Illinois and California Enhance Penalties for Wage Claims

Both Illinois and California recently enhanced penalties for wage and hour violations.  In Illinois, Governor Pritzker signed an amendment to the Illinois Wage Payment and Collection Act which more than doubles penalties for wage and hour violations from 2% to 5%, and is currently in effect.  California enacted a bill that makes intentional wage theft a form of grand theft, effective January 1, 2022.     

In Illinois, businesses that do not timely pay employee wages or compensation will now be subject to enhanced statutory penalties of 5% interest for each month of underpayment under a new amendment to the Illinois Wage Payment and Collection Act.  In Illinois, an employee who was not timely paid wages, final compensation, or wage supplements (such as bonus payments, payment for accrued but unused vacation pay, or commissions) will be entitled to recover: 

• The amount of any such underpayments; 

• Statutory damages of 5% per month for each month of underpayment; and 

• Attorney’s fees and costs 

In California, the Penal Code now provides that intentional theft of wages, including gratuities, in an amount greater than $950 from any one employee, or $2,350 in the aggregate from 2 or more employees, by an employer in any consecutive 12-month period is punishable as grand theft.  Grand theft may either be punished as a misdemeanor by imprisonment in a county jail for up to 1 year or as a felony by imprisonment in county jail from 16 months up to 2 or 3 years.  Wage theft is when an employer fails to pay an employee their full wages, including pay for all hours worked or correctly paying overtime.  Under this Code, employees not only include direct hires but also independent contractors, and employers are also defined as the hiring entity of an independent contractor.  The wages, gratuities, benefits, or other compensation subject to the prosecution may be recovered as restitution.  The Penal Code does not prohibit the employee or the Labor Commission from filing a civil action to seek remedies provided under the Labor Code. 

If you have questions about this or any other workforce issue, please do not hesitate to contact your relationship attorney or one of Honigman’s Labor & Employment attorneys.