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Compensation and Benefits Due 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 payroll after termination. This final compensation includes final wages earned, and the monetary equivalent of any accrued but unused vacation time. Note that unpaid sick time is not paid out upon termination. However, if vacation and sick time were lumped together under the employer’s policy as combined PTO, then the employee is entitled to the accrued but unused PTO.

In addition, an employee is entitled to be paid his or her “supplemental” compensation such as bonuses or commissions to the extent they have been “earned” at the time of the termination. The exception is when the employer’s bonus policy is discretionary or has restrictions stating, for example, that entitlement to receipt of a bonus requires that the employee be employed on the date that the bonus is paid out.

The employee is also entitled to receive any vested retirement benefits, although these retirement benefits may not be accessible to the employee 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 the funds are currently being held or alternatively, how the employee may roll the funds over into another tax qualified account.

If the employee was part of a group health plan, the employee must be given notice of 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, depending on the size of the employer. Typically, the employee becomes responsible for paying the COBRA premiums.

If you have been terminated and have questions about the compensation or benefits to which you are entitled, contact Cotler Law LLC.

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