Business record-keeping legislation finds Pritzker's desk

[June 21, 2024]  By Catrina Petersen | The Center Square

(The Center Square) – Given Illinois' economic environment, lawmakers are concerned that proposed record-keeping mandates will further burden the small business community in the state.

House Bill 3763 would allow an employee's legal representation to request access to personnel records, not just the employee himself or herself. Labor attorneys pushed for the measure's advancement, and now the bill is on the governor's desk and awaiting his signature.

Max Barack leads the Garfinkel Group's litigation practice. He represents workers experiencing unfair pay practices, such as minimum wage and overtime pay violations, as well as other forms of wage theft. He's a proponent of the bill because it's good for plaintiffs and employers. Barack explained there's a natural tension between ex-employees and employers, so giving representation access helps both sides.

"Not having a set standard for what employers must come up with and just giving more flexibility to the process for producing the documents is why the Plaintiff's Bar is pushing this issue," said Barack. "Sometimes, there are really important documents that may affect whether a claim exists. If the employer blows you off or doesn't give you that document and you end up filing a lawsuit … the plaintiff's lawyer spends money and brings a claim that doesn't have merit, but the employer is also wasting money defending a claim that could have been resolved had they been required to come up with the document up front."

HB 3763 additionally requires employers to turn over employee personal records to third parties upon text-message request, eliminating the ability of employers to require the request to be submitted in writing on an employer-approved form. National Federation of Independent Business State director Noah Finley is an opponent of the proposed law.

"Year after year, the General Assembly votes to put yet more record-keeping and administrative requirements on small businesses. While each one, individually, may appear minor, they are cumulative, absorbing more and more of the small-business owner's time and energy," said Finley.

Illinois state Senator Villivalam, D-Chicago.
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Opponents worry small businesses won't be able to keep up with yet another record-keeping regulation passed down from the state legislature.

House Bill 3763, according to opponents, could open the floodgates for frivolous lawsuits where plaintiffs sue employers because they don't hand over personnel documentation at the employee's or their legal representation's request. Sen. Jason Plummer, R-Edwardsville, urged a "no" vote on the Senate floor.

"This bill imposes additional record-keeping requirements on businesses with as few as five employees. Businesses with five, 10 or 15 employees don't have Human Resources departments or staff dedicated to this burdensome governmental regulation," said Plummer. "I understand what the sponsor is trying to do, but in an economic environment where we need to be starting small businesses, encouraging small business, and we need to be doing everything we can to take the government out of the way of small business. It sure would be nice to take the burdens away and not put more unnecessary burdens on the lifeblood of our economy."

Sen. Ram Villivalam, D-Chicago, said there was work done on the legislation to get some business groups on board. He explained the bill exempts employer's trade secrets, client lists, sales projects and financial data from disclosure to employees.

"It also establishes a clear timeline for when a civil action can be brought by specifying that employees may not bring civil action until the Department of Labor has failed to resolve their complaint within 180 calendar days or if the department certifies in writing that it is unlikely to resolve that complaint within 180 days. That amendment brought the major business groups to neutral," said Villivalam.

If an employer refuses to provide personnel documents to an employee then that employee can file a complaint with the Department of Labor, and then that agency will attempt to investigate and resolve the complaint. If the department fails, then the employee can sue the employer.