Why Can't I Take Money From A Careless Employee's Paycheck in Illinois?!

June 2010
By: Nancy E. Joerg, Esq.

Employers are often astounded and angry to find out they cannot reimburse themselves from an employee's final paycheck for costs and expenses such as damaged or lost property, unearned but used vacation, etc.

There are certain legal pathways under Illinois law to get around these difficult situations, but an employer must be careful to follow the regulations of the Illinois Wage Payment and Collection Act precisely. Every situation involving paycheck deductions must be carefully evaluated under state laws and regulations or the employer may face legal consequences.

Federal and state laws strictly prohibit if and how an employer can deduct from an employee's paycheck. In Illinois, for example, an employer can only deduct from an employee's paycheck if the deduction is:

• To the benefit of, and approved by, the employee (group insurance premiums, credit union transactions, union dues, etc.);
• Required by law (federal and state taxes, social security, etc.);
• In response to a valid wage assignment or wage deduction order (garnishment, child support, etc.);
• Made with the express written consent of the employee, given freely at the time the deduction is made. "At the time" means the deduction(s) will be made on the next payroll after the deduction agreement is voluntarily signed by the employee.

The Fair Labor Standards Division of the Illinois Department of Labor enforces four basic regulations covering most deductions from paychecks: (1) shortages; (2) damaged property; (3) return of employer's property; and (4) cash advances.

Deductions from paychecks need to be done very carefully. Employers need to be aware of the complex web of laws and regulations which prevent an employer from making unilateral deductions from an employee's paycheck. An employee's paycheck is sacred under the law. Once an employee has earned his pay, it is legally protected and employers must treat it accordingly.

Questions about this topic or other management-side labor and employment law issues? Please contact WS Shareholder and Senior Attorney Nancy E Joerg at 630-377-1554, najoerg@wesselssherman.com, or visit our website.

The Question of Mandatory Direct Deposit

July 2010
By: Nancy E. Joerg, Esq.

Many employers call our law firm to see if they can force their employees to use direct deposit. The answer for many states is "No." State laws rule in this area. Interestingly, some states, such as Missouri and Ohio, have no direct deposit laws.

Illinois: The Illinois Wage Payment and Collection Act requires employers to pay each of its employees his/her wages in a form that the employee may readily convert into cash (without the need of a personal bank account), unless an employee freely volunteers to be paid by direct deposit into an account with a financial institution of his/her choice.

This means that an Illinois employer cannot force (by means of company policy) employees to accept "direct deposit" as a method of payment. An employer cannot designate a particular financial institution or currency exchange for the exclusive payment or deposit of a check for wages.

Iowa: An Iowa employer may require a new employee to sign up for direct deposit (to the employee's designated financial institution) as a condition of hire unless the employee's costs of establishing and maintaining that account would reduce wages below the minimum wage; the employee would incur account fees as a result of direct deposit; or the parties are subject to a collective bargaining agreement prohibiting a direct deposit requirement as a condition of hire.

Minnesota: Private sector employers in Minnesota can enroll employees in direct deposit; however, employees may opt out by written notification to the employer. Therefore, mandatory direct deposit is not permissible in Minnesota.

Wisconsin: Wisconsin does not have a law that deals with direct deposit. The Wisconsin Department of Workforce Development (DWD) uses interpretation and inferences from Wisconsin wage and hour laws. The DWD says on its website that a direct deposit system must utilize a Wisconsin facility unless the employee voluntarily chooses a facility that is located outside of the state. This same DWD website states that a mandatory direct deposit system must provide a worker with 100% of his or her wages without the worker incurring any cost to gain access to their pay (check fees, service charges on an account, etc.).

The DWD website further notes that if an employer chooses to institute a direct deposit pay system that is available at the option of the employee, it is immaterial whether or not there are fees associated with obtaining the wages. If the employee chooses to use the direct deposit system, it is assumed that the employee has agreed to pay these fees for the convenience and security of having the wages placed directly into his or her bank account.

Because this direct deposit issue is not addressed in the statutes, a Wisconsin employer may make employee participation in a direct deposit pay program a condition of employment. That is, a Wisconsin employer may require that all new hires agree to participate in a direct deposit system, and be responsible for any fees, as a condition of employment. A Wisconsin employer may also require that established employees participate in a direct deposit system as a condition of continued employment. If a direct deposit is to be made, the employee must still receive a check stub showing the rate of pay, hours worked and the amount of and reason for each deduction.

Because each state sets its own laws regarding direct deposit of employee paychecks, each state has its own approach to related subjects such as "account fees," "opting out," "choosing the financial institution," etc. Contact a Wessels Sherman attorney to discuss questions regarding this subject.

Questions about this topic or other management-side labor and employment law issues? Please contact WS Shareholder and Senior Attorney Nancy E Joerg at 630-377-1554, najoerg@wesselssherman.com, or visit our website.

 

School's Out Soon -- Read this Before Hiring Teen Workers

May 2010
By: Nancy E. Joerg, Esq.

Summer is coming and many teenagers across America are looking for jobs. From seasonal positions to more work hours at jobs they already have, millions of teenagers across the country are seeking summer jobs to find money, experience and build their resumes.

While these teen workers can be valuable employees, teen workers also require special handling to comply with U.S. Department of Labor (DOL) strict rules (and varying state laws) on employing minor workers.

VIOLATIONS LEAD TO CIVIL AND CRIMINAL PENALTIES: The influx of teenagers into the U.S. workplace during the next few months means employers should review federal and state rules governing teen workers to ensure they are in compliance. Employers who violate the child labor laws are subject to civil and criminal penalties.

Wal-Mart: Wal-Mart (the biggest retailer in the world) recently found this out "the hard way"! The DOL fined Wal-Mart $135,540 in civil penalties for violating the youth employment provisions of the Fair Labor Standards Act (FLSA) for allowing teenage workers to operate hazardous equipment.

The DOL conducted an investigation of 25 of Wal-Mart's stores from October 1998 through April 2002 (21 stores in Connecticut, 3 in Arkansas, and 1 in New Hampshire). The investigation showed that Wal-Mart employed 85 minors, aged 16 and 17, who were performing prohibited activities under federal child labor laws, including loading and occasionally operating or unloading scrap paper bales and operating forklifts at Wal-Mart stores.

In reaching a settlement agreement with the DOL, Wal-Mart agreed to the following actions: designating a corporate officer at Wal-Mart to supervise compliance with the settlement agreement; providing new and current store managers at Wal-Mart with training on child labor law compliance; including child labor compliance reviews in Wal-Mart's regular internal audits; and posting of warning signs, supplied by the DOL, on all Wal-Mart owned hazardous equipment indicating the age restriction on their use. Additionally, Wal-Mart agreed that it will implement these practices in all Wal-Mart Stores and Supercenters.

Super Center Concepts: Another large employer, Super Center Concepts, the parent of Superior Grocers, has recently been ordered to pay $79,200 by the DOL's Wage and Hour Division for violation of child labor laws. According to a release from the DOL, the regional grocery chain allowed minors to operate scrap paper balers, paper box compactors and forklifts. A total of 40 hazardous occupational violations were identified as occurring at the stores between March 2007 and March 2009. The company has contested the civil money penalty assessment.

FEDERAL RULES: Federal child labor rules are established by the Fair Labor Standards Act (FLSA) which establishes minimum wage, overtime pay, recordkeeping, and child labor rules affecting full- and part-time workers. The rules vary depending upon the age of the young worker and his or her occupation. Once a youth reaches 18 years of age, he or she is no longer subject to the federal youth employment provisions.

STATE RULES: All states have child labor standards. When federal and state standards differ, the rules that provide the most protection to young workers will apply. Be sure to check your state's child labor laws before hiring teen workers.

PROHIBITED OCCUPATIONS FOR 14 AND 15-YEAR OLDS: Children ages 14 and 15 are prohibited under the FLSA from working in the following occupations: manufacturing, mining, or processing occupations; using power-driven machinery other than office machines; using motor vehicles or serve as helpers on such vehicles; working in a public messenger service; baking; boiler or engine room work, whether in or about; cooking, except with gas or electric grilles that do not involve cooking over an open flame and with deep fat fryers that are equipped with and utilize devices that automatically lower and raise the baskets in and out of the hot grease or oil; freezers or meat coolers work; loading or unloading goods on or off trucks, railcars or conveyors; and several other occupations.

MINORS CANNOT WORK IN HAZARDOUS OCCUPATIONS: Generally speaking (there are some exceptions), minors under the age of 18 cannot work in occupations that have been deemed hazardous or detrimental to the health or well-being of such minors. These occupations are many and include: those occupations in or about plants or establishments manufacturing or storing explosives or articles containing explosive components; motor-vehicle driver and outside helper; logging and occupations in the operation of any sawmill, lath mill, shingle mill, or cooperage stock mill; operation of power-driven woodworking machines; operation of power-driven hoisting apparatus; operation of power-driven metal forming, punching, and shearing machines; operation of power-driven meat-processing machines and slaughtering, meat packing or processing; operation of bakery machines; operation of paper-products machines, scrap paper balers, and paper box compactors; operations of circular saws, band saws, and guillotine shears; roofing operations and on or about a roof; and many others.

RESTRICTION ON HOURS OF WORK FOR TEENS: The child labor provisions of the FLSA include restrictions on hours of work and occupations for youth under age 16. The permissible jobs and hours of work, by age, in nonfarm work are as follows:

• Minors age 18 or older are not subject to restrictions on jobs or hours.
• Minors age 16 and 17 may perform any job not declared hazardous by the DOL, and are not subject to restrictions on hours.
• Minors age 14 and 15 may work outside school hours in various nonmanufacturing, non-mining, nonhazardous jobs listed by the DOL's regulations under the following conditions: no more than 3 hours on a school day, 18 hours in a school week, 8 hours on a non-school day, or 40 hours in a non-school week. In addition, they may not begin work before 7 a.m. or work after 7 p.m. (except from June 1 through Labor Day, when evening hours are extended until 9 p.m.). The permissible work for 14 and 15 year olds is limited to those jobs in the retail, food service and gasoline service establishments specifically listed in the DOL's regulations. Those enrolled in an approved Work Experience and Career Exploration Program (WECEP) may work up to 23 hours in school weeks and three hours on school days (including during school hours).

ENFORCEMENT: The Wage & Hour Division's enforcement of the FLSA is carried out by investigators stationed across the United States. These federal investigators gather data on wages, hours and other employment conditions or practices to determine compliance with the law. Where violations are found, they also may recommend changes in employment practices to bring an employer into compliance. It is a violation to fire or in any other manner discriminate against an employee for filing a complaint or for participating in a legal proceeding under FLSA.

Willful violations may be prosecuted criminally and the violator fined up to $10,000. A second conviction may result in imprisonment. Violators of the child labor provisions are subject to a civil penalty of up to $10,000 for each employee who was the subject of a violation.

WORK PERMITS AND AGE CERTIFICATES: Employers can protect themselves by requiring minors to give them work permits and age certificates. The federal government does not require work permits or proof-of-age certificates for a minor to be employed. Many states, however, do require them for workers of certain ages. In addition to state labor departments, school guidance counselors might know if permits or proof-of-age certificates are required in that particular state. The DOL will issue age certificates if the minor employee's state does not issue them, or if the minor is requested by his or her employer to provide one. However, the vast majority of age certificates are issued by states.

The purpose of these certificates is to protect the employer from prosecution for employing an under-aged worker. The possession of an age certificate constitutes a good faith effort to comply with minimum age requirements.

SOME EXEMPTIONS: The FLSA provides for certain child labor exemptions. For example, minors under age 16 working in a business solely owned or operated by their parents or by persons standing in place of their parents can work any time of day and for any number of hours. However, parents are prohibited from employing their child in manufacturing or mining or in any of the occupations declared hazardous by the Secretary of Labor.

TIPS FOR EMPLOYERS: Putting warning stickers on equipment that teen workers cannot use is an excellent idea. Some employers place special "Warning Stickers" on equipment that young workers may not legally operate or clean. Stickers can be downloaded through the U.S. DOL at: http://youthrules.dol.gov/news/posters-stickers-bookmarks/index.htm.

Also using different colored vests for employees under age 18 allows supervisors to know at a glance who can and cannot operate the electric meat slicer, for example.
There are also some very helpful fact sheets regarding child labor in various occupations. Those fact sheets can be downloaded at: http://youthrules.dol.gov/news/fact-sheets/index.htm


FINAL WARNING: Child labor laws vary from state to state, so check your state's most recent child labor laws before you hire teen workers.

Questions about this topic or other management-side labor and employment law issues? Please contact WS Shareholder and Senior Attorney Nancy E Joerg at 630-377-1554, najoerg@wesselssherman.com, or visit our website.