AUTHORITY: Implementing and authorized by Sections 234, 235, 245, 1700 and 1701 of the Unemployment Insurance Act [820 ILCS 405/234, 235, 245, 1700 and 1701].

SOURCE: Illinois Department of Labor, Bureau of Employment Security, Rule 1 filed as amended June 27, 1952, effective July 7, 1952; Regulation 30 filed as amended September 12, 1977, effective September 22, 1977; rules repealed by operation of law October 1, 1984; new rules adopted at 9 Ill. Reg. 18924, effective November 25, 1985; amended at 12 Ill. Reg. 15072, effective September 8, 1988; amended at 15 Ill. Reg. 16964, effective November 12, 1991; amended at 18 Ill. Reg. 14958, effective September 27, 1994; emergency amendment at 36 Ill. Reg. 18928, effective December 17, 2012 through June 30, 2013; amended at 37 Ill. Reg. 7432, effective May 14, 2013; amended at 43 Ill. Reg. 6442, effective May 14, 2019.

SUBPART B: OTHER REMUNERATION TREATED AS WAGES

 

Section 2730.100  Money Value of Board And Lodging, Etc.

 

a)         Except as otherwise provided in this Section, board, lodging or other remuneration in kind received by an individual from his employer for personal services performed by the individual for the employer shall be deemed to be wages paid by the individual's employer. Meals which are given for the convenience of the employer are not remuneration for the performance of personal services and, therefore, are not wages. Meals that are given for the convenience of the employer must be furnished for substantial non-compensatory business reasons rather than as additional compensation to the worker. When the meal is served at the location where the services are performed, it is presumed that the meal is for the benefit of the employer. When the meal is served at a location other than where the service is performed, it is presumed that the meal is not for the benefit of the employer.

 

1)         Example: An individual performs services at a restaurant. The employer does not want the worker to bring food from another restaurant to eat at his establishment. Meals are provided to the worker as a convenience for the employer and, therefore, are not remuneration to the worker for his services. Under such circumstances, the value of the meal is not deemed to be wages.

 

2)         An employer provides ambulance services and always needs to have drivers ready for emergencies. Meals are provided at the dispatch terminal so that drivers will always be available. Under such circumstances, the value of the meals are not deemed to be wages.

 

3)         Whenever a worker is required to work past seven o'clock in the evening, the employer reimburses the worker for her dinner. If the worker has the option of leaving the location where the work is performed for dinner, it is presumed that this meal is not for the benefit of the employer.

 

4)         Whenever a worker is required to work past seven o'clock in the evening, the employer orders dinner brought in for the worker. It is presumed that this meal is for the benefit of the employer.

 

b)         The money value of the remuneration in kind received by the individual shall be the fair market value of such remuneration.  "Fair market value" is the cash value of the remuneration which would be reached between a willing buyer and a willing seller.  The Director has the authority to determine or approve the fair market value of the remuneration in kind received by the individual, and this value shall be used in determining the wages paid to the individual and in computing contributions due under the Unemployment Insurance Act [820 ILCS 405], hereinafter referred to as "the Act".

 

c)         Where a money value for board, lodging or other remuneration in kind furnished an individual by an employer is agreed upon in a contract of hire, this agreed on amount shall be deemed the fair market money value of such remuneration unless this amount is less than the fair market money value specifically determined by the Director under subsection (b) above.

 

(Source:  Amended at 18 Ill. Reg. 14958, effective September 27, 1994)

 

Section 2730.105  Reporting Gratuities

 

a)         Each employer who employs individuals who customarily receive gratuities from persons other than the employer in the course of their work with the employer shall inform, either orally or in writing, all those individuals of their duty to report currently the amount of the gratuities to the employer, and post a notice, issued by the Director, which may be conveniently read (such as on the employer's bulletin board) by all such individuals.  The notice shall be procured by an employer from the Director.

 

b)         Each individual who customarily receives gratuities in the course of his or her work from persons other than his or her employer shall, on the day he or she is paid wages for a pay period by his or her employer, or not later than the next succeeding pay day, submit a written statement or form, in duplicate, to his or her employer concerning the amount of gratuities received during the pay period.

 

c)         The statement or form referred to by subsection(b) shall contain the information required to be listed under Section 6053(a) of the Internal Revenue Code of 1954 (26 USC 1 et seq.).  Each employer shall acknowledge the receipt of the statement or form on the duplicate copy and return the copy to the individual, who shall retain it as evidence of the fact that he or she has reported gratuities in accordance with the requirements of this Section.  The employer shall retain each original statement or form for a period of three years.

 

d)         Each employer shall include in its regular monthly or quarterly reports, as the case may be, to the Director the amount of gratuities reported to it by each individual under subsection (b); provided, however, that in the event the employer shall deem the amount so reported by the individual to be in excess of the amount of gratuities actually received by the individual, the employer shall attach to its monthly or quarterly report a statement indicating the amount reported by the individual, the amount reported by the employer, the difference between those amounts, and the basis for the employer's belief that the differences were not actually received by the individual.

 

e)         If, for any reason, the employer fails to obtain from the individuals in its employ the amount of gratuities received by such individuals, the employer shall estimate the amounts of such gratuities.  The employer shall estimate the amount of the gratuities as the greater of 8% of the gross receipts for service provided by the individual or the applicable federal minimum wage (29 USC 206 et seq.) times the number of hours worked by the individual.

 

(Source:  Amended at 37 Ill. Reg. 7432, effective May 14, 2013)

 

Section 2730.130  Liability for Contributions and Reporting of Sick Pay

 

a)         Sick pay is any amount paid to an employee for any period during which the employee is temporarily absent from work because of injury, sickness, or disability. Except as provided in subsection (b), sick pay paid with respect to employment by employers and third parties is wages under Sections 234 and 235 of the Act and subject to the payment of contributions. Determination of the individual or entity liable for reporting wages and paying contributions on sick pay depends on whether the sick pay is paid by the employer, by an agent of the employer, or by a third party that is not the employer's agent. Except as provided in subsection (d), the entity or individual who pays the sick pay is responsible for reporting those payments as wages and paying contributions to the Department.

 

b)         The following payments, made to, or on behalf of, an individual or any of his or her dependents under a plan or system established by an employer that makes provision generally for individuals performing services for him or her (or for such individuals generally and their dependents) or for a class or classes of such individuals (or for a class or classes of such individuals and their dependents), are not "wages" subject to the payment of contributions:

 

1)         payments made under a workers' compensation law;

 

2)         payments made on account of medical or hospitalization expenses in connection with sickness or accident disability;

 

3)         payments made on account of death;

 

4)         payments made on account of sickness or accident disability made by an employer to or on behalf of an employee after the expiration of 6 calendar months following the last calendar month in which the employee worked for the employer.

 

c)         If an employee receives a payment on account of sickness or accident disability that is not made under a workers' compensation law or a statute in the nature of a workers' compensation Act, the payment is not excluded from "wages" even if the payment must be repaid if the employee later receives a workers' compensation award or an award under a statute in the nature of a workers' compensation Act with respect to the same period of absence from work.

 

d)         Except when the payments do not constitute "wages" (see subsection (b)), and except as provided in subsection (e), a third party payor is the employer for purposes of reporting wages and paying contributions, unless all of the conditions in subsections (d)(1) through (4) are met.

 

1)         The last employer for whom the individual worked prior to becoming sick or disabled or for whom the individual was working at the time the individual became sick or disabled made contributions on behalf of the individual to the plan or system under which the individual is paid.

 

2)         There is an agreement between the third party payor and the employer that the employer will be required to report the wages and pay the contributions.

 

3)         The third party payor notifies the employer at least six working days prior to the end of the month following the preceding calendar quarter (or the preceding month in the case of an employer subject to 56 Ill. Adm. Code 2760.125(a)(1)) of the Social Security account numbers, employee names, and amount of sickness or accident disability payments made during the month or calendar quarter, as the case may be.

 

A)        For the purposes of determining timeliness of the notice, the provisions of 56 Ill. Adm. Code 2765.60 shall apply;

 

B)        A notification that contains the required information and that has been made by a third party to an employer, as required by the Federal Insurance Contributions Act (26 USC 1501 et seq.) will be sufficient notification under this Part.

 

4)         The employer reports the wages pursuant to Section 2760.125, and includes the wages in the calculation and payment of contributions.

 

e)         A third party making a payment on account of sickness or accident disability to an individual as agent for the employer or making such a payment directly to the employer shall not be treated as the employer with respect to the payments unless the agency agreement so provides.  The determining factor as to whether a third party is an agent of the employer is whether the third party bears any insurance risk.

 

1)         If the third party bears no insurance risk and is reimbursed on a cost plus fee basis, the third party is an agent of the employer even if the third party is responsible for making determinations of eligibility of the individual employees of the employer for payments on account of sickness and accident disability.

 

2)         If the third party is paid an insurance premium and not reimbursed on a cost plus fee basis, the third party is not an agent of the employer, but the third party is treated as the employer, as provided in subsection (d).

 

f)         For purposes of subsection (b), a dependent of an individual is the individual's husband or wife, children and any other member of the individual's immediate family as defined in 18 USC 115(c)(2).

 

g)         Except for any wages paid to an individual for services actually performed in employment of the third party payor, a third party payor that is liable for purposes of reporting wages and paying contributions for payments made on account of sickness and accident disability is not the last 30-day chargeable employer for purposes of Section 1502.1 of the Act.

 

(Source:  Amended at 43 Ill. Reg. 6442, effective May 14, 2019)

 

Section 2730.150  Payments Under A Cafeteria Plan

 

Payments which are not taxable for federal income tax purposes as part of a cafeteria plan established under Section 125 of the Internal Revenue Code of 1986 are not included in "wages", as defined in Section 234 of the Act (Ill. Rev. Stat. 1989, ch. 48, par. 344), to the extent that (1) the benefit chosen under the plan is specifically excluded under Section 235 of the Act (Ill. Rev. Stat, 1989, ch. 48, par. 345) and (2) under Section 245(C) of the Act (Ill. Rev. Stat. 1989, ch. 48, par. 370(C)) the benefit is not includable in the term "wages" subject to the payment of taxes under the Federal Unemployment Tax Act (FUTA).

 

a)         Example:  Payments made under a plan established by an employer generally for individuals in its employ to provide for the payment of medical insurance premiums which would not be includable in gross income for federal income tax purposes under Section 125 of the Internal Revenue Code of 1986 are not includable as wages because there is a specific exclusion in Section 235 of the Act for payments on account of medical or hospitalization expenses in connection with sickness or accident disability and such payments are not subject to the payment of taxes under FUTA.

 

b)         Example:  Payments made under a plan established by an employer generally for individuals in its employ to provide for the payment of life insurance premiums which would not be includable in gross income for federal income tax purposes under Section 125 of the Internal Revenue Code of 1986 are not includable as wages because there is a specific exclusion in Section 235 of the Act for payments on account of death and such payments are not subject to the payment of taxes under FUTA.

 

c)         Example:  Payments made under a plan established by an employer generally for individuals in its employ to  provide for the payment of dependent care assistance which would not be includable in gross income for federal income tax purposes under Section 125 of the Internal Revenue Code of 1986 are includable as wages because there is no specific exclusion in Section 235 of the Act for payments on account of dependent care assistance even though they are not subject to the payment of taxes under FUTA.

 

(Source:  Added at 15 Ill. Reg. 16964, effective November 12, 1991)

 

Section 2730.155  Payments Under A Plan Authorized By Section 401(k) of the Internal Revenue Code of 1986

 

Payments not taxable for income tax purposes under Section 401(k) of the Internal Revenue Code of 1986 are included in "wages", as defined in Section 234 of the Act. Amounts deducted from an individual's taxable income pursuant to salary reduction arrangements, as well as employer contributions, are also "wages".

 

(a)        Example:  An individual is entitled to $1,000 in salary. It is agreed between the employer and the individual that $50 of his salary is to be placed in the employer's 401(k) plan fund, and the individual is paid cash of $950. The 401(k) plan does not provide for employer contributions. The individual's "wages" under Section 234 of the Act are $1,000.

 

(b)        Example:  An individual is entitled to $1,000 in salary. It is agreed between the employer and the individual that $50 is to be placed in the employer's 401(k) plan fund, and the individual is paid cash of $950. In addition to the aforementioned arrangement, the employer makes a contribution of $50 to the fund on behalf of the individual. The individual's "wages" under Section 234 of the Act are $1,050.

 

(Source:  Added at 15 Ill. Reg. 16964, effective November 12, 1991)