Following the close of the 102nd General Assembly, the Illinois Legislature sent over 600 bills to Governor J.B. Pritzker for signature.
After addressing a wave of employment laws in 2020 and keeping up with COVID-19 developments, Illinois employers now have more employee-friendly state laws and local ordinances to plan for in 2021.
2021 Amendments to Chicago Minimum Wage and Paid Sick Leave Ordinances
On June 25, 2021, the Chicago City Council passed Ordinance No. 02021-2182, updating Chicago’s paid sick leave law and adding wage theft protections for employees. The ordinance applies to any employee performing two or more hours of work within Chicago’s city limits in any two-week period for an employer with four or more employees (or one or more if the employee is a domestic worker). The ordinance now expressly allows employees to use paid sick leave for mental health, behavioral and substance abuse treatment, and covers victims of sex trafficking or stalking-related absences, COVID-19-related (or other communicable disease-related) quarantine and isolation absences, and absences caused by family-care facility closures. Under the ordinance, employees also maintain their unused paid sick leave if their employer sells or assigns its business to another employer, so long as employees continue to work in Chicago following the change in ownership.
The ordinance provides employees with a new choice of venue to file wage theft claims at the City of Chicago Office of Labor Standards and adds a new damages category for such claims (in addition to the amount of any underpayment): the greater of 2 percent interest per month from the date the employer originally owed the wages or as provided under state law, which is currently 5 percent interest per month from the date owed. An employer with two or more wage theft settlements within a calendar year (including those before the state or federal Departments of Labor) may now be investigated for ineligibility by the city’s procurement and licensing divisions. Finally, the ordinance requires employers to maintain employee records for at least five years and furnish copies to employees upon “reasonable” request.
Much of the ordinance codifies protections addressed in Chicago’s prior ordinances (such as protections for victims of sex trafficking and COVID-19) or state and federal law, but Chicago employers should still reconfirm their wage payment and paid time off policies and practices comply with the ordinance, particularly its notice, record access, permissible use and carryover requirements. Importantly, Chicago employers should also post the city’s updated poster, which was required by August 1, 2021, and distribute individual notices with new employees’ first paychecks and to all covered employees by August 1 and annually thereafter.
2021 Illinois Employment Laws and Pending Bills
Following the close of the 102nd General Assembly, the Illinois Legislature sent over 600 bills to Governor J.B. Pritzker for signature. The following bills have notable implications for Illinois employers:
Increased Damages for Unpaid Wages
The governor signed H.B. 118, which amends the Illinois Wage Payment and Collection Act effective July 9, 2021, by increasing employees’ available damages for successful wage claims from 2 percent to 5 percent of wage underpayments for each month the wages remain unpaid.
Reporting Requirements for Employers Using Artificial Intelligence for Interviews
The governor also signed H.B. 53, which amends Illinois’ Artificial Intelligence Video Interview Act (AIVIA). Effective January 1, 2022, employers that rely solely on artificial intelligence to determine whether an applicant will qualify for an in-person interview must collect and report to the Department of Commerce and Economic Opportunity: (1) the race and ethnicity of applicants, both for those individuals selected and not selected for in-person interviews; and (2) the race and ethnicity of those individuals who are ultimately hired. Employers must report annually beginning December 31, 2022, the data collected in the preceding 12-month period ending November 30. This new reporting requirement follows employers’ other new annual reporting requirements due January 1, 2023. When preparing for compliance with AIVIA’s new reporting requirement, employers should confer with counsel to avoid violating Title VII’s prohibition against inquiring into applicants’ racial or ethnic background.
Bill Impacting Employers’ Restrictive Covenants Under Illinois Freedom to Work Act Awaits Governor’s Signature
On June 29, 2021, the Illinois Legislature sent Senate Bill 0672 to the governor for his signature to amend the Illinois Freedom to Work Act (IFWA) by August 28, 2021. Enacted in 2017, IFWA prohibits employers from requiring low-wage workers to enter into restrictive covenants as a condition of employment, which follows the nationwide trend of state and local legislatures limiting employers’ use of such covenants. If signed by the governor, the below amendments to the IFWA will become effective January 1, 2022.
Increased Minimum Income for Enforcement of Restrictive Covenants
Under the bill, employees subject to a noncompete covenant must have actual or expected annual earnings of at least $75,000 beginning January 1, 2022, with increases to $80,000 on January 1, 2027; $85,000 in 2032; and $90,000 in 2037. Employees subject to a nonsolicit covenant must have actual or expected annual earnings of at least $45,000 beginning January 1, 2022, with increases to $47,500 by January 1, 2027; $50,000 by 2032; and $52,500 in 2037.
Covenants Covered Under IFWA Defined
The bill clarifies that noncompete covenants covered under the IFWA only include those that impose adverse financial consequences on former employees if the they engage in competitive activities following termination. Importantly, the bill clarifies that the following covenants are not considered noncompete covenants under the IFWA:
- Covenants not to solicit;
- Confidentiality covenants;
- Covenants prohibiting the use or disclosure of trade secrets or inventions;
- Invention assignment covenants;
- Covenants entered into by someone purchasing or selling an ownership interest or the goodwill of a business;
- Clauses requiring advance notice of termination; and
- Covenants wherein the employee agrees not to reapply for employment to the same employer following their termination.
Similarly, the bill clarifies that nonsolicit covenants covered under the IFWA only include those that restrict employees from soliciting employers’ employees, or from soliciting for the purpose of selling products or services, or interfering with employers’ relationships with current or prospective clients, vendors, or suppliers or other business relationships.
COVID-19 Exception for Noncompete and Nonsolicit Covenants
The bill prohibits employers from entering into noncompete or nonsolicit covenants with employees terminated or furloughed as a result of business circumstances or governmental orders related to the COVID-19 pandemic, or under circumstances similar to the pandemic, unless employers pay employees their base salary for the duration of the restricted period (less any income earned from subsequent employment during the restricted period).
Certain Collective Bargaining Agreements Void Noncompete Covenants
The bill makes noncompete covenants void and illegal for employees covered by a collective bargaining agreement under the Illinois Public Labor Relations Act, Illinois Educational Labor Relations Act or employed in certain construction jobs. The construction prohibition does not include construction industry employees who primarily perform management, engineering or architectural, design or sales functions.
Express Notice to Employees Required
The bill requires that all noncompete and nonsolicit covenants expressly advise employees to consult with legal counsel before entering into such covenants and provide employees with at least 14 calendar days to review covenants prior to any required execution.
Codification of Recent Court Decisions
The bill’s amendments to the IFWA codify the enforceability standards for noncompete and nonsolicit covenants developed by various court decisions, including recent holdings that continued employment alone will be adequate consideration for a noncompete or nonsolicit covenant only where employment lasts at least two years after the employee signed the covenant.
Additional Remedies for Prevailing Employees and Intervention by Illinois Attorney General
In addition to any remedies available under the covenant, the bill provides a prevailing employee in a civil action or arbitration filed by their prior employer all costs and reasonable attorney’s fees and any other relief deemed appropriate by a court or arbitrator. The bill also provides the Illinois attorney general power to initiate or intervene in any civil action on behalf of the state of Illinois and conduct an independent investigation into alleged violations of the IFWA.
Other Illinois Bills That May Impact Employers in 2021
- H.B. 121 would amend the Human Rights Work Authorization Act by prohibiting employers, employment agencies and labor organizations from discriminating based on individuals’ work authorization status or refusing to honor work authorizations.
- H.B. 3582 would amend the Victims’ Economic Security and Safety Act (VESSA) by expanding individuals covered under the act to include victims and family members of victims of crimes of violence.
- S.B. 2486 would amend the Personnel Record Review Act by adding a three-year statute of limitations period for an aggrieved individual to file a complaint for an alleged violation.
Given the above Illinois and Chicago amendments, Illinois employers are encouraged to consult with counsel to address the wide range of new employment laws and bills that affect paid sick leave policies, data collection and reporting, noncompete and nonsolicitation agreements and VESSA policies.
For More Information
If you have any questions about this Alert or have specific questions and concerns related to your operations, please contact Daniel O. Canales, Jennifer Long, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.
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