September 26, 2011

Jason Tremblay gets reversal of IDOL wage payment demands on behalf of client

E. Jason Tremblay

E. Jason Tremblay

Chicago Partner Jason E. Tremblay recently obtained the reversal of several Wage Payment Demands issued by the Illinois Department of Labor (“IDOL”) on behalf of a client. The client was an assignee for the benefit of the creditors of an Illinois company that was financially distressed. Instead of filing a bankruptcy, the company elected to conduct an assignment for the benefit of creditors. In that regard, the assignee continued to wind down the operations of the business in order to liquidate assets and to pay off creditors of the company. Thereafter, several former employees of the company who were allegedly not paid wages filed wage claims before the IDOL. The IDOL Administrative Law Judge held that, in light of the fact that the business was still operating (albeit in the limited role of just liquidating assets to pay off secured creditors), the assignee was still an “employer” under the Illinois Wage Payment and Collection Act and therefore subject to liability.

On appeal, Mr. Tremblay argued, among other things, that the assignee could not be a “employer” under the Act because it only controlled the assets of the debtor and had no other duties or obligations (contractual, statutory or otherwise). Therefore, he asserted that an assignee in this circumstance does not fall under the purview of the Illinois Wage Payment and Collection Act. On appeal, the Chief Administrative Law Judge at the IDOL agreed with Jason’s argument and dismissed the assignee-client from the underlying Wage Claims.

This result is significant since, a finding to the contrary, would likely expose all assignees in Illinois to potential liability under the Illinois Wage Payment and Collection Act solely by virtue of a fact that they agree to assume the position of an assignee of a distressed company. Such a ruling would grossly expand the potential liability under the Illinois Wage Payment and Collection Act, and would likely curtail companies and individuals from becoming assignees to financially distressed companies.