Let’s say that you have a union employee who was unhappily separated from his job and now has, among other issues, a dispute with you, his former employer, over whether he received his proper final compensation. Being the unhappy soul that he is, and being highly skeptical that you, his now former employer, has calculated the correct amount of payout as his final compensation, he files suit against you under the Illinois Wage Payment and Collection Act, claiming that you violated the Act by failing to properly pay him all wages and compensation that was due to him no later than the next regular pay day after his separation, as the Act requires.
First of all, the Wage Payment and Collection Act is one of those wage statutes that you, as an employer, don’t want to get caught up in. It is what we call in the business a “strict liability” statute. If an employer doesn’t follow the wage payment requirements of the Act, little or no defenses exist to a claim. It doesn’t matter to a court if your company headquarters burned down or your payroll software was hacked or if you had a reasonable and rational belief that the employee wasn’t due the wages. If it turns out that you underpaid the employee, or didn’t pay the employee on time, then you are likely liable under the statute. And the problem with liability under the statute is that you don’t just owe your employee the wages, but you pay the employee’s attorney’s fees, costs of the lawsuit, and 2% interest per month on any unpaid amounts. That can really add up. This doesn’t even include what you have paid your own attorney to handle the case.
So, many employers who find themselves in this kind of predicament think they have relief from the onerous statute because the employee was a member of a union, covered by a collective bargaining agreement that also include a grievance procedure as the mechanism to resolve disputes. Ah ha, you might think. The former employee was bound by the terms of the cba to utilize the grievance procedure and therefore cannot file a lawsuit.
Like arbitration clauses in individual employment contracts, the grievance procedure is designed to provide an alternative, cheaper and easier method of resolving disputes over provisions in collective bargaining agreements. Courts routinely find that they lack jurisdiction over claims for contract breach or violation when the contract contains a provision for an alternative form of dispute resolution (i.e. a grievance procedure) as opposed to seeking judicial relief. But, can you hold a former union employee to this same standard? Maybe not.
Here is the problem – by the time that a former employee has a claim for non-payment of final compensation, they are no longer an employee and therefore generally no longer a union member, and therefore no longer bound by the terms of the collective bargaining agreement. Naturally, if they are no longer bound by the terms of the collective bargaining agreement then they are not required, and some would say that they are not even allowed, access to the grievance procedure, and so are free to file suit individually against the former employer, opening the door for you paying all of those additional costs. Both federal and state courts find that, absent language in the cba to the contrary, a retired, disabled or even laid off union member has no obligation to file a grievance over payment of final compensation. Instead, they can go straight to court.
How can you fix this? It’s simple really, but something employers rarely think about at the bargaining table. Employers need to make sure that the grievance procedure provision in their collective bargaining agreements includes an obligation to resolve all disputes over wage claims, including payment of final compensation, through the grievance procedure. Sure, unions might not like their continuing obligation to represent a former member in those claims because it extends their responsibility. Is it worth it to negotiate this though, over any objections of the union bargaining team? Absolutely. Make the cba language work for you because avoiding even one claim under the Wage Payment and Collection Act can save an employer thousands of dollars in costs.