Compensation and Benefits Due Upon Termination of Employment
Often, clients will come to us asking what compensation and benefits they are entitled to upon termination of employment. Pursuant to the Illinois Wage Payment and Collection Act 820 ILCS 115, employers are required to pay the employee their final earned compensation no later than the end of their next regularly scheduled pay day after termination. This final compensation includes any “supplemental” compensation such as bonuses or commissions earned, unless the employee had a contract stating that any bonus compensation was restricted in some way, for example to be paid to active employees only. In addition, the employer is required to pay the employee the equivalent of any accrued but unused vacation time.
As for benefits, the employee is entitled to receive any vested retirement benefits, though these benefits may not be paid out until the employee reaches a designated age. If the employee was a participant in a 401(k) retirement savings plan, the employee must be given information as to whether the employee will be permitted to maintain the account with the financial service provider where it is currently being held or alternatively, how the employee may roll the account over to another tax qualified plan. If the employee was part of a group health plan, the employee must be given the option to elect COBRA benefits so as to be able to continue healthcare coverage for a period of up to 18 months post employment. Typically, the employee becomes responsible for paying the COBRA premiums.