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New Illinois Employment Laws and Tax Provisions Effective January 1, 2016

January 2016


Illinois Employment Laws Effective January 1, 2016

In recent months, there have been some significant amendments to existing Illinois employment laws and/or the passage of new ones effective January 1, 2016.  As a recommended course of conduct, employers should begin implementing any necessary changes as soon as practicable.

As of January 1, 2016, the minimum wage for Chicago workers will increase to $10.50.  This applies to (a) employers that maintain a business facility within the City of Chicago and/or are required to obtain a business license to operate in the City and (b) employees who work two hours in the City within the period of two weeks.  This increase is part of an ordinance passed by the Chicago City Council, which will gradually raise the minimum wage for Chicago workers to $13 per hour by the year 2019. The ordinance also increases the minimum wage for tipped employees from $5.45 to $5.95. 

Effective January 1, 2016, House Bill 3619 expands the coverage of the Illinois Equal Pay Act of 2003, 820 ILCS 112/1 (IEPA) to all employers.  Currently, the IEPA applies to only those employers with four or more employees.  The IEPA prohibits employers from paying any employee less than it pays another employee of the opposite sex for the same or substantially similar work requiring equal skill, effort and responsibility performed under similar working conditions for the same employer in the same county.  H.B. 3619 also increases the penalties under IEPA as follows: (a) for employers with four or more employees, for a first offense, a fine not to exceed $2,500.00; for a second offense, a fine not to exceed $3,000.00; and for a third or subsequent offense, a fine not to exceed $5,000.00; (b) for employers with fewer than four employees, for a first offense, a fine not to exceed $500.00; for a second offense, a fine not to exceed $2,500.00; and for a third offense, a fine not to exceed $5,000.00.

Effective January 1, 2016, House Bill 3122 is enacted as the Veterans Preference in Private Employment Act (VPPEA), which permits Illinois employers to give hiring preference to honorably discharged veterans of the U.S. Armed Forces and their widows or widowers.  VPPEA also provides that spouses of honorably discharged veterans who have a service-connected permanent and total disability may also be preferred for employment.  Preference given under VPPEA is not considered a violation of any state or local law.  VPPEA is permissive and essentially serves as a means of thanking veterans for their service to this country.  Those employers who choose to adopt a voluntary preference for hiring, promoting, or retaining a veteran over another equally qualified applicant or employee during a reduction in force may do so if (a) the veterans’ preference employment policy is in writing; (b) the veterans’ preference employment policy is publicly posted by the private employer at the place of employment or on a website; and (c) the private employer’s job application informs all applicants of the veterans’ preference employment policy and where the policy may be obtained; and (d) the private employer applies the veterans’ preference employment policy uniformly for all employment decisions.

For more information, please contact Naureen Amjad of Pedersen & Houpt’s Employment Practice Group at 312.261.2273 or namjad@pedersenhoupt.com.

Federal Tax Law Impacting Passport Denials, Revocations and Limitations

Effective January 1, 2016, H.R. 22 (titled the Fixing America's Surface Transportation Act, or the FAST Act) adds a new Section 7345 to the Internal Revenue Code of 1986, as amended, pursuant to which the U.S. State Department may deny, revoke or limit a taxpayer's passport upon a certification from the IRS that the taxpayer owes a U.S. federal tax liability in excess of $50,000 (adjusted for inflation beginning in 2017) which is "significantly delinquent."  26 USC 7345; H.R. 22, §32101.  For these purposes, a "seriously delinquent tax debt" means "an unpaid, legally enforceable U.S. federal tax liability of an individual in excess of $50,000," which (A) has been assessed, (B) is greater than $50,000 and (C) with respect to which (i) a notice of lien has been filed and the collection due process hearing procedure has been exhausted or has lapsed or (ii) a Section 6331 tax levy has been made. Sec. 7345(b)(1). Exceptions may apply for tax debts subject to installment agreements, offers in compromise, and innocent spouse relief.

For more information, please contact Valdir Barbosa of Pedersen & Houpt’s Corporate and Business Counseling Practice Group at 312.261.2177 or vbarbosa@pedersenhoupt.com.