The Fair Labor Standards Act (FLSA) was originally enacted in 1938 to ensure employees a “fair wage for a fair day’s work,” and it has been amended several times since. The FLSA establishes standards for a minimum wage rate, maximum number of hours, overtime pay, record keeping, and youth employment standards. The fundamental requirement of the FLSA is that covered nonexempt employees are entitled to a minimum wage of not less than $7.25 per hour and overtime pay at a rate not less than one and one-half times the regular rate of pay after 40 hours of work in a single week.
Illinois has its own laws governing certain wage and hour requirements, with differing standards and requirements from the FLSA. In particular, as of July 1, 2010, the minimum wage in Illinois is $12.00 per hour. The minimum wage in the city of Chicago is $14.00per hour for companies with four to 20 employees; $15.00 per hour for companies with 21 employees or more and $8.40 for tipped employees at companies with four to 20 employees and $9.00 for employees at companies with 21 employees or more. The Illinois law is not nearly as comprehensive as the FLSA; and to this end, Illinois courts determined that the FLSA regulations and provisions offer additional guidance in determining the Illinois wages and hours laws. Even so, both the FLSA and the Illinois statutes covering wages and hours law are highly fact intensive and nuanced and this chapter provides only an overview of both the FLSA and the Illinois provisions most relevant to all employers.
Unless an employee falls into one of the exceptions listed below, the federal and Illinois wage and hour laws will apply to the employee. The Fair Labor Standards Act (FLSA) applies to enterprises, or companies with related operations performed for a common business purpose, including all operations, whether or not they are performed at the same location.
Example - Departments of a store or plant, along with all other stores and plants within a company, are included in the enterprise. Independent contractors and certain independent retail and service establishments are not included within the enterprise.
A covered enterprise is subject to the FLSA with respect to all of its employees. In order to qualify as a covered enterprise, a company must meet both of the following requirements:
In addition to these commercial employers, the FLSA applies to hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies regardless of their sales volumes. Each of these enterprises is addressed as follows.
Hospitals and institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises are covered by the FLSA.
Public employers are covered by the FLSA. Special provisions apply to certain public employees, such as law enforcement and fire protection employees, including higher overtime eligibility levels and longer work periods in which to calculate overtime. Elected officials and their personal staff members and appointees, as well as members of the legislative branch, are excluded from the FLSA’s coverage of public agencies.
Preschools (including child care facilities), elementary schools, secondary schools, institutions of higher education, and schools for gifted or handicapped children are covered by the FLSA.
The vast majority of manufacturing companies that are engaged in the production of goods for commerce are covered by the FLSA.
Transportation companies are covered by the FLSA. However, certain employees such as interstate truck drivers, and the helpers and mechanics working on those trucks, are exempt from the overtime requirements of the FLSA.
Public utilities are covered by the FLSA.
Retail and service establishments whose annual revenues are at least $500,000 are covered by the FLSA. The term “retail and service establishment” has a special meaning under the FLSA: “an establishment 75% of whose annual dollar volume of goods or services (or a combination of both) is not for resale and is recognized as retail sales or services in the particular industry.” These establishments include:
Numerous businesses are excluded from this definition of retailers because the concept of retailing is not generally applicable to them. Such businesses include:
Employees of retail and service establishments paid on commission are not subject to the FLSA’s overtime requirements. In order to be considered such an employee, the employee must receive at least one and one half the current minimum wage and more than 50% of his or her earnings must come from commissions.
Even if an organization is not a covered enterprise as outlined previously, its individual employees may still be covered by the FLSA. An individual is covered if he or she is engaged in interstate commerce, produces goods for interstate commerce, or performs activities closely related and directly essential to the production of goods for commerce.
The FLSA also covers certain domestic service workers depending on the amount of cash wages they receive from one employer in a calendar year, or if they work a total of more than eight hours a week for one or more employers. Examples of service workers are:
Employers covered by the FLSA are required to display an official poster outlining FLSA provisions. This poster is available at no cost from local offices of the Wage and Hour Division. (Contact information for these offices is provided at the end of this chapter under Where to go for more information.) The poster is also available through the DOL by calling (866) 4US-Wage (866/487-9243) and it is available electronically for downloading and printing at:
The federal minimum wage is $7.25 per hour and the Illinois minimum wage is $12.00 per hour as of January 1, 2022. Employees covered by the Illinois law must receive the higher rate. Illinois minimum wage rates are scheduled to increase through 2025 as follows:
Minimum wage rate
January 1, 2023
January 1, 2024
January 1, 2025
Under the Illinois minimum wage rules, employers may pay optional lower minimum wage rates for:
The city of Chicago increased its minimum wage to $14.00 on July 1, 2020 for employers with four to 20 workers, increasing to $14.50 per hour on July 1, 2022, and $15.00 per hour July 1, 2023: and $15.00 per hour for employers with 21 or more workers. Under the FLSA, employees who receive tips may be credited up to 40% of the statutory minimum wage per hour for tips received. In the city of Chicago, tipped employees must be paid at least $8.40 per hour in cash wages for employers with four to 20 workers and $9.00 for employers with 21 or more workers. The employer must be able to demonstrate the employee receives at least the minimum wage for each hour of work when tips and direct wages are combined.
Employers subject to the Chicago minimum wage should provide notice of required wage increases using forms available from the city:
No minor under the age of 16 may be employed or allowed to work for more than six consecutive days in a week, more than 48 hours in a week or more than eight hours in a day. No minor under the age of 16 may be employed or allowed to work more than three hours a day on any day when school is in session. The combined hours of work outside and in school may not exceed a total of eight in a day.
The FLSA also permits the employment of certain individuals at wage rates below the statutory minimum wage, so long as employers obtain certificates issued by the Department of Labor, including:
In February of 2014, President Obama signed an Executive Order to raise the minimum wage rate for workers on federal contracts. The order says that covered “new” federal contracts, “contract-like instruments,” and related subcontracts must include a clause providing that, no sooner than January 1, 2015, workers performing under such arrangements will be paid a rate of at least $10.10 per hour. Under the clause, the minimum rate will be determined (and likely raised) annually thereafter by the U.S. Secretary of Labor with reference to percentage increases in the Consumer Price Index. The minimum wage for federal contractors, as of January 1, 2022, is $11.25 per hour for exiting contracts. For new or extended contracts entered into on or after January 30, 2022, the minimum, wage rate is $15.00 per hour.
The order refers to a variety of contracts and “contract-like instruments” as falling within its scope. Among them will be those for certain federal procurements, for a variety of services (including at federal properties and on federal lands), for construction and for certain concessions, the wages under which are governed by the FLSA, the Service Contract Act or the Davis-Bacon Act. Employers covered under these requirements will want to pay attention to the DOL’s guidance regarding its implementation or possible amendments to these requirements.
Nonexempt employees must be paid overtime compensation for all hours worked in excess of 40 per week and must be paid at least the minimum hourly rate set by federal or state law.
The FLSA does not limit either the number of hours in a day or the number of days in a week that an employer may require an employee to work, as long as the employee is at least 16 years old. Illinois law also provides different hour protections for employees under the age of 16.
Example - Illinois law limits minors under the age of 16 on the number of hours they may work whether or not school is in session.
In addition to these requirements, employers should consult with the Illinois DOL when hiring minor employees to ensure compliance with Illinois child labor laws.
In determining an employee’s regular rate for purposes of determining overtime, the employer must include the employee’s hourly wages and any incentive pay, commission or bonus (including attendance, production and incentive bonuses).
Even if the employee will not receive a bonus until later (for example, a quarterly production bonus or an annual longevity bonus), the payments must be included in the overtime compensation determination – even if it means retroactively adjusting those computations once the amount of the bonus is determined. The FLSA provides special rules for retroactive adjustment of an employee’s regular rate. The regular rate need not include:
In December 2019, the DOL issued a final rule updating the FLSA definition of the regular rate of pay for the first time in more than 50 years. The final rule, which went into effect on January 15, 2020, clarifies that many benefits and perks should be excluded from the regular rate calculation, including (in addition to those listed above):
The final rule also includes guidance and fact-based examples of what types of bonuses are considered discretionary. Bonuses that may be discretionary include:
Such bonuses are usually not promised in advance, and the fact and amount of payment are in the sole discretion of the employer until at or near the end of the period to which the bonus corresponds.
Finally, the final rule updates the regulations regarding the “basic rate,” which is authorized under section 7(g)(3) of the FLSA as an alternative to the regular rate under specific circumstances. Under the current regulations, employers using an authorized basic rate may exclude from overtime computation any additional payment that would not increase total overtime compensation by more than $0.50 a week on average for overtime workweeks in the period for which the employer makes the payment. The final rule updates this regulation to change the $0.50 limit to 40% of the higher of the applicable local, state or federal minimum wage.
Under the DOL’s final rule, effective January 1, 2020, employers may use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary test requirement. Such bonuses include nondiscretionary bonuses tied to profitability or productivity, such as bonuses based upon the performance of the company in the prior year. In order for such bonuses to count toward the standard salary level test, the bonus payments must be made at least annually.
Under this option, an employer may pay the employee at least 90% of the salary level each pay period ($615.60/week). At the end of the year, the bonus, incentive payment or commission must bring the total amount paid to at least $35,568. Employers may make one final catch-up payment no later than the next pay period after the end of the year if the bonus, incentive payment or commission ended up being less than anticipated.
Employers often want to enforce a “no overtime without prior authorization policy” to control costs. However, such a policy will not prevent employees from being entitled to overtime compensation. In such cases, employees should be told that working unauthorized overtime will lead to discipline (but not non-payment). If employees continue to perform unauthorized work, they should be paid for it and disciplined appropriately (up to and including termination).
The Fair Labor Standards Act (FLSA) and state laws exempt some employees from overtime pay and minimum wage provisions (total exemptions) and also exempt certain employees from the overtime pay provisions alone (partial exemptions). Employers are required to follow the law that best benefits the employee. Illinois law by and large mirrors the FLSA in this regard, except that Illinois law uses slightly different definitions for each of the federal exemptions that are described below.
Due to the general shift from manufacturing to services and focus on technology, the employees exempted from FLSA provisions have changed somewhat since the inception of the FLSA. Indeed, traditional “white-collar” jobs once classified as exempt from overtime provisions are now often covered by the FLSA based on the duties performed. Most of the FLSA’s exemptions relate to specific jobs or industries.
Note: The duties, not the title, determine whether an employee is exempt from the FLSA. In addition, although the Illinois standards for these exemptions are similar to the federal standards, there are variations on these standards that apply in Illinois. Employers should consult with their attorneys before determining that these exemptions apply in cases where the employee’s job duties do not clearly fall within these exemptions.
There are three principal white-collar exemptions under FLSA and Illinois law:
To determine whether any position is exempt under one of the white collar exemptions, the employer must apply both the salary test and the duties test.
An employee is paid on a “salary” basis if, for each week the employee works, he or she receives a predetermined salary (exclusive of board, lodging, or other facilities). The salary cannot be subject to reduction based upon the quality or quantity of work performed. Therefore, before an employer takes a deduction from an exempt employee’s salary, it must look closely at whether that deduction might negate the exemption and subject the employer to overtime liability.
If an employer makes improper deductions from salary, it may lose the exemption if the facts show it did not intend to pay its employees on a salary basis.
An isolated or inadvertent partial-day deduction will generally not jeopardize the exemption except in the workweek for which it was taken. However, if the error is repeated or systemic, the exemption could be lost on far broader scale. For instance, if an employer regularly sends non‑exempt, salaried employees home early for lack of work and then deducts the partial day absences from their salaries, the employer is engaging in a repeated and widespread, although inadvertent, violation of the law. Those employees will not be properly paid on a salary basis and will not be considered exempt from overtime laws. The likely outcome is that all employees in that job category will be considered non-exempt for the time period that the policy existed (subject to the statute of limitations).
An employee can be exempt under the executive exemption from the minimum wage and overtime provisions of FLSA law if the employee is paid a salary of at least $684 per week and the employee meets the following additional criteria:
The administrative exemption applies to an employee who is paid at least $684 per week on a salary basis who meets the following criteria:
Examples of administrators include:
Examples of non-administrators include:
The professional exemption, which includes both learned professionals and creative professionals, applies to an employee who is paid at least $684 per week on a salary or fee basis. However, teachers, lawyers, and physicians are excepted from the salary requirement and have their own duty requirements for this exemption.
Professional employees must spend their primary duty in the performance of professional work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction. A prime characteristic of professional work is that the employee applies specialized knowledge or talents with discretion and judgment. Mechanical or routine work is not considered professional work.
The professional exemption employee must be engaged in work which is predominantly intellectual and varied, as opposed to routine mental, manual, mechanical, or physical work.
Creative professionals perform work in creative fields including music, writing, acting, and the graphic arts. The employee must perform work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor as opposed to routine mental, manual, mechanical or physical work.
The computer employee exemption applies to highly-skilled employees who are compensated on a salary or fee basis at a rate of not less than $684 per week, or $27.63 per hour (or $57,460 per year), and whose primary duties consist of one or more of the following:
the application of systems analysis techniques and procedures, including consulting with users to determine hardware and software specifications
the design, documentation, testing, creation or modification of computer programs relating to machine operating systems
Computer employees can also be either professional or administrative employees if they are paid on a salary. Employees whose computer-related duties are directly related to management policies and the implementation of business operations, may be exempt as administrative employees.
For the outside sales employee exemption to apply, the employee must be customarily and regularly engaged away from the employer’s place of business or away from an in-home office in making sales or obtaining orders for services or the use of facilities. Outside sales must be the employee’s primary duty. There is no salary requirement for this exemption.
Under the new exemption for highly compensated employees, an employee with a total annual compensation of at least $107,432, or equivalent to the 90th percentile of full-time salaried workers across the country, is considered exempt if all of the following are true:
In addition to the “white collar” exemptions, both FLSA and Illinois law carve out further employee exemptions from the wage and hours requirements. The following are groups of employees that are either totally exempt (from minimum wage and overtime requirements), or partially exempt (from overtime requirements only) under Illinois law.
To the extent that Illinois law is more protective of employees than the FLSA, employers must comply with Illinois law. It is important for employers to remember that even if an employee is exempt from a requirement under either the FLSA or Illinois law, but not both, the employer must comply with the wage or hour requirement from either statute.
The following employees are exempt from minimum wages under Illinois law:
In addition to the Illinois exemptions listed in the above section, the following workers are exempt from the minimum wage and overtime provisions of the FLSA:
The following are some categories of employees that are exempt from the minimum wage and/or overtime requirements of the FLSA laws. The exemptions narrowly defined. An employer should consult an attorney if they feel their business may be exempt.
Independent contractors are not subject to FLSA laws.
Seasonal employees of educational or organized camps are exempt from state law as long as the camp grosses less than $500,000 annually or is a non-profit organized camp. They are exempt from federal law if they also do not operate more than seven months in a calendar year and the average receipts for any six months of the preceding calendar year may not be more than 33 1/3% of the average receipts of the remaining months of that year.
Companions to the elderly or infirm, working in or about the home of the person by whom the companion is employed, are exempt from state and federal laws.
Under federal law, only casual babysitters employed in the house of the child are exempt. Casual means “employment which is irregular and intermittent and which is not performed by an individual whose vocation is providing domestic services.” Therefore, a babysitter who works on other than a casual basis, must be paid the federal minimum wage rate, and overtime based on a rate not less than one and one half times the federal minimum wage rate.
Immediate family members of agricultural employers, some employees of small farm operators, certain hand harvesters, and certain employees mainly engaged in the range production of livestock are exempt from state and federal laws.
Golf caddies employed at a golf course in a supervised training program are exempt from state and federal laws.
Managers of multi-unit accommodations designed to provide others with temporary or permanent lodging are exempt from state minimum wage and overtime. Assistant managers and maintenance employees who live on the premises are also exempt. Managers and maintenance personnel who reside in mobile home parks or manufactured dwelling parks are also exempt. However, all of these employees are subject to the federal minimum wage and must be paid at least $7.25 per hour.
Employees who want to volunteer time to their employer must meet all of the following criteria to be exempt from minimum wage and overtime laws:
Employers often view interns as a win-win for the company and the intern. The individual is able to receive substantive work experience and the employer is able to utilize his or her services for free. The Department of Labor (DOL), however, looks deeper than simply an intern’s offer to work without pay when classifying the individual as an intern or an employee. Internships in the “for-profit” private sector will most often be viewed as compensable employment, unless the six-part test (described herein) relating to trainees is met.
Whether an internship or training program meets the exclusion depends upon all of the facts and circumstances of each such program. All six of the following criteria must be applied when making a determination:
The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment.
The internship experience is for the benefit of the intern.
The intern does not displace regular employees, but works under close supervision of existing staff.
The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.
The intern is not entitled to a job at conclusion of the internship.
The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.
Generally speaking, the closer an internship program is to a classroom or learning experience versus the performance of the employer’s operations, the more likely that the WHD would classify the program as an internship program eligible for “unpaid” status.
If the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will more likely be viewed as employees and entitled compensation under the FLSA. However, if the employer is providing job-shadowing opportunities that provide the intern the opportunity to learn certain functions under the supervision of regular employees and the intern performs minimal work, the activity is more likely to be viewed as an education experience.
The internship should be for a set amount of time, established prior to the start of the internship. Further, unpaid internships generally should not be used by the employer as a trial period for individuals seeking employment at the conclusion of the internship. If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA and subject to wage and hour laws beginning with the period of training.
Payment of wages is generally governed under state law.
Illinois law exempts from the requirement to pay timely and full wages to family members of the employer and any salaried employee who falls within the “white collar” exemptions, which are listed in above sections.
Illinois law provides that wages must be paid on an established day or date at regular intervals. Employers who pay wages bi-monthly must pay wages within 13 days from when the compensation was earned, and employers who pay weekly must pay wages within seven days from when the compensation was earned. Subject to very limited exceptions, employers must pay in full all wages earned by each employee on the scheduled pay days.
As of August 1, 2021, employees in Chicago are afforded protections in the event of wage theft. Under the provision, an employer is liable for wage theft where it fails to timely pay a covered employee. Wage theft includes the nonpayment of any wages required for work performed, as well as paid time off (including Chicago paid sick leave) and contractually required benefits.
Claims may be filed with the Office of Labor Standards or a civil action, but not both. In either type of action, the employment may be held liable for the amount of any underpayments and damages of either:
In general, the Fair Labor Standards Act (FLSA) considers time spent performing activities that are primarily for the employer’s benefit as compensable “hours worked,” while time spent primarily for the employee’s benefit is not. Below is an explanation of how this rule is applied to several specific situations.
When employees are idle during their regular workday because of interruptions beyond their control, the time spent waiting is counted as working time if it is unpredictable, short in duration, and controlled by the employer such that employees are unable to use that time for their own purposes. Below are examples of compensable waiting times:
Employees on duty 24 or more hours or who reside on the employer’s premises may agree in writing to have uninterrupted sleep time of up to eight hours per night deducted from hours worked. No reduction is permitted unless at least five hours of sleep are taken. Up to three hours of meal times also may be deducted. Persons who reside on the employer’s premises also may voluntarily sign agreements setting forth their work and non-work time on a fair and reasonable basis.
Whether on-call time is compensable depends on the extent to which the employee’s personal time is restricted. Carrying a beeper does not constitute hours worked, provided the employee is relatively free to come and go as he or she pleases, and the employee is given sufficient time to report (generally 20 to 30 minutes, depending on geographic population density) so that the employee may be free to use time to engage in personal activities while on call. The employee may be required to refrain from drinking alcoholic beverages during this period. Some restrictions may translate on-call time into hourly work, such as requiring an employee to stay at work or placing an employee constantly on-call or frequently interrupting the on-call period.
In Illinois, every employer shall allow every employee, except part time employees, employees required for emergency repair or other emergencies, agricultural or coal mining, canning and processing employees, watchmen or security guards, executives, and professionals, and crew members in towing vessels, at least 24 hours of consecutive rest in every calendar week, in addition to the regular period of rest allowed at the close of each working day. Beginning January 1, 2023, the one day of rest period will change from one day every calendar week to one day "every consecutive seven-day period."
Hotel employers must provide hotel room attendants who work at least seven hours per day with at least two 15-minute paid rest breaks. An employer may not require hotel room attendants to work during their break periods.
Many states have laws requiring meal and/or rest periods, yet neither of these periods is required under the Fair Labor Standards Act (FLSA). As addressed earlier, the FLSA’s only connection to this subject is that unpaid meal periods need to be at least 30 minutes long in order to not constitute hours worked.
Illinois law requires that an employee be given a 20-minute meal or rest break after seven and one-half consecutive hours worked, beginning no later than five hours after the start of the shift. This requirement, however, may be altered by written agreement between and employee and employer and does not apply to employees generally exempt from Illinois wage and hour requirements. Illinois law provides an exception to the required break requirement for hotel employees, motor and contract carriers and individuals who work in “compressed air workplaces.” Effective January 1, 2023, employers will be required to provide an additional 20-minute meal or rest break for each additional four-and one-half-hour period worked after the initial seven and one half period.
Both Illinois and the FSLA require employers to provide female employees who are otherwise not exempt from the wage and hours requirements with reasonable, paid or unpaid break time to express breast milk for a nursing child up to three years old. Illinois law requires that such time be run concurrently with available paid break time for the first year after the birth of the child and prohibits docking an employee’s pay for time spent nursing an infant or expressing milk. The law also requires the employer to make reasonable efforts to provide a clean room or other location, other than a bathroom, where an employee may express breast milk in privacy.
The One Day Rest in Seven Act (ODRISA) requires that employers provide a minimum of 24-hours of rest in each calendar week. The law permits employers to secure permits from the Illinois Department of Labor to work employees the seventh day provided that the employees voluntarily elect to work.
Employers must maintain the following records:
Employers are required to maintain payroll records showing the following information.
Note: A copy of the paycheck is not sufficient to meet these requirements.
The principal risk to an employer in failing to maintain adequate or accurate employment records is that the employer will be held responsible for the information contained within such records. For instance, employee testimony as to hours worked generally will be believed in the absence of accurate records of such work. Courts and government agencies maintain that the employer can hardly complain about this consequence, since it could have been easily avoided by accurate recordkeeping.
Hours worked are all hours an employee is engaged to work, engaged to wait, or actually at work, whether or not authorized. Therefore, if an employee starts work early or works beyond the end of his or her shift, such work must be compensated, whether or not it was authorized or even necessary. Employees, however, may be disciplined for unauthorized or unnecessary work.
Employers may keep track of employees’ time in any method they choose. Employers may use a time clock, have a timekeeper keep track of employees’ work hours, or tell their workers to write their own time on the records. Generally, any timekeeping plan is acceptable as long as it is complete and accurate.
While required to track the time of non-exempt employees for proper payment of wages, employers also may require exempt employees to track their hours of work as well.
Time clocks are not required but can be used to record hours worked. If time clocks are used, rounding practices may be used. If the rounding method is followed, employers must ensure that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.
Example - Employers should not round time for employees who punch in early or who leave late, without also rounding back for employees who may show up late or leave a few minutes early.
Employers should round employee time to the nearest increment (e.g., five minutes, or nearest 15 minute).
As of January 1, 2021, employers must provide work schedules to employees at least 10 days in advance. This requirement will expand to 14 days as of July 1, 2022.
If an employee alters an employee’s schedule after the schedule is provided, the employee is entitled to regular pay plus:
Employees have the right to:
Covered employers are required to keep the following records for each covered employee for at least three years and to make them available for inspection upon request:
In addition, employers must retain:
The requirements of the Fair Workweek Ordinance do not apply when a work schedule change is because of a pandemic. Chicago’s Department of Business Affairs and Consumer Protection (BACP) will consider the change due to a pandemic only when the pandemic causes the employer to materially change the operating hours, operating plan or goods or services provided resulting in a work schedule change. This exception applies only to right-to-rest provision.
Employers are subject a fine between $300 and $500 for each offense. Each employee whose rights are affected and each day a violation continues constitute separate and distinct offenses to which a separate fine shall apply.
Child labor, minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA) are enforced by the Wage and Hour Division of the DOL. Government investigators have authority to inspect and copy records, interview employees and otherwise make determinations of FLSA violations. Based on the results of such DOL audits, the Secretary of Labor, an individual employee or a group of employees, may sue an employer to collect past due minimum wages or overtime compensation.
Under the FLSA, the statute of limitations to collect past-due wages is two years for ordinary violations and three years for willful violations. Illinois statute of limitations for wage and hour violations is three years.
Liquidated (pre-determined) damages in an amount equal to back wages found due are available as a remedy, plus attorneys’ fees and costs. An injunction is also possible in court cases brought under the act by the Secretary of Labor. Attorneys’ fees may be recovered in successful private actions. Civil fines of up to $2,203 may be assessed by the DOL for each repeated or willful violation.
Willful FLSA violations (those violations in which a court finds an employer knew or should have known that pay practices were in violation of the FLSA) may result in criminal prosecution. First offenders are subject to a fine not to exceed $10,000. Second offenders are subject to a fine and maximum prison term of six months. In Illinois, employers are guilty of a Class B misdemeanor if they:
The FLSA is very complex and involves numerous detailed regulations. In addition, DOL investigators are quite experienced. Moreover, in the last few years, litigation for failure to pay overtime compensation has increased dramatically, with companies collectively paying out more than one billion dollars annually to resolve these claims, often brought as collective actions, which involve claims by numerous employees as a result of a single improper pay practice. It is extremely important that employers consult an attorney at the earliest stage of any potential lawsuit or DOL audit involving wage and hour laws. Keep in mind that the information contained in this chapter only addresses a portion of the relevant laws and regulations related to wage and hour laws.
The equal pay provisions of the FLSA provide that persons performing jobs requiring equal skill, effort and responsibilities at the same establishment may not be paid different wage rates based upon their sex. (Illinois has a similar law prohibiting discriminatory wage practices based on sex.) Differences may be based upon seniority and bona fide merit systems. This statute is enforced by the Equal Employment Opportunity Commission (EEOC). Recently the EEOC has increased enforcement of this Act to bring wages of women more in line with those of men.
The Equal Pay Act (EPA) has the same statute of limitations for violations (two years for ordinary violations and three years for willful violations) as the FLSA. Liquidated damages are also available to claimants where the employer is unable to prove its actions were taken in good faith.
Recent amendments to the Illinois Equal Pay Act expanded the coverage from just gender discrimination to also cover discrimination against African-Americans. This act places increased burdens on employers for justifying pay variations among employees. Employers who pay employees differently for “substantially similar” jobs at different pay rates should carefully document the reasons for the disparities. Pay differentials should be based on a job-related reason that is consistent with business necessity. Employers need to be especially conscious of pay differences that are between employees of different sexes and/or races.
Employers with 100 or more employees are required to obtain an equal pay registration certificate from the Illinois department of Labor (IDOL) by March 23, 2024, and to renew that certificate every two years. To obtain the certificate, employers must apply and provide disclosures and affirmations. Before applying, employers must provide contact information to the IDOL. More information can be found online at:
On January 29, 2009, the Lilly Ledbetter Fair Pay Act (Ledbetter Act) was signed into law and further expanded protection to employees with pay claims. Unlike the EPA, the Ledbetter Act covers more than just gender discrimination – it also protects against discrimination in pay based on race, color, religion, national origin, age and disability. The Ledbetter Act provides that an unlawful employment practice occurs, “each time wages, benefits or other compensation is paid, resulting in whole or in part from a [discriminatory] decision or other practice.”
If an employee believes that she was denied a promotion as the result of a discriminatory practice, each paycheck she receives after that decision will now trigger the start of a new 180-day period within which she may file a claim of discrimination. If an unlawful employment practice has occurred, the employee may be entitled to recover back pay for up to the two-year period before the charge was filed. The Ledbetter Act became effective on May 28, 2007, and applies retroactively to all pending claims of discrimination after that date.
Under the Fair Labor Standards Act (FLSA), employers may make deductions from the pay of non-salaried employees when:
Under Illinois law, employers may need to obtain the express written authorization from the employee before making a wage deduction that is not required by law or pursuant to a wage assignment or that is not for the benefit of the employee.
Wage garnishment occurs when an employer withholds a portion of an employee’s earnings for the payment of a debt as the result of a court order or other equitable procedure. Employers are prohibited from discharging an employee because his or her earnings have been subject to garnishment for any one debt. However, an employee is not protected from discharge if the employee’s earnings have been subject to garnishment for a second or subsequent debt.
Under federal law, the maximum amount of an individual’s disposable earnings (earnings after statutory withholding) that may be subjected to garnishment is the lesser of the two:
The intent of these restrictions is to save a certain amount of the earnings for the wage earner. These restrictions do not apply to any debt due for a state or federal tax, child support or alimony or any order of a bankruptcy court under Chapter 13 of the Bankruptcy Act. Up to 50% of a worker’s disposable earnings may be garnished for child support or alimony if the worker is supporting another spouse or child or up to 60% if the worker is not.
Under Illinois law, no assignment of wages is valid unless the assignment is written, signed by the wage-earner and bears the date of execution, the name of the employer, amount of money owed, rate of interest and a Social Security number.
Employers that pay at or near minimum wage rates should be mindful of avoiding situations in which employees are required to bear work-related expenses for the benefit of the employer that may result in the employee being paid less than the applicable minimum wage.
Also, under Illinois law, employers are required to reimburse employees for expenses or losses that the employee incurs that are directly related to the work the employee performs within the scope of the employee’s duties. This requirement is a potential source of controversy in situations where an employee has not maintained careful records of work-related expenses and possibly delays requesting reimbursement until only after the employee has been disciplined or been dismissed from employment. Employers can reduce the risk of a dispute by implementing clearly defined expense reimbursement policies within their handbooks. Illinois employers may, for example, require that employees submit expense reimbursement requests within 30 days from when the employee incurred the expense and may place limits on expenses that employees may incur without prior authorization. While the employee may not necessarily forfeit the right to be reimbursed for certain expenses, employees who do not follow applicable written rules or policies relating to expenses may lose the right to claim reimbursement under Illinois wage payment law.
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Appendix A: Recordkeeping requirements
Appendix B: Posting requirements