April 21, 2015

Consider the following scenario: You are an employer located in Cook County. Two recently terminated employees filed wage claims with the Illinois Department of Labor, asserting you owed them commissions. You fought the claims, but the Department determined that you owed the money and ordered you to pay. You paid the amounts as directed. End of story?

Possibly not. In a recent unanimous vote, Cook County Commissioners passed the "Cook County Wage Theft Ordinance" that goes into effect May 1, 2015. The ordinance amends various existing Cook County ordinances to provide that a “person or substantial owner” who has admitted liability or has been found liable by a court or administrative agency for violating state and federal wage laws can be penalized by, among other things, being: 

  • Barred from entering into a contract with Cook County.
  • Rendered ineligible to receive a property tax incentive.
  • Disqualified from receiving or renewing a Cook County business license.

Details of the Ordinance and Its Application

The premise for this new ordinance is that employers who "steal" wages due their employees should not be allowed to operate or do business with the County. However, the ordinance has a fairly wide scope. Its punitive measures may apply to any employer located in Cook County who, within the prior five-year period, has admitted or has been "adjudicated to be guilty or liable" in any judicial or administrative proceeding of committing a "repeated or willful violation" of federal or state wage payment laws. The wage payment laws enumerated are the Illinois Wage Payment and Collection Act, the Illinois Minimum Wage Law, the Illinois Worker Adjustment and Retraining Notification Act, the Illinois Employee Classification Act and the federal Fair Labor Standards Act. 

Of additional concern, the ordinance adds that violations of "any comparable state or regulations" governing the payment of wages can also be the basis for disqualifications, without any requirement that the affected employee(s) lived or worked in the County. Therefore, an employer in Cook County who has been found to have violated wage hour laws in another state can still be subject to penalties under the ordinance.
The consequences for an employer can be considerable: 

  • Ineligibility for Cook County Work. Absent a finding of “good cause,” an employer can be barred for a five-year period from entering into a contract with, responding to a request for proposal from, or submitting a bid to Cook County. Furthermore, an employer seeking to contract with Cook County must attest under oath that it has not been found to have willfully or repeatedly violated federal or state wage laws anywhere in the country. If the County finds that, contrary to such attestation, the employer has violated wage payment laws within the United States, it can issue a notice of default under any existing contract.
  • Revoked Property Tax Incentives. An employer requesting property tax incentives from the County similarly must attest that for the past five years it has not been found in willful or repeated violation of such wage payment laws. Unless an express waiver is procured from the Cook County Board, an employer that has been found liable for such violations will be ineligible for such incentives and may be required to pay back to the County any tax savings for received incentives. 
  • Denial of Business Licenses. An employer located in unincorporated Cook County cannot do business without obtaining a two-year General Business License from the County. Cook County may deny, revoke or refuse to renew a license to any employer that has been found to have either willfully violated or committed two or more violations of state or federal wage laws within the past five years.

Lessons to Be Learned: Wage and Hour Violations Can Cost More than You Think

We previously reported on a similar ordinance that was passed last year by the City of Chicago. (See http://www.muchlaw.com/knowledge-center/article/frying-pan-fire-chicago-employers-may-lose-business-licenses-following-wage.) While well meaning, these laws have the effect of raising the stakes considerably for an employer in Cook County in deciding whether it is worthwhile to contest a wage action by an employee. They also provide a means of leverage for unions targeting employers or for disgruntled employees to achieve their ends. 

This ordinance is yet another reason employers in Cook County should be vigilant in auditing their wage and hour practices to make sure they are in compliance with the various wage laws. 

This article contains material of general interest and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Under applicable rules of professional conduct, this content may be regarded as attorney advertising.