Wage and Hour Law – An Overview

Federal Wage and Hour Law

The Fair Labor Standards Act (“FLSA”), mandates the payment of the minimum wage and overtime at a “time and one-half” rate for hours worked in excess of forty in a workweek.

Passed during the Great Depression, the FLSA is one of the oldest and most important employment laws on the books. In urging Congress to enact the FLSA, U.S. President Franklin Delano Roosevelt eloquently articulated its aims:

Our nation so richly endowed with natural resources and with a capable and industrious population should be able to devise ways and means of insuring to all our able-bodied working men and women a fair day’s pay for a fair day’s work. A self-supporting and self-respecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling workers’ wages or stretching workers’ hours.

A covered employee can pursue a claim under the FLSA individually or collectively (with other similarly situated employees). In a collective action under the FLSA, court-approved notice of the lawsuit is sent to similarly situated persons who can choose to “opt in” to the case by signing a consent to join the suit.

An employee who is affected by a violation of the FLSA can normally recover liquidated damages of twice what the employee is owed. The statute of limitations under the FLSA is three years for “willful” violations and two years for “non-willful” violations. A violation is “willful” where the employer knew it was violating the FLSA or showed reckless disregard for its requirements.

Although some employees are exempt from the FLSA, exemptions are “narrow” and it is the employer’s burden to prove an employee is exempt. The fact that an employee is paid a salary, or is classified as an “independent contractor,” by itself, does not mean that she is not entitled to minimum wage and overtime under the FLSA. Job titles and generic job descriptions are insufficient to determine who is exempt; rather, the determination must be based on all the facts in a particular case.

The FLSA prohibits an employer from allowing employees to work “off the clock,” and work time can be compensable, even if it is not recorded. Thus, if the employer knows (or should have known) that its employees are working, they must be paid. It is the employer’s obligation to ensure that employees do not work off the clock, and that they are fully compensated for all of their work time.

Illinois Minimum Wage and Penalty

The FLSA (which is a federal statute) can also be enforced in tandem with state laws. For instance, where state law sets a higher minimum wage than the FLSA, covered employees are entitled to the higher rate of pay. In Illinois, the Illinois Minimum Wage Law (“IMWL”), sets a higher minimum wage than the FLSA, and the historic rates are set forth as follows:

  • from July 1, 2007 through June 30, 2008: $ 7.50 per hour,
  • from July 1, 2008 through June 30, 2009: $ 7.75 per hour,
  • from July 1, 2009 through June 30, 2010: $ 8.00 per hour, and,
  • on and after July 1, 2010: $ 8.25 per hour.

Like the FLSA, the IMWL requires employers to pay covered employees time and one-half for hours worked over 40 in a given workweek. And, it provides for a penalty of 2% for any underpayments per month until the underpayment is made corrected.

Unlawful Deductions from Wages and Unfulfilled Promises

The Illinois Wage Payment and Collection Act (“IWPCA”), 820 ILCS 115/1 et seq. is another important statute which allows employees to recover unpaid earned wages. The IWPCA provides that covered employers must pay all wages earned to covered employees within a certain pay period. If you are paid every two weeks, the employer must pay you a paycheck no later than 13 days after the end of the pay period. If you are paid every week, the employer must pay you within 7 days after the end of the pay period.

The IWPCA can encompass traditional hourly-based compensation agreements (hours worked times hourly rates). The IWPCA can also be used in some cases to recover earned vacation benefits, severance payments, bonuses, commissions, stock options, and other forms of compensation, depending on the facts of the case.

An employer also violates the IWPCA if it makes certain deductions from an employee’s paycheck without her approval.  The statute of limitations under the IWPCA is ten years. In January 2011 the Statute was amended to provide a 2% per month penalty, similar to that allowed under the IMWL.

Strength in Numbers

Unlike the FLSA, employees can pursue traditional “class action” lawsuits under the IMWL and IWPCA, provided the elements for class certification are met. If a class is certified under the IMWL and IWPCA, employees are not required to “opt into” the suit to participate, as is required by the FLSA’s collective action provisions. Rather, in a certified class action, all class members are included in the suit (and bound by its result) unless they affirmatively “opt out.” This distinction may be advantageous, for instance, to current employees who do not wish to formally join a lawsuit, but are nonetheless entitled to wage payments under the law. Class actions under the IMWL and IWPCA can, in some cases, be pursued in tandem with “opt in” actions under the FLSA to simultaneously enforce federal and state wage and hour laws.

If you have questions or concerns regarding how you have been paid, please contact Robin Potter & Associates to schedule a consultation.