Page 1 - John Hundley 2010

Sharp Thinking

No. 28 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. January 2010
Decision Raises Doubt As To Employer

Ability To Settle Disputed Wage Claims

By John Hundley, Jhundley@lotsharp.com, 618-242-0246

There’s an old adage that an oral agreement isn’t worth the paper it’s written on – but the same may be
true for written agreements to settle disputed wage claims in Illinois.
A decision issued late last month by the Appellate Court seems to say that nothing but a settlement or
release formally entered into in a court case will be binding on an employee who later wants to claim the
settlement or release provided for payment of less than was due under the Illinois Minimum Wage Law
(820 ILCS 105) (“IMWL”) or the Illinois Wage Payment & Collection Act (820 ILCS 115) (“IWPCA”).

However, that decision – Lewis v. Giordano’s Enterp., Inc., __ Ill.App.3d __, 2009
WL 5125252 (1st Dist. Dec. 23, 2009) – is marked by several distinguishable
factors. First, the wage shortage at issue arose from Giordano’s practice of
deducting 25¢ an hour from employees’ stated wages to cover the cost of their on-
the-job meals. Illinois Department of Labor regulations provided that such deduc-
tions were permissible so long as they did not include a profit to the employer.
Second, certain employees had commenced a class action alleging that there
was such a profit, and while the putative class action was pending the pizzeria
went behind the backs of class counsel and negotiated settlements with 350
employees, which individual settlements it then used to argue that treatment
on a class basis was improper. Even worse, it did so while obtaining court continuances with excuses
the court later believed had not been offered in good faith.
The appellate court held that the releases obtained by defendants of all claims arising under the IMWL
and IWPCA were “void as a matter of law” because they were obtained after the class action was filed
and voiding them was necessary “to protect . . . the integrity of the judicial process.”

But it also relied on statutory language which is not limited to the context of existing litigation.
Under the IMWL, any agreement to pay less than the minimum wage as fixed thereunder is “an
unreasonable and oppressive wage” and void (820 ILCS 105/2). Under the
IWPCA, in case of a dispute over wages the employer is to pay what is
conceded to be due, leaving to the employee “all remedies to which he may
otherwise be entitled”; the employee’s acceptance of a disputed paycheck is not
a release as to the balance; and any release required by an employer as a
condition to payment is “a violation of this Act and shall be void” (820 ILCS
115/9).
Those provisions reflect perceived unequal bargaining power in employer-
employee contexts – a consideration which is, if anything, even greater when no

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
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