Chicago Overtime Pay and Minimum Wage Lawyers
The Fair Labor Standards Act (FLSA) is a federal law that requires all covered, nonexempt employees be paid at least the minimum wage for all hours worked. The FLSA also provides that covered, nonexempt employees who work more than 40 hours in the workweek must receive overtime pay at the rate of at least one and one-half times the employee’s regular rate of pay for the overtime hours (hours worked over 40 in a workweek). A work week, which can begin on any day of the week, is 7 consecutive 24-hour periods or 168 consecutive hours.
Most workers in the United States are covered under the FLSA. Employers, however, utilize many different schemes to avoid paying overtime and minimum wages to reduce payroll costs.
Minimum Wage Law
The federal minimum wage is $7.25 per hour. In states or cities where the minimum wage is higher than the federal minimum wage, employers are required to pay employees the higher of the city, state or federal minimum wage.
Illinois Minimum Wage Law
Effective January 1, 2023 the Illinois Minimum Wage is $13.00 per hour. The Illinois minimum wage has and will continue to increase as follows:
| Year | Minimum Wage | Tipped Wage | Youth Wage |
| 1/1/20 | $9.25 | $5.55 | $8 |
| 7/1/20 | $10 | $6 | $8 |
| 1/1/21 | $11 | $6.60 | $8.50 |
| 1/1/22 | $12 | $7.20 | $9.25 |
| 1/1/23 | $13 | $7.80 | $10.50 |
| 1/1/24 | $14 | $8.40 | $12 |
| 1/1/25 | $15 | $9 | $13 |
Chicago Minimum Wage Law
As of July 1, 2021 the minimum wage in Chicago is $15.00 per hour for employers with 21 or more workers, and $14.00 per hour for employers with 4 to 20 workers. Tipped workers (workers who receive tips as part of their wage, like restaurant servers) have a minimum wage of $8.40 for employers with 4 to 20 workers, and $9.00 for employers with 21 or more workers. If a tipped worker’s wages plus tips do not equal at least the full minimum wage, the employer must make up the difference.
On July 1, 2024, the tip credit amount an employer can claim decreases from 40% to 32% of the applicable minimum wage. Every year thereafter, on July 1, the tip credit will decrease by 8% until July 1, 2028. At of July 1, 2028, the standard minimum wage rate will apply to all employees, including those in occupations that customarily receive tips.
Overtime Law
Common ways that employers violate the overtime pay provisions of state and federal law include:
- Claiming that because an employee is paid a salary, he or she is not entitled to overtime pay;
- Failing to count all work time in computing overtime pay, such as not including travel time between jobs or time spent performing pre-shift or post-shift duties; or by requiring employees to work “off the clock;”
- Utilizing time clocks that “round down” time in 15-minute increments or that are otherwise solely favorable to the employer;
- Giving employees important sounding titles such as “assistant manager” in order to claim that they are exempt from the overtime laws;
- Paying employees cash at their straight-time hourly rate for all hours worked over 40 in individual work-weeks;
- Using illegal averaging techniques to avoid paying correct overtime wages, such as paying employees overtime on the basis of 80 hours every two weeks as opposed to 40 hours in an individual work-week;
- Excluding certain payments from the regular rate for overtime purposes, such as bonus and commission payments, thereby resulting in the employer paying the employee overtime wages based on an incorrectly low regular rate of pay.
All employees are entitled to overtime pay unless the employer can prove they fit into one of the few exemptions to the state or federal overtime laws.
Special overtime rules may apply to your employment if you are a law enforcement officer, fire protection worker, or other first responder, or are an employee of the federal government. Learn more here.
Special overtime (and minimum wage) rules also apply if you are a tipped employee.
Exemptions from Overtime Pay Law
Understanding the Exemptions and Exclusions from Overtime Pay Law
There are several exemptions — or exceptions — from the federal law that requires the payment of overtime pay. Whether any of the exemptions from overtime pay law apply to your employment depends on how you are paid and the specific job duties that you perform in your job. Job title alone never determines your right to overtime pay. And, many states provide greater rights to overtime pay, and fewer exemptions from state overtime pay laws.
Several categories of employment carry specific regulations regarding overtime exemptions, including:
- White collar employee exemptions
- Highly compensated employee exemption
- Computer employee exemption
- Outside sales employee exemption
- Commissioned retail sales exemption
- Motor carrier exemption
- Employees in hospitals and special care
- Blue collar workers
- Police, fire fighters, paramedics and other first responders
- Independent contractor exemption
An extensive list of the exempt status of specific jobs is also located on this website. If you have questions about whether you are entitled to overtime pay, contact our office via phone, email, or schedule an in-person consultation.
What Work Time Must Be Paid?
What is Work Time?
Generally, an employer must pay an employee for all time considered to be “work” and all “work” time counts towards hours worked towards overtime. What time is “work time” that must be paid by the employer is often complicated.
The FLSA defines the term “employ” to include the words “suffer or permit to work.” Suffer or permit to work means that if an employer requires or allows employees to work, the time spent is generally hours worked. If the hours are considered to be work, then they must be paid by the employer to the employee. Thus, time spent doing work not requested by the employer, but still allowed, is generally hours worked, since the employer knows or has reason to believe that the employees are continuing to work and the employer is benefiting from the work being done. This time is often referred to as “working off the clock.”
There are many situations that might lead to an employee not getting paid for work time, including:
- Delivery drivers load a truck, drive to the job site, and then unload the truck. Sometimes, an employer does not begin to pay for the work time until the truck arrives at its destination, so the worker is not paid for the time it took to actually load the truck or to travel to the job site. This is illegal.
- In an office setting or call-center, many time clocks are on computer workstations. If an employee has to turn on the computer and wait for the software to load before clocking in, he or she is not being paid for work time. This often happens in call centers and may be illegal.
Unpaid work time is a serious problem. Examples of situations where unpaid work time includes time that may or may not be considered hours worked under the FLSA include:
How to Correctly Calculate Overtime Pay
An employee’s overtime pay is based on his or her “regular rate of pay.” Under the FLSA, employees must be paid one and one-half times their “regular rate” of pay for all hours worked in excess of 40 during an individual work week. The regular rate of pay, however, is not always the same as the employee’s hourly rate of pay. This is because all work-related payments must be taken into account when calculating an employee’s correct regular rate of pay. As a result, an employee’s “regular rate” is always equal to or greater than his or her hourly rate of pay. There are various types of payments that employers are required to include when computing the regular rate of pay for all employees, both hourly and salaried.
The following types of payments must be factored in when calculating an employee’s regular rate of pay for overtime purposes.
- Commissions and Bonuses: When an employee receives commissions or a bonus, those payments must be included as part of his or her total compensation in calculating employee’s regular rate of pay for overtime pay purposes. Commissions and non-discretionary bonuses, or other additional payments that are directly tied to hours worked or to the achievement of specific results, must be taken into account when determining the regular rate of pay. Only “non-discretionary” bonuses, like certain types of gifts, may be exempt under FLSA overtime laws.
- Incentive Pay: Many employees will receive extra compensation for special achievements, such as if they are involved in the training or educating of another employee. Such incentive payments also must be included as part of the employee’s regular rate of pay.
- Shift Differentials: Employees who work nights, weekends, or holidays are often paid a “shift differential.” Shift differentials are often improperly excluded from the regular rate of pay in the healthcare industry. The FLSA requires employers to include in the regular rate of pay such types of payments, provided that the “differential” is less than 50% of the employee’s regular rate of pay.
- Longevity Pay: Extra payments related to the length of time an employee has worked at a company must be added to the employee’s total wages to determine the correct regular rate of pay.
There are certain types of payments that an employer may exclude under the FLSA when computing an employee’s regular rate of pay. For example, gifts, discretionary bonuses, profit-sharing plans, thrift-saving plans, and pension benefit plans may be excluded from computing an employee’s regular rate of pay. Also, employers may exclude all “premium” payments if the payment equals or exceeds one-and-one half times the employee’s pay rate for the hours worked during that time period.
Special rules apply to calculating overtime pay owed to salaried employees and tipped employees. Follow the links below to learn more: