The Illinois Wage Payment and Collection Act states that when the employment of an employee ends, the employer is required to pay all final compensation, including earned bonus owed pursuant to an employment contract or agreement between the two parties.
In the case of a departing executive, an Illinois appeals court found that a financial fund manager and his former employer had reached an agreement that he would be paid a bonus based upon a mutually agreed-upon formula.
Importantly, under the Illinois Wage Payment and Collection Act, it is not necessary to have a valid, enforceable contract of a bonus payment. Rather, under Illinois law, an executive and employer may enter into an “agreement” without the formalities of a written contract. Instead, under the Act, an “agreement” requires only a manifestation of mutual assent on the part of two or more persons.
In this case, the fund manager presented evidence that he and the company owners reached a verbal agreement, when he was initially offered a job, to a bonus for his work during the first quarter of the year.
A later Illinois case found that an oral agreement to pay a bonus may be enforceable even if the agreement is not written or memorialized in an employment contract.
Thus, the reach and obligations under the Illinois Wage Payment and Collection Act are broader than the common law involving written employment agreements.