Recently, Illinois revised its wage assignment law. This development is important for multistate employers because Illinois is the only state with a statute that clearly and unequivocally provides that employers must honor contracts employees make with third parties to assign wages. Under the Illinois Wage Assignment Act, 740 ILCS §§170/.01 et seq., there are detailed steps that a creditor must take with an employee for an assignment to be legal and then again with the employer for the assignment to be enforceable against the employer. A highlight of three key changes to the law follows:
- The revised statute eliminated the provision providing that the duration of deductions was only an 84-day period. After this period, the creditor had to restart the “Notice and Demand” process from the beginning in order for the employer to restart wage deductions. Now, under the revised statute, a valid wage assignment lasts until paid, but no longer than three years if the current employer is named on the assignment or two years if the current employer is not the one named on the assignment.
- The revised statute added recognition of Federal Trade Commission (FTC) regulations that require wage assignments derived from credit transactions regulated by the FTC to be revocable at the will of the debtor. Since state laws cannot contradict federal law, this change is academic, but it does provide clarity to all involved parties.
- The revised statute changed some of the statutory verbiage on the required Notice and Demand, including adding an entirely new document called “Understanding Your Choices Under the Illinois Wage Assignment Act.”