Compliance Watch:
Penalties for Breaking Illinois Labor Laws

April 12th 2024

Adhering to labor laws is not only a legal obligation but also a fundamental responsibility for employers in Illinois. The penalties for breaking Illinois labor laws are far-reaching, ranging from monetary fines to reputational harm and even business closures.

This article will delve into these penalties and what proactive steps you can take to avoid them. By understanding the key labor laws and their penalties for violation, employers can prioritize compliance and safeguard their businesses and employees from unnecessary legal trouble.

This Article Covers

Most Common Labor Law Violations in Illinois
Penalties for Breaking Illinois Labor Laws
How You Can Avoid Violating Illinois Labor Laws

Most Common Labor Law Violations in Illinois

Labor law violations can have significant consequences for both employees and employers. In Illinois, like in many other states, some labor law violations are more common than others. Here’s a look at some of the most common violations Illinois employers make:

  • Wage Theft: Wage theft refers to the illegal withholding of wages or underpayment of workers. It can take various forms, such as paying below the minimum wage, not providing overtime pay, denying meal and rest breaks, or withholding tips. According to a survey from the Economic Policy Institute, the Illinois State Department of Labor and the Attorney General recovered $4,059,077 of unpaid wages in 2020. This just goes to show the magnitude of wage theft in the state.
  • Misclassifying employees as contractors: Employers may intentionally misclassify workers to avoid providing benefits, paying payroll taxes, and complying with labor protections. Approximately 52,800 construction workers in Illinois, about 20% of the workforce, are either misclassified or paid off the books. This deprives workers of various rights, such as minimum wage, overtime pay, and unemployment insurance.
  • Unsafe workplace leading to injuries: Employers are legally responsible for providing a safe workplace for their employees. However, some employers still neglect to implement adequate safety measures, leading to hazardous conditions and an increased risk of workplace injuries. According to the US Bureau of Labor Statistics, 102,000 nonfatal workplace injuries and 176 fatalities occurred in 2021.

Penalties for Breaking Illinois Labor Laws

The first step to compliance with Illinois labor laws is familiarizing yourself with the legal landscape. By gaining insights into the key labor laws in the state and the penalties for breaking Illinois labor laws, you can proactively address any potential compliance issues and build a solid foundation for a successful business.

Minimum Wage Law

In Illinois, the minimum wage is currently $14 per hour.

However, not all workers will be entitled to receive this minimum wage. Some categories, like minor employees, executives, professionals, administrative employees, and outside sales workers, will have different minimum pay rates.

Tipped employees such as bartenders and delivery people, on the other hand, can be paid a lower minimum wage of $8.40. But this is only provided that their combined tips and the tipped minimum wage total the regular minimum wage of $13. If it falls short, the employer is required to make up the difference.

The good news for employees is that the state has already scheduled increases to the minimum wage for the next few years. The schedule for these increases is as follows:

YEAR MINIMUM WAGE TIPPED EMPLOYEES YOUTHS (UNDER 18) (WORKING LESS THAN 650 HOURS PER CALENDAR YEAR)
01/01/2024 $14 $8.40 $12
01/01/2025 $15 $9 $13
Penalty for Violation

Suppose an employee is paid less than the wage they should receive. In that case, they can take legal action to recover three times the amount of the underpayment, along with the costs and reasonable attorney’s fees determined by the court. The employee can also claim damages equal to 5% of the unpaid underpayment for each month. It would not be a valid defense if the employee agrees to work for a lower wage.

Illinois Overtime Law

The overtime regulations in Illinois are quite similar to those set by the Federal Labor Standards Act (FLSA). Just like the FLSA, Illinois law states that non-exempt employees should be given overtime pay which is 1.5 times their regular hourly rate, for any hours worked over 40 in a week.

Not everyone qualifies for overtime pay. According to the Fair Labor Standards Act (FLSA), certain job positions like executives, administrators, professionals, and outside sales employees are exempt from overtime requirements. To be exempt, the job duties must meet specific criteria, and the employee must earn at least $684 per week.

However, Illinois has some differences compared to the federal standard. Illinois has no exemption for highly compensated individuals who typically earn over $100,000 per year. Instead, Illinois recognizes different exemptions for overtime. These exemptions include the following:

  • Salespeople and mechanics who sell or service cars, trucks, or farm equipment at dealerships.
  • Agricultural labor
  • Executive, administrative, or professional employees as defined by the FLSA.
  • Certain employees are involved in radio/television in cities with populations under 100,000.
  • Independent contractors or workers who have an employment contract.

Learn more in detail about Illinois Overtime Laws.

Penalty for Violation

Current Illinois Governor Pritzker approved a new law in 2021 that holds employers responsible for unpaid wages, final compensation, and 5% of the damages for underpayment each month. 

This is a change from the previous 2% penalty for underpayment according to the Illinois Wage Payment & Collection Act (IWPCA). The IWPCA applies to private employers and local government units but doesn’t include state and federal employees.

Illinois Human Rights Act

When it comes to employment, the Illinois Human Rights Act plays a significant role in combating discrimination. It prohibits unfair treatment based on certain protected characteristics, such as race, color, religion, sex, national origin, age, disability, marital status, sexual orientation, and gender identity.

This means that employers in Illinois are legally required to provide equal opportunities and fair treatment to all employees, regardless of these protected characteristics. It is unlawful for employers to discriminate against job applicants or employees in hiring, promotion, termination, compensation, training, or any other employment-related decisions and practices.

Aside from employment discrimination, the Illinois Human Rights Act also protects people from sexual harassment, discrimination, and retaliation in various areas like housing, loans, public places, and education. 

Penalty for Violation

When a civil rights violation is found, the Commission or a panel of three members can order certain remedies or penalties. These may include:

(A) Cease and Desist Order: The respondent must stop violating the law immediately.

(B) Actual Damages: The respondent may have to pay reasonable compensation for the harm suffered by the complainant.

(C) Civil Penalty: The respondent may be required to pay a penalty to serve the public interest. The amount of the penalty depends on the respondent’s history of civil rights violations:

  • Up to $16,000 for a first-time violator.
  • Up to $42,500 if the respondent has one prior civil rights violation within the past five years.
  • Up to $70,000 if the respondent has two or more civil rights violations within the past seven years. If the same person has previously violated civil rights laws, the penalties can be imposed regardless of the time frame of subsequent violations.

(D) Attorney Fees and Costs: The respondent may have to pay the complainant’s legal and expert fees incurred during the proceedings.

(E) Compliance Report: The respondent must report how they will comply with the law.

(F) Posting of Notices: The respondent may be required to display notices explaining the requirements of the law or other relevant information as determined by the Commission.

Family and Medical Leave Act (FMLA)

FMLA is a federal law that’s very important when handling time off at work. It gives eligible employees the right to take up to 12 weeks of unpaid leave for certain family and medical reasons. For example, if they have a new baby or adopt a child, or need to care for a family member with a serious health issue.

Under the FMLA, employers must keep providing health benefits to employees during their leave, and when they return to work, they should be put back in their old job or a similar one. It’s all about ensuring people can balance work and personal responsibilities without losing important benefits or their position at work.

Penalty for Violation

The Wage and Hour Division is in charge of making sure the FMLA rules are followed by private, state, and local government employees, as well as some federal employees. If violations can’t be resolved satisfactorily, the US Department of Labor can take the case to court to ensure employers comply. If the court favors the complainant, they can order the employer to let them take their FMLA leave and even give them money for damages, including lawyer fees and court costs.

Illinois Equal Pay Act (EPA)

The Equal Pay Act of 2003 makes it illegal for employers to pay men and women different wages for doing the same or very similar work as long as it requires the same skill, effort, and responsibility and is done under similar working conditions.

This rule applies within the same county and for the same employer. The only exceptions are if the wage difference is based on things like seniority, merit, production quantity or quality, or factors unrelated to gender.

The Illinois Department of Labor has released new regulations that outline the rules for employers to follow regarding the Illinois Equal Pay Act Amendments. These amendments, signed into law by Governor Pritzker in March and June 2021, make the Illinois Equal Pay Act one of the strictest laws when it comes to pay transparency.

Under these regulations, employers with 100 or more employees in Illinois must provide employee pay data and a signed compliance statement to obtain an Equal Pay Registration Certificate (EPRC).

Penalty for Violation

If employers break any part of the Equal Pay Act of 2003, they can be charged a civil penalty for each affected employee. These penalties can vary depending on the size of the business and their history of offenses.

For employers with fewer than four employees:

  • First offense: They can be fined up to $500.
  • Second offense: The fine can go up to $2,500.
  • Third or more offenses: The fine can reach up to $5,000.

For employers with 4 to 99 employees:

  • First offense: The maximum fine is $2,500.
  • Second offense: They can be fined up to $3,000.
  • Third or more offenses: The fine can go up to $5,000.

For employers with 100 or more employees:

  • If they violate any part of the law except Section 11 (Equal pay registration certificate requirements), they can be fined up to $10,000 for each affected employee.
  • If they’re a business as defined in Section 11 and violate Section 11, they can also be fined up to $10,000.

Illinois Child Labor Laws

Illinois Child Labor Laws set the rules for workers under 16 years old. It protects children by:

  • Requiring minors to get employment certificates. These certificates confirm that a young worker is old enough and physically capable of handling the job and that working won’t get in the way of their education.
  • Not allowing minors to work in hazardous jobs that could be dangerous for young workers.
  • Setting limits on working hours. Working before 7 a.m. and after 7 p.m. is not allowed. However, during the period from June 1 to Labor Day, working until 9 p.m. is allowed. This may vary depending on the minor’s age and whether it’s a school day or not.
  • Requiring minors working as a performer in art or creative services to have a trust fund set up in their name. 15% of their earnings will be put into this fund to ensure their money is safe and secure.
Penalty for Violation

If an employer breaks Child Labor Laws or any related regulations, they may have to pay a fine. The fine can be up to $5,000 for each violation. This amount can also depend on the size of the employer’s business and the seriousness of the violation.

Occupational Safety and Health Act (OSHA)

Under OSHA, employees have the right to safe and healthy working conditions. Employers must provide risk-free environments. The Illinois State Plan inspects workplaces and responds to complaints when reasonable grounds exist to believe a hazard exists.

Employers are responsible for the following:

  • Training workers about hazards in a language they understand.
  • Preventing harmful exposure to substances like asbestos and lead.
  • Providing free respirators and safety equipment.
  • Supplying healthcare workers with safe needles and sharp instruments.
  • Preventing excessive noise exposure.
  • Offering safety harnesses and lifelines for fall protection.
  • Installing safety guards on machines.
  • Ensuring safety for workers in confined spaces.
  • Preventing trenching cave-ins.

These standards apply to both Illinois OSHA and Federal OSHA.

The State Plan allows employees to report employer negligence or violations to OSHA. OSHA must respond to employee complaints and conduct inspections.

Penalty for Violation

Illinois OSHA enforces safety and health standards by inspecting workplaces. If they find any violations they will issue citations. Workplace inspections can occur regularly in response to danger reports, fatalities, complaints, or referrals.

If the Director believes that an employer has not corrected a violation within the allowed time, they will notify the employer by certified mail or email about the failure and the proposed civil penalty for that failure.

Civil penalties can be as follows:

  • If a public employer repeatedly violates OSHA or any standards, rules, regulations, or orders under this law, they may face a civil penalty of up to $10,000 per violation.
  • If a public employer receives a citation for a serious or non-serious violation, they may face a civil penalty of up to $1,000 for each violation.

Recordkeeping Laws

Illinois employers covered by FLSA must maintain certain records for each non-exempt worker. The records should include identifying information about the employee, as well as data about their hours worked and wages earned. Here are some of the basic records that an employer must keep:

  • Full name and social security number of the employee.
  • Address, including zip code.
  • Birth date, if the employee is younger than 19.
  • Sex and occupation of the employee.
  • The day of the week when the employee’s work week begins.
  • Number of hours worked each day.
  • Total hours worked each workweek.
  • How the employee’s wages are paid (e.g., hourly rate, weekly salary, piecework).
  • Regular hourly pay rate.
  • Total earnings for each day or week at the regular hourly rate.
  • Total earnings for overtime work during the work week.
  • Any additions to or deductions from the employee’s wages.
  • Date of payment and the pay period covered by the payment.

There are federal requirements as well as state-specific requirements that must be followed for the retention of these records. To help address the confusion, here are some general guidelines for keeping records, whether in electronic or paper form:

  • Personnel records: Keep them for seven years after the employee’s termination.
  • Medical and benefits records: Keep them for six years after the plan year.
  • I-9 forms: Keep them for no more than three years after the employee’s termination.
  • Hiring records: Keep them for two years after the hiring decision.
Penalty for Violation

Given the many different laws that govern record keeping in Illinois, the penalties violators may face will also vary.

While the Department of Labor doesn’t impose monetary penalties for FLSA recordkeeping violations, those who knowingly violate the law can face criminal consequences. Criminal sanctions may include fines of up to $10,000, imprisonment for up to six months, or both.

Failure to keep records required by the Illinois Minimum Wage Act, on the other hand, carries a penalty of $100 per affected employee. The penalty amount needs to be paid to the Department of Labor’s Wage Theft Enforcement Fund.

How You Can Avoid Violating Illinois Labor Laws

To ensure compliance with Illinois labor laws, it’s crucial for employers to understand their responsibilities and take proactive measures. By following these simple tips, you can avoid the penalties for breaking Illinois labor laws and create a fair and lawful work environment for your employees.

Tip #1 Familiarize Yourself with the Key Labor Laws

It is essential to have a solid understanding of the labor laws applicable in Illinois. Familiarize yourself with laws such as the Illinois Minimum Wage Law, the Illinois Equal Pay Act (EPA), and the Occupational Safety and Health Act (OSHA). Regularly review these laws to stay updated with any amendments or changes.

Tip #2 Maintain Accurate Records

Keep detailed and accurate records of employee information, including wages, hours worked, and any deductions or benefits provided. Proper recordkeeping will help demonstrate compliance with labor laws and provide necessary documentation if any issues arise. The best way to maintain accurate records is by leveraging the power of time-tracking software. These tools help eliminate discrepancies and provide an accurate account of employees’ time on the job.

Tip #3 Classify Employees Correctly

Properly classifying employees as exempt or non-exempt is one of the first steps for avoiding penalties for breaking Illinois labor laws. Understand the criteria for exempt and non-exempt classifications under the Fair Labor Standards Act (FLSA) and Illinois state laws. Ensure that employees are classified correctly and receive appropriate wages, overtime compensation, and benefits.

Tip #4 Establish Clear Policies

Develop comprehensive and up-to-date policies that comply with Illinois labor laws. These policies should cover areas such as wages, overtime, meal and rest breaks, leaves of absence, anti-discrimination and harassment, workplace safety, and privacy. Communicate these policies to employees through an employee handbook or other accessible means, and ensure that they are consistently enforced.

Tip #5 Respond Promptly to Employee Concerns

Act promptly and seriously when employees raise concerns or complaints related to labor laws. Establish a procedure for reporting grievances and ensure that employees feel comfortable coming forward without fear of retaliation. Investigate complaints thoroughly, maintain confidentiality, and take appropriate action to address any valid concerns. The sooner you can resolve a workplace dispute, the better.

Tip #6 If You’re in Doubt, Seek Legal Advice

Labor laws can be complex, and it is not always easy to interpret and apply them correctly. If you are uncertain about any aspect of labor laws or compliance, it is advisable to seek legal advice from an attorney specializing in employment law. Consulting with legal professionals can help you navigate potential pitfalls and ensure you are in full compliance with Illinois labor laws.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.

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