What Happens if Employers Accidentally Underpay Employees?

 Posted on February 16, 2026 in Employer Defense

If you accidentally underpay an employee, you will need to pay the full amount owed. This can feel stressful, especially if the error was unintentional. Many employers rely on payroll systems, time records, and staff input, and mistakes can happen even when you are trying to follow the law.

Wage enforcement is active across the country. According to the U.S. Department of Labor, the agency recovered more than $259 million in back wages for workers in 2025 alone, showing how common wage corrections are for employers.

As of 2026, Illinois employers must follow clear wage and record-keeping laws. The good news is that employers who act quickly to correct mistakes can often resolve the issue and reduce legal risk. Our Schaumburg, IL FLSA litigation lawyer helps employers fix payroll issues and protect their business.

What Wage Laws Do Illinois Employers Have to Follow?

Illinois law requires employers to pay employees all wages they have earned. This includes hourly pay, salaries, overtime, commissions, and earned bonuses.

The Illinois Wage Payment and Collection Act requires employers to pay wages no later than the next regular payday. Federal law also applies. The Fair Labor Standards Act requires employers to pay minimum wage and overtime when employees work more than 40 hours in a week.

These laws apply even when underpayment was accidental. Employers must correct the mistake once they discover it.

Why Do Payroll Mistakes Happen to Responsible Employers?

Payroll errors can happen for many reasons. Even careful employers can make mistakes, especially when managing busy schedules, overtime, or new employees.

Common causes of accidental underpayment include:

• Overtime hours calculated incorrectly
• Payroll system or software problems
• Incorrect pay rates entered into payroll
• Missing or incorrect time records
• Employee classification mistakes
• Failure to include commissions or bonuses

What Happens if an Underpayment Is Not Fixed?

If the underpayment is not corrected, the employee may file a wage claim. This can lead to legal and financial consequences for the employer.

Possible consequences include:

• Paying the wages that were owed
• Additional penalties under Illinois law
• Government investigation
• Legal fees and defense costs

Under 820 ILCS 115/14, employees may recover unpaid wages and additional damages. Acting quickly can help reduce the risk of serious problems.

What Should Employers Do After Discovering an Underpayment?

If you discover an underpayment, the most important step is to fix it as soon as possible. Acting quickly shows good faith and helps protect your business.

Start by reviewing payroll records to find the error. Calculate the amount owed and pay the employee as soon as possible. It is also helpful to explain the correction clearly. Next, review your payroll process to find out what caused the mistake. Fixing the cause helps prevent future errors.

Keep records showing how the mistake was corrected. This documentation can help protect your business if questions arise later.

Can Employees File Claims Even if a Payroll Mistake Was Accidental?

Employees have the right to file wage claims even if the mistake was unintentional. However, employers who act quickly and keep good records are in a better position to resolve the issue.

Courts and government agencies often review employer payroll records when deciding claims. Accurate records help show that the employer acted responsibly. Correcting mistakes quickly helps reduce legal risk and builds trust with employees.

Schedule a Free Consultation With Our Schaumburg, IL Employer Defense Attorney

Payroll mistakes can happen to any employer. What matters most is correcting the mistake and protecting your business moving forward. At The Miller Law Firm, P.C., we help employers respond to wage claims, correct payroll errors, and improve record-keeping practices.

Attorney Miller understands both the legal and financial sides of payroll compliance. In addition to his law degree, he has an MBA in Finance, which gives him valuable insight into payroll systems and financial records. This experience helps him guide employers through wage issues with practical solutions. If your business has discovered a payroll mistake or received a wage claim, contact our Schaumburg, IL FLSA litigation lawyer today. Call 847-995-1205 to schedule a free consultation.