Starting May 1, 2015, employers in Cook County will be subject to a new "Wage-Theft Ordinance" that could lead to employers incurring massive property tax liabilities, business license revocation, and debarment from county contracts.
Under the ordinance, local employers will face harsh penalties if they admit guilt or liability or are "adjudicated" to be guilty or liable – in "any judicial or administrative proceeding" – of committing a "repeated or willful violation" of the Illinois Minimum Wage Law (820 ILCS §150/1, et seq.), the Illinois Wage Payment and Collection Act (820 ILCS § 115/1, et seq.), the Illinois Worker Adjustment and Retraining Notification Act (820 ILCS § 65/1, et seq.), the federal Worker Adjustment and Retraining Notification Act (29 USC § 2101, et seq.)(WARN), the Employee Classification Act (820 ILCS § 185/1, et seq.), the Fair Labor Standards Act (29 USC § 201, et seq.)(FLSA), "or any comparable state statute or regulation of any state."
Let us venture down the rabbit hole for moment. Constitutional infirmities aside, the ordinance purports to impose penalties on an employer for violations of the FLSA, WARN, or any state wage law determined by judicial or administrative proceeding anywhere in the country. Is a finding by one state or federal department of labor investigator after an investigation an "adjudication" in an "administrative proceeding"? If it is determined that an employer had more than one violation of a wage law or a violation of a wage law that impacted more than one employee, has the employer committed a "repeated" violation under the ordinance? Theoretically, a rogue manager at a single site in Albuquerque, New Mexico, who miscalculated the pay of two employees for one day could cause the loss of tens or hundreds of thousands of dollars in tax incentives and closure of business operations in Cook County, Illinois.
What do employers stand to lose?
- Revoked property tax incentives and retroactive repayment of tax savings. Many Cook County employers reduce their property tax burdens by taking advantage of various tax incentives offered by the county. Employers can have existing tax incentives revoked, be ordered to repay the county for tax savings from such incentives, and be denied such incentives for a period of five years.
- Ineligibility for Cook County contract work. An employer contracting with the county will immediately be considered in default and will be ineligible to enter into a contract with the county for a period of five years. In addition, the county will now require bidders to certify their compliance with all wage laws in any bid package they submit.
- Revoked business licenses. Employers located in unincorporated Cook County cannot do business without obtaining a two-year General Business License from the county. Employers can have their application for a business license denied, a renewal rejected, or a current license suspended or revoked.
Bottom Line: Cook County's "Wage-Theft Ordinance" is poorly drafted, is constitutionally infirm, and will drive more employers and jobs away from the second most populous county in the country. Employers should be mindful that, under the ordinance as drafted, a violation of the FLSA, WARN, or any state wage law occurring anywhere in the country may result in a loss of the employer's property tax incentives, county contracts, and/or business licensure in Cook County.
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