PI Original Angela Caputo Tuesday March 9th, 2010, 4:06pm

Putting A Stop To Stolen Wages In Illinois

The Illinois Department of Labor estimates that workers reported roughly 10,000 wage theft incidents last year alone. A worker-friendly bill introduced in the General Assembly this year would make it a whole lot easier for state officials to enforce existing labor laws.

In recent years, numerous Illinois companies have made underhanded attempts to stiff their workers on pay or benefits.  The most high-profile example unfolded at the now-defunct Republic Windows and Doors plant in December 2008, where 250 laid-off employees engaged in a successful fight to recoup the money owed to them.  Yet with thousands of workers impacted by wage theft statewide, that outcome is all too rare.

By the Illinois Department of Labor's count, workers reported roughly 10,000 wage theft incidents last year alone. The department itself initially reviewed those claims, before passing them along to the attorney general's office for enforcement. The problem is that the bulk of these cases involved less than $3,000 in back pay and, as a result, they generally fall fairly low on the AG's priority list. As Chris Williams with the Working Hands Legal Clinic points out, "[I]t doesn't make sense to spend so much money" when pursuing the cases is far more costly than the potential payout.

But a worker-friendly bill introduced in the General Assembly this session could make the process a whole lot more efficient and affordable. Under State Sen. William Delgado's (D-Chicago) legislation (SB 3568), the Illinois Labor Department would assume additional power to itself take action on these wage theft claims. Essentially, his bill would grant the department authority to both investigate and issue an enforceable judgment on claims lower than $3,000 per employee, which is required to begin recouping the back pay.

Curtis Black at News Tips sums up how the process would work:

The bill would amend the Illinois Wage Payment and Collection Act to establish an administrative hearing procedure under the Illinois Department of Labor for wage theft claims below $3,000, and would allow employees to recover legal costs if they file successfully for unpaid wages in civil court.

Last week, the measure passed out of committee and could be up for a floor vote as early as today. State Rep. Lisa Hernandez (D-Cicero) has agreed to take the lead on a companion bill in the House. She tells us that there's plenty of reason to be optimistic that the bill will make it to the governor's desk. For starters, it has garnered broad support from within the business community, particularly because companies in good standing know that they simply can't compete with unscrupulous firms that routinely engage in wage theft. Moreover, violators often skip payroll tax payments when they stiff employees of earned income, putting law-abiding businesses at an even greater competitive disadvantage.

Under the bill, the state would drop the hammer on violators. In addition to having to pay workers a penalty of 2 percent per month on outstanding back wages, companies would be subject to a state fine equaling 20 percent of the back pay. Instead of dumping those fees into the general fund (which is currently the case), the revenue would be earmarked for a newly established Wage Theft Enforcement Fund, which would be tapped to cover the cost of hiring hearing officers to handle the increased caseload.  As currently drafted, repeat offenders that owe less than $500 in back wages could also face a misdemeanor charge. Those owing upwards of $500 would face a class 4 felony, which means employers could face multiple years in prisons and fines up to $50,000.

Williams points out that the bill isn't quite a done deal. One sticking point pertains to those criminal penalties and he predicts the monetary threshold may be bumped up. Also, there's an effort under way to amend the bill to reclassify outstanding wages as "secured debt" in bankruptcy cases. That would put workers on par with creditors and lenders who currently receive priority when remaining assets are divvied up.

We'll be following the legislation closely.  Stay tuned.


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