Employment Law Updates - Wage Payment & Collection Act, Equal Pay Act, OSHA, Non-Compete Agreements
july 27, 2021
New Bill Amends Wage Payment and Collection Act
Governor JB Pritzker recently signed into law an amendment to the Illinois Wage Payment and Collection Act, outlined in PA 102-C050. The amendment to the Act can be found here. Employers in Illinois who violate the Act are now subject to larger penalties.
An employer who violates the Act is liable for the unpaid wages and final compensation in addition to 5% of the damages of underpayment per month, for each month during which wages or final compensation remain unpaid. 820 ILCS 115/14. Previously, employers owed 2% of the damages from underpayment. This penalty is a 150% increase.
Employers should review their policies and procedures to ensure that their pay practices are fully compliant with the Act. To ensure compliance, employers should timely pay wages, final compensation, or wage supplements to employees at least twice a month.
Equal Pay Act Amendment
The Illinois Equal Pay Act has been amended, as outlined in SB1480. As of March 23, 2024, every private business with more than 100 employees in Illinois must certify compliance with the Equal Pay Act. To comply, businesses must obtain an equal pay registration certificate between March 24, 2022 and March 23, 2024 from the Illinois Department of Labor. All business must recertify every two years thereafter.
To apply for an equal pay registration certificate, businesses must submit to the Department of Labor:
1. An equal pay act compliance statement that is signed by a corporate officer, legal counsel, or authorized agent of the business (which states that the average compensation for its female and minority employees is not consistently below average compensation and that they comply with the Illinois Equal Pay Act, the Illinois Human Rights Act, and their federal counterparts);
2. A list of all employees during the previous calendar year that is separated by gender, race, and ethnicity;
3. If the business is required to submit a EEO-1 report to the Equal Employment Opportunity Commission, then a copy of the report;
4. A disclosure of the total wages paid to each employee in the previous calendar year; and
5. A $150 filing fee.
The Illinois Department of Labor will provide additional guidance regarding the application process.
Private employers with more than 100 employees should begin preparing to comply with these new requirements. Employers should review their compensation practices while keeping the Illinois Equal Pay Act in mind, and if needed, take the appropriate steps to eliminate any shortcomings of these requirements to ensure that they will obtain the Equal Pay Registration certification before March 23, 2024.
The amendment to the Act can be found here.
OSHA Issues Virus Guidance
OSHA recently published new guidance which distinguishes between workers who are vaccinated and those who are not. That distinction recommends that employers implement interventions to protect unvaccinated or other at-risk workers, such as paid time off for vaccination, telling symptomatic employees to stay home, physical distancing, staggered work schedules, ventilation improvements, and barriers.
OSHA remains silent on employers’ methods for verifying workers’ vaccination status, the use of personal protective equipment, and whether those who contracted COVID-19 over the past 90 days, but are not vaccinated, can be treated as vaccinated workers. OHSA’s vagueness results in uncertainty for employers as they attempt to determine how to navigate the public health, safety, and equal opportunity employment law, and other legal constraints in their specific workplaces.
Significant Changes to Non-Compete Agreements in Illinois
On May 31, 2021, the Illinois Freedom to Work Act was partially amended to change the legality of non-compete agreements. If Governor Pritzker signs SB0672 into law, it will take effect as of January 1, 2022. A copy of the bill can be found here.
The proposed bill prohibits non-compete agreements for employees who earn less than $75,000 per year and further prohibits non-solicitation covenants unless the employee's actual or expected annualized rate of earnings exceeds $45,000 per year. Yearly earnings will increase under the bill beginning in 2027.
The bill defines a non-compete agreement as an agreement between an employer and an employee that restricts the employee from performing: “(1) any work for another employer for a specified period of time; (2) any work in a specified geographical area; or (3) work for another employer that is similar to employee’s work for the employer included as a party to the agreement.” Non-compete agreements do not include confidentiality agreements, agreements prohibiting the use of trade secrets, agreements between an employer and employee requiring advanced notice of termination of employment (where employees remain employed), or agreements where the employee agrees not to reapply for employment to the same employer.
New protections for employees are also covered under the proposed legislation. Non-compete and non-solicit agreements are considered illegal and void if the employer does not advise the employee in writing to consult with an attorney before entering the agreement, and the employer must give the employee at least 14 calendar days to review the agreement. A non-compete agreement may also be considered illegal and void where employees are covered by: a collective bargaining agreement under the Illinois Public Labor Relations Act, the Illinois Education Labor Relations Act, and employees in construction. The bill provides that in some circumstances, a court may use discretion to choose to reform or sever provisions of a non-compete agreement or non-solicit covenant rather than hold it unenforceable.
The proposed bill protects employees impacted by COVID-19 and provides that non-compete agreements and non-solicit agreements will not be enforceable against employees who were terminated or furloughed due to COVID-19 or circumstances similar to the COVID-19 pandemic. However, in this circumstance, non-compete agreements are allowed if it includes compensation that is equivalent to the employee’s base salary at the time termination.
The bill further provides that an employee may recover from the employer all costs and all reasonable attorney’s fees if an employer files a lawsuit against an employee and the employee prevails on a claim to enforce a non-compete agreement or a non-solicit agreement.
Several definitions and clarifiers are also provided. Adequate consideration is considered when the employee worked for the employer for at least 2 years after the employee signed an agreement containing a non-compete agreement or non-solicit agreement, or the employer provided consideration that is adequate to support a non-compete agreement or non-solicit agreement. Consideration can include a period of employment plus additional professional or financial benefits that are adequate by themselves. In addition, when determining the legitimate business interest of the employer, the totality of the facts and circumstances of the individual will be considered. These factors may include, but are not limited to, the employee’s knowledge of confidential information through the employee’s employment and the employee’s exposure to the employer’s customer relationships.
Non-compete and non-solicit agreements are one way for employers to manage competition and protect legitimate business interests. Employers should consider reviewing their employment policies to ensure proper protection and consider future utilization of confidentiality provisions and agreements that prohibit the use of trade secrets.
For questions relating to any of these bills or acts, please contact any of the Heyl Royster Employment Law Practice attorneys.
Special thanks to Katelyn Schwiderski and Jessica Pullen, summer associates in the Peoria office, for their assistance with this article.
