Employment Law Watch : Employment & Labor Lawyer & Attorney : Reed Smith Law Firm

New Enforcement Methods and Civil Penalties

Employees may file claims under the Wage Payment Act with the Illinois Department of Labor ("IDOL") or by bringing suit in state court.  The Wage Theft Enforcement Act makes clear that employees may bypass the IDOL and proceed directly to court, and that such suits may be brought as individual or class actions.  In addition, while current IDOL hearings are relatively informal conferences, the IDOL has now been given the power to establish a formal procedure to adjudicate claims, in final and binding administrative decisions, where the amount sought is no more than $3,000 per employee, including cases where an employer fails to respond to a claim within the short 10-day deadline set by IDOL rules.

The new law also provides additional fees and penalties for employers who lose before the IDOL or in court.  If an employee prevails before the IDOL, then the employer, in addition to any wages that it owes, must pay a $250 administrative fee to the IDOL.  If the IDOL demands or orders that an employer pay any wages, and the employer fails to comply or appeal within 15 days, it must also pay the IDOL a penalty of 20 percent of the total amount owed regardless of the length of the delay, and pay the employee 1 percent of the amount owed for each day it delays payment past the 15th day.  The IDOL may sue the employer to recover any such amounts.

If an employee chooses to proceed in court and prevails, the employer will be required to pay the employee not only his or her wages, but also damages equal to 2 percent of the amount of underpayments for each month past the date on which the wages were due, as well as the employee's court costs and reasonable attorney's fees.  Finally, if the employer fails to comply with or appeal the court order within 35 days, it must pay the IDOL a penalty of 20 percent of the total amount owed, and also pay the employee 1 percent of the amount owed for each day it delays payment.

Enhanced Criminal Penalties

Under the new law, any employer or agent of an employer who willfully refuses to pay wages when due, has committed a Class B Misdemeanor if the amount due is $5,000 or less, and a Class A Misdemeanor for larger amounts, with each day during which any violation continues treated as a separate offense.  If within two years of being convicted of such a crime an employer or agent of an employer again violates that part of the law, it is guilty of a Class 4 felony.  The penalties for such crimes are significant:  each Class A misdemeanor offense is punishable by one year in jail plus a $2,500 fine, while each Class 4 felony offense is punishable by three years in prison plus a $25,000 fine.

New Remedies for Retaliation

The Wage Payment Act now provides that it is a Class C misdemeanor for an employer or agent of an employer to knowingly discharge or discriminate against an employee because the employee complains about unpaid wages to the employer or the IDOL; because an employee has brought a claim seeking to recover such amounts; or because an employee has testified or plans to testify in such a proceeding.  The new law removes the "knowingly" requirement, expands coverage to protect employees who complain in a public hearing or to a community organization, and - most importantly - adds a civil remedy, allowing employees to file retaliation claims with the IDOL or in court to recover "all legal and equitable relief as may be appropriate," as well as costs and reasonable attorney's fees.

Questions

If you have any questions about your obligations with respect to the payment of wages, salaries, bonuses, or vacation pay to any Illinois employees, or how to deal with any such employee who has complained about not being paid all amounts he or she believes are due, please contact the author of this alert or any Reed Smith attorney with whom you regularly work.

The Court’s Decision

The Act provides that an employer is responsible for sexual harassment “by nonemployees or nonmanagerial or nonsupervisory employees only if the employer becomes aware of the conduct and fails to take reasonable corrective measures.” The court read that to mean that an employer is strictly liable for all sexual harassment by its supervisors, even those who have no authority to affect the terms and conditions of the victim’s employment. It rejected the employer’s argument that it should follow the lead of courts holding that under federal law an employer is not liable for supervisory harassment which involves no tangible job action against the victim if the employer “exercised reasonable care to prevent and correct promptly” any harassment, and the employee “unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 765 (1998). The court held that it was bound by the specific language in the Illinois statute, not by federal court decisions interpreting a different law. Because Yanor was neither a “nonemployee” nor a “nonmanagerial or nonsupervisory employee,” the court ruled that the sheriff’s department was liable for his harassment regardless of whether it knew about his conduct or sought to correct it.

The court rejected the argument that strict liability places an unreasonable burden on Illinois employers. First, it noted that an employee still bore the burden of proving sexual harassment, including, for “hostile environment” harassment, that the harasser engaged in “unwelcome sexual advances or requests for sexual favors or any conduct of a sexual nature,” which had “the purpose or effect of substantially interfering with an individual’s work performance or creating an intimidating, hostile or offensive working environment.” Second, the court said that because employers empower their supervisors to act as their “public face,” “are in the best position to train supervisors and make them aware of the law prohibiting sexual harassment,” and can be presumed to have notice of sexual harassment by their supervisors, it was fair to hold employers strictly liable for supervisory harassment. Finally, the court held that as remedial legislation, the Act should be construed liberally to prevent sexual harassment, and that its reading of the Act “ensure that victims have full incentive to report” such conduct without fear of retaliation.

What The Case Means

This decision leaves no doubt that every Illinois employer is automatically responsible for all sexual harassment by its supervisors, whether or not the supervisor has any authority over the victim. Even if the supervisor takes no tangible job action or threatens or promises to do so, even if the employee never reports the harassment to anyone, and even if the employer takes prompt corrective action as soon as it learns about the conduct, the employer will still be liable for the supervisor’s harassment. Whenever any supervisor engages in sexual harassment, therefore, his or her employer may be required to make the complainant whole for any loss of job or position, including all lost wages and benefits, and pay the victim’s compensatory damages, costs, and attorney’s fees. Since 2008, moreover, all cases under the Act can be heard by juries rather than administrative law judges, making harassment cases particularly risky.

It is thus more important than ever that Illinois employers take every possible step to ensure that none of their supervisors engage in any conduct that might be considered sexual harassment. Management should make certain that each and every supervisor receives effective training on proper workplace behavior, understanding clearly what behavior is off-limits. And even though such steps may not provide a legal defense, policies and practices that encourage employees to report any possible harassment without fear of retaliation will not only make for a more civil workplace, but will allow many problems to be resolved before employees feel the need to contact a third party such as a federal or state agency or plaintiff’s attorney.