Wage Payment and Collection Act Amendments Allowing for Attorneys’ Fees and 2% Interest – One Applies Retroactively, the Other Doesn’t – IL 1st Dist

Aside from its application of the apparent agency doctrine to a dispute over commissions, Thomas v. Weatherguard Construction Company, 2015 IL App (1st) 142785 also provides an interesting analysis of when attorneys’ fees and statutory interest can be tacked on to a successful Illinois Wage Payment and Collection Act (“Wage Act”) plaintiff’s suit for unpaid wages against an employer.

The Wage Act was amended in 2011 to allow a winning plaintiff to add to his unpaid damage award (a) attorneys’ fees and costs, plus (b) 2% monthly interest on unpaid amounts. 820 ILCS 115/14(a).

Before this change, a Wage Act plaintiff could still recover fees but he had to do so under the Attorneys Fees in Wage Actions Act, 705 ILCS 225/1.  Since the plaintiff in this case filed suit in 2007 (before the amendment), the question was whether Section 14(a) (the section with the attorneys’ fees provision) applied retroactively.  The defendant argued that the amended Wage Act could not apply retroactively since it fastened two new liabilities – an attorneys’ fees provision and a 2% interest term – on Wage Act defendants.

Generally, procedural changes in a statute apply retroactively while substantive changes don’t.  But the line separating procedure from substance can be blurry.

‘Procedure is the machinery for carrying on the suit, including pleading, process, evidence and practice, whether in the trial court, or in the processes by which causes are carried to the appellate courts for review, or laying the foundation for such review.’ By contrast, a substantive change in the law establishes, creates or defines rights. (¶ 66)

A procedural statutory amendment will not be applied retroactively if the statute would have a “retroactive impact” – meaning the amended statute would (i) impair rights a party possessed when he acted, (ii) increase a party’s liability for past conduct, or (iii) impose new duties with respect to transactions already completed.

Here, the amended Section 14(a) of the Wage Act was not a substantive change since it did not create a new attorneys’ fees remedy.  At the time plaintiff filed suit (2007), a Wage Act plaintiff could recover fees under the Attorneys Fees in Wage Actions Act cited above. 

In addition, the amended law didn’t have retroactive effect on the defendant.  The amended statute didn’t impair any of the defendant’s pre-existing rights, increase the defendant’s liability for past conduct or impose new obligations on it.  Again, a prevailing Wage Act plaintiff could recover attorneys’ fees under the prior, existing version of statute when plaintiff filed suit. (¶¶ 66-74)

The court reached the opposite conclusion on the 2% monthly interest provision, though.  Where a statutory amendment creates a new liability that didn’t exist under a prior version of a law, it’s considered a  substantive change.  Since the 2% monthly interest provision didn’t exist in the earlier version of the Wage Act, its presence in the current statute was a substantive change that could not be applied retroactively.

The end result was that the court remanded the case so that the trial court could assess plaintiff’s attorneys’ fees incurred in his partially successful Wage Act claim.

Take-away:

This is a pro-claimant case as it gives added strength to a Wage Act remedy.  By raising the specter of prevailing plaintiff attorneys’ fees on top of the unpaid wages amount, the amended Wage Act may level the playing field between former employees who might normally lack the resources to fund litigation against deeper-pocketed ex-employers.  By allowing for fees and interest, the Wage Act provides an incentive for aggrieved employees to sue under the statute.

 

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PaulP

Litigation attorney at Bielski Chapman, Ltd. representing businesses and individuals in business litigation, post-judgment enforcement, collections and real estate litigation.