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Employee Handbook Statements May Now Form a Sufficient Basis for IWPCA Claims

The Northern District of Illinois has found that statements in an employee handbook may form an “agreement” between an employer and employee sufficient enough to support a claim pursuant to the Illinois Wage Payment and Collection Act (IWPCA). The Northern District, in Wharton v. Comcast, held that several employees suing for their employer’s failure to properly compensate them at a rate of one-and-one-half their regular rate for hours worked in excess of forty (40) per week could use the handbook as the basis for an IWPCA claim. While the time-and-a-half rate is a requirement under the federal Fair Labor Standards Act (FLSA) and Illinois Minimum Wage Law (IMWL), the IWPCA merely enforces the terms of an existing contract or agreement for the payment of wages. Consequently, an employee must have a contract or agreement with the employer designating how wages or final compensation are to be paid.

In Wharton v. Comcast, where the employee handbook included an overtime policy detailing that the employer would provide overtime pay, the court found this language sufficient to form an agreement, thus supporting an IWPCA claim. Illinois law requires only mutual assent for an agreement; there need not be an exchange of promises and consideration. While this decision only specifically affects IWPCA claims, it has to potential to be expanded to other state statute and claims. Although the breadth of the decision is unclear, the decision has made it more difficult for suits based on an employee handbook to be dismissed; mere “at will” statements in the handbook will not be sufficient to protect an employer from liability.