Written Notice Required to Document Change in Pay!

November, 2015
By Nancy E. Joerg, Esq.

Another legal requirement for Illinois employers to follow! The Illinois Wage Payment and Collection Act now requires Illinois employers to provide a written notice to the employee of his/her rate of pay when the employee begins to work for an employer.

Additionally, if the employer changes the rate of pay at some point, a new written notice must be given to the employee. This Illinois law became effective August 22, 2014.

Below is an excerpt from Section 300.630 Records and Notice Requirements of the Illinois Wage Payment and Collection Act which states the following with regard to this requirement:

• An employer is required to notify an employee in writing, at the time of hiring, of the rate of pay. An employee commencing work shall reflect mutual assent to the rate of pay.
• An employer shall not change an agreement regarding the payment of wages and compensation without first notifying the employee prior to the effective date of the change. 
• The employer shall place the arrangement in writing at the time of the change and present the change to the employee unless impossible to do so.

Because of extraordinary circumstances, the immediate placement in writing may not be able to be accomplished, but this inability to do so must be immediately rectified.

An employer cannot rely upon an employee's continued employment as affirmation that the employee consented to an adverse modification of the employee's rate of compensation when the employee was not notified in writing of the modification prior to its effective date.

However, when the employee continues to work after being notified of a change in writing, the employee shall be presumed to have assented to the change, absent evidence to the contrary. An employer may not retroactively adversely affect the wages earned by an employee.

IMPORTANT TIP: Have the employee sign and date a copy of the written notification of salary change, and keep the signed and dated copy in the employee’s personnel file.

Questions?: Contact Nancy Joerg at Wessels Sherman's St. Charles, Illinois office: (630) 377-1554 or email her at najoerg@wesselssherman.com.

Why Can't I Take Money From A Careless Employee's Paycheck in Illinois?!

June 2010
By: Nancy E. Joerg, Esq.

Employers are often astounded and angry to find out they cannot reimburse themselves from an employee's final paycheck for costs and expenses such as damaged or lost property, unearned but used vacation, etc.

There are certain legal pathways under Illinois law to get around these difficult situations, but an employer must be careful to follow the regulations of the Illinois Wage Payment and Collection Act precisely. Every situation involving paycheck deductions must be carefully evaluated under state laws and regulations or the employer may face legal consequences.

Federal and state laws strictly prohibit if and how an employer can deduct from an employee's paycheck. In Illinois, for example, an employer can only deduct from an employee's paycheck if the deduction is:

• To the benefit of, and approved by, the employee (group insurance premiums, credit union transactions, union dues, etc.);
• Required by law (federal and state taxes, social security, etc.);
• In response to a valid wage assignment or wage deduction order (garnishment, child support, etc.);
• Made with the express written consent of the employee, given freely at the time the deduction is made. "At the time" means the deduction(s) will be made on the next payroll after the deduction agreement is voluntarily signed by the employee.

The Fair Labor Standards Division of the Illinois Department of Labor enforces four basic regulations covering most deductions from paychecks: (1) shortages; (2) damaged property; (3) return of employer's property; and (4) cash advances.

Deductions from paychecks need to be done very carefully. Employers need to be aware of the complex web of laws and regulations which prevent an employer from making unilateral deductions from an employee's paycheck. An employee's paycheck is sacred under the law. Once an employee has earned his pay, it is legally protected and employers must treat it accordingly.

Questions about this topic or other management-side labor and employment law issues? Please contact WS Shareholder and Senior Attorney Nancy E Joerg at 630-377-1554, najoerg@wesselssherman.com, or visit our website.

The Question of Mandatory Direct Deposit

July 2010
By: Nancy E. Joerg, Esq.

Many employers call our law firm to see if they can force their employees to use direct deposit. The answer for many states is "No." State laws rule in this area. Interestingly, some states, such as Missouri and Ohio, have no direct deposit laws.

Illinois: The Illinois Wage Payment and Collection Act requires employers to pay each of its employees his/her wages in a form that the employee may readily convert into cash (without the need of a personal bank account), unless an employee freely volunteers to be paid by direct deposit into an account with a financial institution of his/her choice.

This means that an Illinois employer cannot force (by means of company policy) employees to accept "direct deposit" as a method of payment. An employer cannot designate a particular financial institution or currency exchange for the exclusive payment or deposit of a check for wages.

Iowa: An Iowa employer may require a new employee to sign up for direct deposit (to the employee's designated financial institution) as a condition of hire unless the employee's costs of establishing and maintaining that account would reduce wages below the minimum wage; the employee would incur account fees as a result of direct deposit; or the parties are subject to a collective bargaining agreement prohibiting a direct deposit requirement as a condition of hire.

Minnesota: Private sector employers in Minnesota can enroll employees in direct deposit; however, employees may opt out by written notification to the employer. Therefore, mandatory direct deposit is not permissible in Minnesota.

Wisconsin: Wisconsin does not have a law that deals with direct deposit. The Wisconsin Department of Workforce Development (DWD) uses interpretation and inferences from Wisconsin wage and hour laws. The DWD says on its website that a direct deposit system must utilize a Wisconsin facility unless the employee voluntarily chooses a facility that is located outside of the state. This same DWD website states that a mandatory direct deposit system must provide a worker with 100% of his or her wages without the worker incurring any cost to gain access to their pay (check fees, service charges on an account, etc.).

The DWD website further notes that if an employer chooses to institute a direct deposit pay system that is available at the option of the employee, it is immaterial whether or not there are fees associated with obtaining the wages. If the employee chooses to use the direct deposit system, it is assumed that the employee has agreed to pay these fees for the convenience and security of having the wages placed directly into his or her bank account.

Because this direct deposit issue is not addressed in the statutes, a Wisconsin employer may make employee participation in a direct deposit pay program a condition of employment. That is, a Wisconsin employer may require that all new hires agree to participate in a direct deposit system, and be responsible for any fees, as a condition of employment. A Wisconsin employer may also require that established employees participate in a direct deposit system as a condition of continued employment. If a direct deposit is to be made, the employee must still receive a check stub showing the rate of pay, hours worked and the amount of and reason for each deduction.

Because each state sets its own laws regarding direct deposit of employee paychecks, each state has its own approach to related subjects such as "account fees," "opting out," "choosing the financial institution," etc. Contact a Wessels Sherman attorney to discuss questions regarding this subject.

Questions about this topic or other management-side labor and employment law issues? Please contact WS Shareholder and Senior Attorney Nancy E Joerg at 630-377-1554, najoerg@wesselssherman.com, or visit our website.