissions and even vacation pay).  Any Illinois employee and Illinois employer may be subject to the Wage Act, 820 ILCS 115/1 and 820 ILCS 115/2. 

The Wage Act protects employees by ensuring that they are paid all earned wages at time of separation, including vacation pay (on a pro rata basis) as final compensation at the time of separation from employment.  Herron v. Magna Group, Inc., 272 Ill. App.3d 39, 42-43, 650 N.E.2d 675 (5th Dist. 1995).  The Wage Act also ensures that employers are not required to pay unearned compensation that was not covered by a compensation agreement at the time of separation.  Prettyman Commonwealth Edison Co., 273 Ill.App.3d 1090, 1096, 653 N.E.2d 65, 70 (1st Dist. 1995). 

However, a non-complying employer may have to pay the attorneys fees for an employee making and recovering the amount demanded pursuant to 705 ILCS 225/1 and Anderson v. First Am. Group of Cos., 353 Ill. App. 3d 403, 409-10, 412, (1st. Dist. 2004).  This fee shifting provision means a non-complying employer may end up paying more that what it would have paid, if it acted in accordance with the Wage Act. 

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