Municipal Law Q&A Test your knowledge of municipal practices and procedures with the questions and answers below. Click here to submit a question to Ancel Glink.
Municipal Q&A - August 2004
What Must Municipal Officials Do To Comply With The New Federal and State Overtime Regulations?
ANSWER:
On April 23, 2004, the U.S. Department of Labor issued a report finalizing the rules regarding the administration of federal wage-hour laws, including overtime rules. The new regulations will become effective on August 23, 2004. In a major departure from past experience, however, there now will be a difference between the federal laws and Illinois law regarding the payment of overtime pay. In addition, because of the way the federal statute is written, there is room for state law to block some parts of the federal regulations.
On April 2, 2004, Governor Blagojevich signed into law Senate Bill 1645, which amended the Illinois Minimum Wage Law (IMWL) to: 1) eliminate the "governmental body" exemption from the application of the IMWL; 2) adopt the rules interpreting the federal Fair Labor Standards Act (FLSA) as those rules existed before the new federal regulations were adopted, except for the minimum salary levels required for the white collar exemptions; and 3) specifically approve the use of compensatory time off in lieu of overtime pay and the partial, extended work period exemption for police and firefighters contained in Section 7(k) of the FLSA. The Illinois law became effective when signed by the Governor.
Prior to the April 2 amendment to the IMWL, the overtime provisions of the State law did not apply to the employees of "any governmental body". By eliminating that exemption, the amended IMWL now requires public employers to pay overtime to employees who were previously exempted by both State and federal law. The FLSA applies to government employees generally, but exempts employees of amusement or recreational establishments. The IMWL contains no such exemption. Therefore, employers such as park districts, municipalities and school district with recreational programs will be required by State law to pay overtime for hours worked in excess of 40 in a week to seasonal employees formerly exempted by the "amusement or recreational establishment" exemption to the FLSA and the "governmental body" exemption of the IMWL.
The fact that the amended IMWL went into effect April 2, while the amended FLSA does not go into effect until August 23, may affect some overtime exemptions in the interim. Since only the prior state law provided recreational exemptions, the elimination of that by the state obligates all employers to pay overtime effective immediately to employees that were formerly exempt. By State law, effective April 2, all employees earning less than $425 per week must be paid overtime, even if they are otherwise performing work of a type that would exempt them from overtime under the so-called "white collar" (executive, administrative, and professional) exemptions. Effective with the new FLSA regulations on August 23, that minimum weekly threshold salary will increase to $450, a minimum that will apply under both federal and State law.
On August 23, new regulations governing the white collar exemptions will go into effect for federal, but not State law purposes. As between federal and State regulations after August 23, employers will be required to follow the more conservative of the two in any given case. Thus, if overtime is mandated in any given case by either federal or State law, but not both, the employer must pay the affected employee overtime.
The primary difference between the new federal regulations governing the white collar exemptions and the old federal regulations now incorporated by State law involves the executive exemption. This exemption is most widely applied by public sector employers to staff supervisors. Both sets of regulations require that the employee's primary duty be management of the enterprise or a recognized department or subdivision and that he or she regularly supervise the work of two or more other employees. But the new federal regulation provides, in addition, that the employee must have the power to hire or fire or be in a position where a recommendation as to hiring, firing, advancement, promotion, or any other change of status of other employees are given "particular weight". This could affect the exempt status of lower-level supervisors in Illinois governmental bodies with civil service commissions and/or boards of police and fire commissioners, where the power to hire and fire is vested with the commission or board and not the supervisor. While our "supervisor" may direct the work of two or more employees, he or she does not have the power effectively to recommend advancement, promotion, or other change of status of those employees. While we continue to examine the impact of this change, a conservative reading of this new regulation reveals that such a supervisory position which is still exempt under State law, may be non-exempt under federal law, and may now be entitled to overtime pay. Analysis of this issue continues.
Finally, the new federal regulations eliminate the major burden of potential destruction of the exemption with disciplinary suspensions of one or more full days. Unfortunately, while the Illinois legislation does not specifically adopt either the old or new regulation on this issue, prudent employers will assume that the old regulation, which jeopardizes the exemption with disciplinary suspensions, will continue to control in Illinois in the same fashion that the old and more conservative regulations control elsewhere within the Act.
There are other differences between the State and federal laws, mainly technical, that are beyond the scope of this management alert. We suggest you contact your Ancel, Glink lawyer for compliance advice in the event that you encounter problems requiring interpretation of the new regulations and/or the interface between federal and State overtime requirements.
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