Why is this bill needed?
The amount of wages stolen in Illinois is estimated to be around $1 billion a year, and these wages are most often stolen from low-wage workers – the people who can least afford the loss of income. So there's a fairness aspect to this bill.
However, there are more practical reasons. If these low-wage workers were paid the money they earned through their work, they would immediately spend it on necessities like rent and food. This extra money spent on Illinois businesses is good for the economy, and amounts to a tax-free stimulus.
Also, much of the public assistance that taxpayers fund is to people in working families. These folks work hard, but still don't make enough to get above the poverty line. So, paying workers what they're already owed reduces the need for food stamps and other taxpayer-funded assistance.
When the State of Illinois spends taxpayer money, we all benefit when it's spent wisely. One benefit of state spending is that it puts money in the pockets of working people, who then spend it on rent and food at other Illinois businesses. When unscrupulous businesses don't pay their workers properly, they undercut honest employers, and less of this money goes into the economy.
Increasing wage theft penalties works. Based on the results of an in-depth study of wage theft penalties across the United States, Northwestern professor Daniel Galvin concluded:
“In my research, I have found that simply increasing the penalties for wage violations – even in the absence of strategic enforcement by regulators – can by itself reduce the incidence of wage theft.”
[i] “Wage theft is widespread, but politics and policies can play a powerful role in reducing it”. London School of Economics.
What are the objectives of the bill?
The Illinois Fighting Wage Theft Act (SB1720) accomplishes several objectives for Illinois residents:
- It reduces wage theft, a billion-dollar problem in Illinois.
- It reduces the need for public assistance to working people.
- It levels the playing field for honest employers that don't steal from their workers.
What is the impact on businesses?
Responsible businesses will see a positive impact because it levels the playing field for them. They're already paying workers for all their work. Irresponsible businesses shouldn't be allowed to undercut good businesses with these shady tactics.
What are the benefits for workers?
Low-wage workers will benefit the most, because they are more likely to be victims of wage theft. They will get paid for all their work. Other workers who don't suffer from wage theft will feel less downward pressure on their pay from low-paid workers.
Is this bill pro-business?
Yes. The bill is designed to help the majority of responsible employers who play by the rules.
Responsible businesses are often under-cut by companies that don't pay their workers the legal wage. They shouldn't be penalized for doing the right thing. Stiffening penalties for willful or repeated wage theft encourages irresponsible employers to follow the law, making it easier for honest employers to compete. In the case of state contracts, it means that your tax dollars are going to honest employers.
The amount of wages stolen in Illinois is estimated to be around $1 billion a year. And, when low-wage workers are paid the money they earned, they spend it, usually at local businesses. So this bill is a tax-free stimulus to the economy.
This seems like just another government regulation. Why should I support it?
Currently, wage theft, no matter the amount, simply requires that the business pay the improperly withheld money. If the guilty business is able to pay and refuses to, it's still only charged with a misdemeanor. This penalty is too light to be an effective deterrent, so this bill slightly increases the penalty for non-payment from a Class B misdemeanor to Class A for amounts less than $5,000, and from Class A misdemeanor to Class 4 felony for amounts over $5,000. If a business is found guilty twice within 5 years, the penalty is increased to a Class 3 felony. This is a modest stiffening.
The amount of wages stolen in Illinois by unethical businesses is estimated to be around $1 billion a year, and could be as much as $3 billion/year. That's $1 billion taken out of the economy, and the public pays for this loss with reduced economic activity and higher taxes.
When low-wage workers are paid all the money they earned, they spend it on local Illinois businesses, pay more in taxes, and need less public assistance. The state increases its tax revenues and reduces its public assistance expenditures.
The government contract provision gives Illinois taxpayers the confidence that state projects will generate the most benefit for residents. When workers are paid for all the hours they work on a state project, they spend that extra income on Illinois businesses, continuing to add money into the state economy.
Also, the wage theft penalty increases are directed only at willful and repeat violators, not the business that simply makes a mistake. These repeat/willful cheaters undercut responsible employers and make Illinois a less attractive state to do business in, because there isn't a level playing field for responsible companies.
What are the benefits for Illinois residents?
- Residents will see less pressure to raise taxes or cut the state budget, since low-wage workers will get paid for all their work and be less reliant on public assistance.
- Confidence that state contracts are going to ethical businesses and that more of their taxes will go to people who spend the money on other Illinois businesses. This generates the biggest benefit from public projects.
What is the change to the Illinois Procurement Code?
The bill prohibits businesses that are guilty of repeated or willful wage theft from doing business with the State of Illinois for the next 5 years. To help enforce that prohibition, companies who want to sell taxpayer-funded goods or services simply have to assert that they haven't violated wage theft laws, and they have to state that their subcontractors also haven't violated these laws.
This is a simple requirement, because a business that's been found guilty (or admitted being guilty) of breaking the law is going to know that it did so.
What are the increased penalties for Wage Theft?
The bill increases the severity of willful and repeated wage theft violations from a Misdemeanor to a Class 4 Felony. A Class 4 Felony is the lowest-severity felony in Illinois. It carries a minimum sentence of 1 year in prison and a maximum sentence of 3 years.
In comparison, simple theft of between $300 and $2,000 is a more serious Class 3 Felony, carrying a prison sentence of 2-5 years. So wage theft of a much greater amount has a less severe penalty than for someone stealing a smartphone, for example.
Why does the bill increase penalties for Wage Theft?
Other than the state contracting provision, the bill actually doesn't increase those penalties; it increases the penalties on guilty companies who refuse to pay the improperly withheld wages. Today, even willful or repeated wage theft is just a misdemeanor, meaning that guilty parties simply pay the wages owed and a small penalty. This isn't a very effective deterrent. Right now, stealing a smartphone carries a more severe penalty than stealing millions of dollars in wages.
Increasing the non-payment penalty to a felony increases the stakes, because willful and repeat offenders now face jail time.