Federal and state laws heavily regulate the rate, method, and timing of payment of wages, overtime, child/youth labor, employer record-keeping, and minimum wage.
Minimum Wage
In Illinois the minimum wage is set at $10.00 per hour for employees who are 18 or older. Certain exceptions apply (i.e. employees who receive tips, youth, trainees/interns, etc.).
Overtime
An employer is required to pay employees at a rate of 1-1/2 times the employee’s regular rate for all hours worked in excess of 40 in each workweek. The mere fact that an employer pays an employee a salary does not automatically disqualify the employee from receiving overtime. Also, the mere fact that an employer has not “authorized” an employee to work overtime is not a basis to deny payment of overtime.
Overtime Exemptions
To be exempt from the requirement of overtime, the following tests must be met: salary (at least $455 per week or $27.63 per hour if a computer professional) and the duties must fall into one of the categories identified as being exempt from overtime.
One of the most common exemptions are the “white collar” exemptions:
Executive Exemption
To qualify for the executive exemption, all of the following tests must be met:
An employee must earn a salary of at least $455 per week or $23,660 annually.
The employee’s primary duty must be managing the employing enterprise or one of its recognized departments or subdivisions.
The employee must customarily or regularly direct the work of two or more other employees
The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
The employee’s suggestions and recommendations have particular weight if it is part of the executive’s job duties to make such suggestions and recommendations, the executive frequently makes or is requested to make suggestions and recommendations, or the executive’s suggestions and recommendations are frequently relied upon.
There is an additional category of executive exemption that includes employees who own at least a 20% equity interest in a business if they also are actively engaged in managing the business, regardless of what they earn weekly.
Administrative Exemption
To qualify for the administrative exemption, all of the following tests must be met:
An employee must earn a salary of at least $455 per week or $23,660 annually
The employee’s primary duty must be the performance of office or non-manual work directly related to the management policies or general business operations of the employer or its customers
The employee’s primary duty includes the exercise of discretion and independent judgment with respect to significant matters
Professional Exemption
To qualify for the professional exemption, the following tests must be met:
An exempt professional must earn a salary of at least $455 per week or $23,660 annually. In addition to the salary requirement, an exempt professional must have a primary duty of performing office or non-manual work that requires one of the following:
Knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction
Invention, imagination, originality or talent in a recognized field of artistic or creative endeavor
Computer Employees
To qualify for the computer professional exemption, the computer employees must earn at least $27.63 per hour or $455 per week ($23,660 annually) and be employed as computer systems analysts, computer programmers, software engineers or other similarly skilled workers in the computer field.
In addition to the above requirements, an exempt computer employee must have a primary duty in one of the following areas:
Application of systems analysis techniques and procedures, including consulting with users to determine hardware, software or system functional applications
Design, development, documentation, analysis, testing, creation or modification of computer systems or programs including prototypes, based on and related to user or system design specifications
Design, documentation, testing, creation or modification of computer programs related to machine operating systems
A combination of duties described in the above three options that requires the same level of skill to perform those duties
Outside Sales Exemption
There is no salary basis or compensation test for the outside sales exemption.
The outside sales exemption applies to an employee who meets both of the following requirements:
The employee’s primary duty is to make sales or the employee’s primary duty is to obtain orders or contracts for services or contracts for the use of facilities for which clients or customers pay
The employee is customarily or regularly engaged away from the employer’s place of business in performing his or her primary duty
An outside sales employee typically makes sales away from the workplace and at the customer’s place of business or, if selling door-to-door, at the customer’s home. Outside sales for exemption purposes do not include sales made by mail, telephone or the internet unless such contact is used in addition to personal calls.
Highly Compensated Employees
Employees earning at least $100,000 in annual base salary, commissions and non-discretionary bonuses are exempt from the FLSA’s minimum wage and overtime requirements if the employee performs one or more duties of an exempt executive, administrative or professional employee.
Off-the-Clock Work
Off-the-clock work is work an employee performs for the benefit of the employer without being paid for such work. Often, employees will perform pre-or-post work duties that are essential to the position. This work is often compensable to employees. Additionally, employees who check email at home or after hours could be entitled to compensation for the time they spend on such duties.
Wage Theft
Illinois recently enacted tough new legislation to penalize employers who steal employee wages. Repeat offenses of the law will now be treated as felonies and will be subject to fines and penalties as well as an award of lost wages and interest. The new law expressly permits class actions to recover “stolen” wages.
Illegal Deductions
Only certain deductions from employee wages are allowed under Illinois law. Deductions may be made when: (1) required by law (such as taxes); (2) to the benefit of the employee (such as health insurance premiums, union dues etc.); (3) a valid wage assignment or wage deduction order is in effect; (4) made with the express written consent of the employee, given freely at the time the deduction is made.
Many deductions made by employers violate this law. For example, the following deductions from an employee’s wages without an express written agreement by the employee at the time the deduction is made are violations of the law: deductions to cover for cash drawer shortages; deductions for damage to equipment; deductions for inventory shortages; and deductions for customer theft.
Final Paychecks
All final compensation, including bonus payments, vacation pay, wages and commissions must be paid on your next regularly scheduled payday.