Human Resource Blog

Where HR Professionals Seek Answers

A Practical Source For Your Daily HR Needs.Lets Build An HR Blog Community Together! Want To Share Your HR Knowledge Or Gain Knowledge Through Other Professionals?Lets Discuss HR!

Apr17

Insufficient Funds to Cover Paycheck in Illinois

Compensation
Employee Payroll Action Form
W-4 Employee Withholding Allowance Cert.
Employee Payroll Status/Change Form
Direct Deposit Form
Total Compensation Summary
Labor Laws
Complete State & Federal Labor Law Posters
1 Year Compliance Protection Plan
State ONLY Labor Law Posters
Federal Labor Law Posters

Illinois Paychecks have bounced 3 times in a row. It has caused workers to be late with payments causing late fees and increased interest rates for some to go to 20-30% (credit cards). The small company owner says the employees just have to wait. Now he’s threatening a month layoff for everyone.

Under both federal and Illinois law, paying employees with a check that bounces, is the same as not paying employees. It’s a violation of the federal FLSA, the Fair Labor Standards Act or minimum wage law. That’s because paying an employee nothing, is paying less than the minimum wage.

Illinois also has a minimum wage law, which the employer is violating.

Put another way, the employer is not responsible for writing a paycheck. The employer is responsible for getting the money to the employee.  This includes actually having the funds in the bank to pay the employee.

Under the Illinois Payday Law, employers must by law pay workers on payday. An employer who issues worthless paychecks is not paying workers.

The employer is probably not responsible for employee’s bank fees or higher credit card interest, although a responsible employer would reimburse workers for them. However, a responsible employer wouldn’t write bad checks in the first place.

The best recommendation is for this employee to take two steps. The first step would be to report the employer to the Wage and Hour Division of the U.S. Department of Labor at   866-487-9243, or file an online claim for unpaid wages with IDOL, the Illinois Department of Labor.  If anyone can force this employer to meet payroll obligations, they can.

The second step would be for the employee to look for a new job, even if that involves quitting this job. This employee should ask herself, “Why do I want to work for someone who is not paying me?”

Continuing to work for the employer doesn’t make payment for past wages more likely. By law, the employer is already required to pay those wages. On the other hand, if the employee continues to work, and the business closes, she may lose 12 week’s of back pay instead of the current 3 weeks of back pay.

It’s easy for an employee to get caught in the trap of working for nothing and accepting the employer’s promises of future payment, but it’s a sinkhole. Once an employer’s cash flow problems are so severe that he or she can’t pay employees, and can’t borrow the money to pay employees, the business seldom recovers.

A responsible employer will lay off workers temporarily rather than have them perform work that the employer can’t pay for. This employer’s actions suggest that he or she is irresponsible.

Laying workers off for a month in this situation would not be a “threat” – it would be a kindness. The employees would be able to collect unemployment, and have time to look for jobs where they actually get paid.

Under unemployment regulations in Illinois and most states, a worker who quits “for good cause” can collect unemployment benefits. Not being paid is definitely a “good cause” for quitting a job. 

The employee should be aware that the employer’s promises of future payment probably mean nothing. If the employer goes bankrupt, there is a chance that the worker will never be paid for the hours that he or she has already put in.

This entry was posted on Thursday, April 17th, 2008 at 12:32 pm and is filed under
Compensation, Labor Laws.
You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.

4 Responses to “Insufficient Funds to Cover Paycheck in Illinois”

  1. D.M. Howard Says:

    My former employer laid me off on August 4th. They refused to pay me for the first week that was withheld or for the last week that I had worked that ended August 1. They promised the pay check on the 8th which was the next scheduled payday. They didn’t mail it until the 12th and then the check , which was for $500.00 bounced for NSF.

    The business has since closed it’s doors.

    Is there anything that I can do to get them to honor this check? Are there no Illinois laws that would force them to pay me? Would the sheriff’s department go after them? Any advise would be most helpful.

  2. Caitlin Says:

    Hi D.M.! Sorry to hear about all the troubles you are having. Our advice would be to contact the Illinois Department of Labor for help in collecting your paycheck. Obviously, an employer who has given you a bad check, has not paid your wages. It’s wise to take this action promptly — it is difficult for even the Department of Labor to collect if the business goes bankrupt. Thanks for your question, and for reading the blogs! Caitlin

  3. L Catt Says:

    this exact situation happened to me as well. First weeks paycheck bounced. Worked another two weeks and decided to go directly to the financial bank and cash the next paycheck. Not only was the paycheck late, I should have received it on a Friday, but didn’t get it till the following Monday and then was told by the bank teller that there were no funds whatsoever available to cover any portion of this paycheck. I went in the following morning, demanded the money to be issued and gave my notice. Now I am still waiting for my final paycheck for the last 6 days of work and even though I have given back any/all property of the said previous employer, they say they are not releasing any funds till property is returned. What do I do? Also went back to unemployment to reopen my unemployment from the my previous employer of 2 years 7 months and was told that I might have my case reopened and the chance of getting unemployment again was a maybe. What is up with this scenario. I left a job of fours weeks because of insufficient funds. Any advice?

  4. Caitlin Says:

    Hi L Catt! Contact the Illinois Department of Labor ASAP and file a wage claim. Under the Illinois Payday law, employers must pay workers — and they must pay workers on payday. So the employer was violating state law by paying you on Monday instead of Friday.
    When an employer issues a paycheck without sufficient funds in the bank, under the law, that is the same as not paying the employee.
    The Illinois Department of Labor — IDOL — will contact the employer and investigate the wage claim. If they find you are due wages, they will insist the employer pay them, or face fines and penalties.
    We will add one exception. If the company goes out of business and has no funds, even the IDOL can’t get blood out of a turnip. You were right to leave the company and try to reopen your unemployment claim. HTH, and thanks for reading the blogs!~ Caitlin

Leave a Reply





  • [ Back ]
  • Spam Protection by WP-SpamFree

Home Ask a Question Archives

© 2008 HumanResourceBlog.com, All Rights Reserved