What are the Penalties Against Employers for Nonpayment in Illinois?

Do You Know the Rule?

In Illinois, an employer may face a penalty in amount of up to 50 percent of the employee’s original award if the employer unreasonably fails to pay the employee's workers’ compensation benefits. 820 ILCS 305/19(k)(l). This Section of the statute was created to address situations where there is not merely a delay, but a delay that is deliberate or the result of bad faith or improper purpose. 

What actions may result in a penalty?

Section 19(k) authorizes the Commission to penalize an employer that:

1. Engages is in any unreasonable or vexatious delay of payment; or  
2. Intentionally underpays compensation.

The penalty is not automatic even if one of two scenarios above occurs. The Commission has discretion to award the penalty.

What type of penalty can the Commission impose?

The Commission may award a penalty of up to 50 percent of the amount payable. This is in addition to the compensation it already owes the employee. The "amount payable" refers to the entire amount of the type of benefit originally awarded to the employee.

Does this section apply when an employer fails to authorize medical treatment?

No. “Payment” means the act of paying or giving compensation and it does not include the act of authorizing medical treatment. Thus, an employer cannot be penalized under 19(k) for failing to provide, revoking, or delaying medical authorization. See Hollywood Casino-Aurora, Inc. v Ill. Workers’ Comp. Comm’n, 2012 IL App (2d) 110426WC.

What if the employer acted in good faith (e.g. it believed the injury was not compensable)?

Courts generally won’t award a penalty if the employer has a reasonable and good-faith argument that it is not liable. For example, if there is some testimony that the injury occurred outside the course and scope of employment, the employer could have a good-faith argument. Still, it should always review the issue with its legal counsel before denying or delaying payment.

Case examples:

The employer had a good-faith argument where the claimant testified that his right knee gave out while climbing into the cab of his semi-truck but other witnesses testified that the employee informed them that his right knee gave out while walking across the parking lot to his truck. Bowen v. Illinois Workers’ Compensation Comm’n, Nos. 4-22-0575WC, 4-22-0576WC cons (Ill. App. Ct. 10/02/23).

Penalties should have been awarded to the claimant, a laborer who sustained a back injury at work, given that the employer's conduct was not the result of simple inadvertence or neglect. “The employer made an intentional decision not to honor its statutory obligations to the employee, and it did so simply because it had not complied with the requirements of its insurance policy and was unwilling to absorb the cost itself.” McMahan v. Industrial Comm'n, 183 Ill. 2d 499 (Ill. 1998). 

What are some tips for employers to avoid penalties?

When delaying, revoking, or denying payments, an employer or insurance carrier should document its good faith reasons for doing so. But it should always obtain legal advice before taking this step. Once before the Commission or in court, the employer has the burden for justify a delay, revocation, or denial.

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