Yes, the Illinois Employee Classification Act Complaints are Starting to Roll in!

By Nancy E. Joerg, Esq.


Clients are asking me if we have started receiving complaints from the Illinois Department of Labor relating to the harsh new Illinois law, the Employee Classification Act. Yes, we are starting to see these complaints coming in from the Illinois Department of Labor.

Under this new law, a company such as a construction company, a trucking company which hauls gravel or road building materials, a landscape company, and a wide variety of other construction related companies, can be challenged by the Illinois Department of Labor (IDOL) and "interested parties" on how the company classifies workers as either employees or independent contractors.
If the construction related trucking company who uses independent contractors is found in violation of the Illinois Employee Classification Act, the trucking company could be hit with substantial financial penalties, possible shut down of its business or job sites, and, most worrying to many, misdemeanor or felony criminal charges.

Below is the kind of wording we are seeing in these initial complaints:

Re: IDOL File No. 2008-###/Request for Records

Please be advised that the Illinois Department of Labor (IDOL) has received a complaint, alleging that you have violated Illinois' Employee Classification Act, 820 ILCS 185, by misclassifying one or more individuals performing construction services on your behalf in connection with re-roofing a house at 123 ABC Street, St. Charles, IL.

In connection with its investigation of this complaint, and pursuant to its authority under Section 25 of the Act, IDOL hereby requests that within fifteen (15) days you make available or provide copies to IDOL of all records in your power, possession or control relating to your business relationship with the individual(s) performing services, including but not limited to:

• Their names, addresses, phone numbers and Social Security numbers;
• Any/all written agreements or contracts you have with them;
• Any/all records of days/hours worked;
• Any/all payroll or payment records; and
• Any federal and state documents related to the individuals performing services.

Failure to comply with this request for records may result in the issuance of a subpoena to compel production of the requested information. Furthermore, failure to comply with a valid IDOL order may result in the imposition of civil and/or criminal penalties, as prescribed in the Act.

Also note that if there is any additional information you wish IDOL to consider in its investigation of this matter, please submit information in writing to IDOL within 15 days of this letter.

We urge all trucking companies who use independent contractors to seek legal counsel regarding their usage of independent contractors—not just with regard to the Illinois Employee Classification Act, but also in terms of the IRS, the Illinois Department of Employment Security (IDES), workers' compensation, etc. Don't wait until you are hit with a complaint or an audit. Get legal advice early on in the game.

This is the period in Illinois history when it is particularly important for construction and construction-related companies to really sit down, take the time, and lower liability in every way possible. Your independent contractor agreement must be carefully drafted to be consistent with the Illinois Employee Classification Act and any other independent contractor laws from other Agencies. It is a time to carefully assess independent contractor relationships, contracts, and practices.


CONSULTATION: If you have any questions about the Illinois Employee Classification Act and want to evaluate your company's liability (and discuss ways to protect your company in its use of independent contractors), contact Senior Attorney and Shareholder Nancy Joerg at 630-377-1554 or najoerg@wesselssherman.com.

What are the "Penalties" Under the Illinois Employee Classification Act?

By Nancy E. Joerg, Esq.

The Illinois Employee Classification Act (formerly House Bill 1795) is very punitive towards companies who are found to have misclassified their independent contractors!! It applies to construction and construction-related companies (including trucking companies) who use independent contractors in construction and construction related jobs. The law (heavily supported by unions) became effective January 1, 2008. It will usher in a blood bath for a large part of the Illinois business sector.

As used in this Act "penalties" encompass the following:

1. FIRST ILLINOIS DEPARTMENT OF LABOR (IDOL) AUDIT: An employer or entity that violates any of the provisions of this Act or any rule adopted under this Act shall be subject to a civil penalty not to exceed $1,500 for each violation found in the first audit by the IDOL.
2. ADDITIONAL IDOL AUDITS: Following a first audit, an employer or entity shall be subject to a civil penalty not to exceed $2,500 for each repeat violation found by the IDOL within a 5 year period.
3. VIOLATION FOR EACH PERSON FOR EACH DAY: For purposes of this Section, each violation of this Act for each person and for each day the violation continues shall constitute a separate and distinct violation.
4. AMOUNT OF PENALTY: In determining the amount of a penalty, the IDOL Director shall consider the appropriateness of the penalty to the employer or entity charged, upon the determination of the gravity of the violations. The amount of the penalty, when finally determined, may be recovered in a civil action filed in any circuit court by the IDOL Director, or a person aggrieved by a violation of this Act or any rule adopted under this Act.
5. BOUNTY HUNTER GETS 10%: In any civil action brought by an "interested party" (can be anyone!), the circuit court shall award the interested party 10% of the amount recovered. In such case, the remaining amount recovered shall be submitted to the IDOL Director. Any uncollected amount shall be subject to the provisions of the Illinois State Collection Act of 1986.
6. DEBARMENT FROM STATE CONTRACTS: For any second or subsequent violation determined by the IDOL which is within 5 years of an earlier violation, the IDOL shall add the employer or entity's name to a list to be posted on the IDOL's official website. Upon such notice, the Department shall notify the violating employer or entity. No state contract shall be awarded to an employer or entity appearing on the list until 4 years have elapsed from the date of the last violation.
7. WILLFUL VIOLATIONS: [DOUBLE VIOLATIONS]

• Whoever willfully violates any of the provisions of this Act or any rule adopted under this Act or whoever obstructs the IDOL Director, or his or her representatives, or any other person authorized to inspect places of employment under this Act shall be liable for penalties up to double the statutory amount. 
• PUNITIVE DAMAGES: Whoever willfully violates any of the provisions of this Act or any rule adopted under this Act shall be liable to the employee for punitive damages in an amount equal to the penalties assessed in subsection (a) of this Section.
• The penalty shall be imposed in cases in which an employer or entity's conduct is proven by a preponderance of the evidence to be willful. The penalty may be recovered in a civil action brought by the IDOL Director in any circuit court. In any such action, the IDOL Director shall be represented by the Attorney General. Any uncollected amount shall be subject to the provisions of the Illinois State Collection Act of 1986. 
• MISDEMEANOR/FELONY: An entity or employer that willfully violates any provision of this Act or any rule adopted under this Act commits a Class C misdemeanor. An entity or employer that commits a second or subsequent violation within a 5 year period commits a Class 4 felony.

If you have any questions about the Illinois Employee Classification Act, contact Senior Attorney and Shareholder Nancy Joerg at 630-377-1554 or najoerg@wesselssherman.com.

Warning to Illinois Companies About Employee Classification Act: New Danger!

August 2009
By: Nancy E. Joerg, Esq.


All Illinois companies who are in construction-related industries should be fully aware of the strict legal requirements of the Illinois Employee Classification Act, a brutal law (pushed through by several Unions) which went into effect on January 1, 2008. This terribly punishing law applies to a wide range of Illinois construction-related businesses (some trucking companies, building trades, landscaping, decorating, flooring, etc.).

The law requires covered companies to post special notices in English, Spanish, and Polish and keep specific records. The main thrust of the law is to hammer (severely!) those construction-related companies who "misclassify" independent contractors. Our law firm is currently representing clients who have been hit with assessments from the Illinois Department of Labor (IDOL), some in excess of $200,000.00!!! We are, of course, assisting our clients in fighting back.

Any Illinois businesses who are construction-related should seek immediate legal counsel. Even a small amount of legal assistance can be tremendously helpful should these businesses ever be targeted by the IDOL under this horrible (and powerful!!) new law.

A new danger under this law: Very recently, we have found that the IDOL may try to "fool" companies by sending them a Notice which asks for broad information and records pertaining to a substantial period of time, rather than one particular construction-related project. This approach by the IDOL is not proper, and it is excessively burdensome on the company. Do not answer these IDOL Notices under the Illinois Employee Classification Act without experienced legal counsel. You may expose yourself to over-broad liability. Remember, these IDOL assessments under this new law can be huge.

We recommend that all Illinois construction-related companies who use "1099 independent contractors", "subcontractors", "outside vendors", "casual labor", or any kind of "non-employees" seek preventative legal help at once. The IDOL (at the urging of some Unions) are using this new law to cripple, and in some cases almost destroy, Illinois construction-related companies who use independent contractors of all types.

Don't wait for the ax to fall. Learn everything you can about this law and protect yourselves and your business. There are many (relatively simple) ways to do this. Call Attorney Nancy E. Joerg to learn more about this extremely serious problem and how to coexist with it.

Questions? Call Attorney Nancy E. Joerg of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com. 

Strict Posting and Record Keeping Requirements Under the Illinois Employee Classification Act

March 2008
By Nancy E. Joerg, Esq.

In January 2008, the Illinois Department of Labor published its "Proposed Rules" for the Illinois Employee Classification Act. Under this law, a company such as a construction company, a trucking company which hauls gravel or road building materials, a landscape company, and a wide variety of other construction related companies, can be challenged by the Illinois Department of Labor (IDOL) and "interested parties" on how the company classifies workers as either employees or independent contractors.There was a "public comment" period which gave "the public" a chance to be heard on how it feels regarding the Proposed Rules for the Illinois Employee Classification Act. The public comment period expired on February 25, 2008.

This article will discuss two key issues: 1) record keeping requirements, and 2) the posting requirements.

RECORD KEEPING REQUIREMENTS:
 
There are strict record keeping requirements in the Proposed Rules to the Illinois Employee Classification Act. You must keep the documents specified in the Rules, on each construction-related independent contractor, for a period of FIVE years.

For example, if your were audited by the Illinois Department of Labor in 2015, the IDOL would require you to have records [as described below] on each construction-related independent contractor that you used for the past five years.

1. Records that must be maintained for each construction-related independent contractor include, but are not limited to:
2. their names, addresses, phone numbers, Social Security numbers, Individual Tax Identification Numbers and Federal Employer Identification Numbers;
3. the type of work performed and the total number of days and hours worked;
4. the method, frequency and basis on which wages were paid or payments were made;
5. all invoices, billing statements or other payment records, including the dates of payments, and any miscellaneous income paid or deductions made;
6. copies of all contracts, agreements, applications and policy or employment manuals; AND any federal and State tax documents or other information the Illinois Department of Labor deems relevant or necessary.

Beware: If you violate the record keeping requirements, you violate the Illinois Employee Classification Act! 
 
POSTING REQUIREMENTS:
 
The Illinois Employee Classification Act requires you to post the IDOL's Notice about the Illinois Employee Classification Act (in English, Spanish, and Polish) in your workplace and at every worksite. Where it is not practicable to post a notice on the job site, you must give a copy of the Notice to each construction-related independent contractor.

TIP: Give each of your independent contractors who are construction-related a copy of the Notice for them to keep, and have them sign and date another copy for you to keep in each independent contractor's file to prove that the independent contractor received the Notice. Do this on a yearly basis.

Beware: If you violate the posting requirements, you violate the Illinois Employee Classification Act! 
 
When a construction related company who uses independent contractors is found in violation of the Employee Classification Act, the company could be hit with substantial financial penalties, possible shut down of its business or job sites, and, most worrying to many, misdemeanor or felony criminal charges.

Questions? Contact

Six Questions and Answers Under the Illinois Employee Classification Act

February 2008

By: Nancy E. Joerg, Esq.

The Employee Classification Act (formerly House Bill 1795) is a frightening and radical Illinois law which went into effect January 1, 2008. It affects construction and construction-related companies (including trucking companies) who use independent contractors in construction and construction related jobs.

Under the Employee Classification Act, Illinois construction and construction related companies (including trucking companies which haul gravel or road building materials, landscape companies, etc.) can be severely penalized by the Illinois Department of Labor (IDOL) and other "interested parties" for misclassifying workers as independent contractors on construction related projects. The term "construction" is very liberally defined by the Act and includes all aspects of construction.
The following are some of the most common questions that I have received from construction-related companies including trucking on almost a daily basis:

•1) Question: We are a trucking company. How do I know if we are the kind of company that would be covered under the Illinois Employee Classification Act?

Answer: If the kind of hauling you do is construction-related, then your company would be covered under the Act. If you haul construction materials to and from the construction site - for example, road building materials - the independent contractors you use would be at issue under the Illinois Employee Classification Act.

•2) Question: Who can turn us in to the Illinois Department of Labor under the Illinois Employee Classification Act?

Answer: Any interested party. It could be a jealous competitor, a disgruntled employee, a dissatisfied independent contractor, a hostile Union, etc.-and they may be rewarded with a "bounty."

•3) Question: How do I know whether or not my independent contractors would be considered misclassified employees under the Illinois Employee Classification Act?

Answer: You really won't know until you are legally challenged, but for a rough idea, look at the two independent contractor tests in Section 10 of the Act. Take protective steps now to strengthen independent contractor status.

•4) Question: I have passed an Illinois Department of Employment Security (IDES) audit on the issue of the independent contractor status of various kinds of workers who provide services for our company. Does this mean that I am "bullet-proof" in the face of an audit or investigation under the Illinois Employee Classification Act?

Answer: No. Unfortunately, each Agency is an independent entity. Just because you have passed other legal challenges and audits on the independent contractor status of your workers does not mean that you have any level of protection whatsoever under the Illinois Employee Classification Act.

•5) When did this Act go into effect?

Answer: January 1, 2008.

•6) Question: Is it true there are both criminal and civil penalties under this new law?

Answer: Yes, and they can be severe.

Dramatic and dangerous times are here for Illinois construction and construction-related companies (including trucking companies) who use independent contractors. Be assured that we are here to help you do an emergency "self audit."

Questions or concerns? Call Attorney Nancy E. Joerg of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com. 

Illinois Employers Ask... Can I Require My Employee to Work Seven Days in a Row?!

December 2011
By: Nancy E. Joerg, Esq. 

The brief answer is: yes, sometimes.

Illinois has a very detailed and multi-part law called One Day Rest in Seven Act (820 ILCS 140/1 et seq.).

The One Day Rest in Seven Act requires at least 24 hours of rest for an employee in every calendar week. It is a law intended to give employees a break from the strain of work. A calendar week is defined as seven consecutive 24 hour periods starting at 12:01 a.m. Sunday morning and ending at midnight the following Saturday.

Under this Act, employers may ask the Illinois Department of Labor (IDOL) for a "relaxation" of the law. If the IDOL grants a relaxation to the employer, the IDOL requires a statement from the employer demonstrating that all employees who will be working seven days in a row are in fact volunteers.

In other words, employees cannot be forced into working 7 days in a row.

EXEMPTIONS: This law does not apply to part-time employees whose total work hours for one employer during a calendar week do not exceed 20.

It also does not apply to employees needed in case of breakdown of machinery or equipment or other emergency requiring the immediate services of experienced and competent labor.

Also exempt from this law are employees employed as watchmen or security guards.

The following exempt employees are not guaranteed one day of rest in seven: Employees who are employed in a bonafide executive, administrative, or professional capacity or in the capacity of an outside salesman, as defined in Section 12(a)(1) of the Fair Labor Standards Act, as amended.

VIOLATIONS: Under the One Day Rest in Seven Act, any employer who violates any of the provision of the Act is guilty of a petty offense and is fined for each offense in a sum of not less than $25 nor more that $100. The law is enforced by the IDOL.

A violation of the Act is charged for each employee during each week in which the employee works seven days of the calendar week when no permit authorizing work on the designated day of rest has been granted by the Director.

PERMITS:A permit is required under the Act during any week in which one or more employees, not excluded by the Act, work all seven days of the week.

Fortunately, permits for eight weeks of the year are granted without "justification of necessity."
However, permits in excess of eight weeks in a year shall require justification of necessity as follows:

• A statement that the necessity cannot be remedied by increasing the number of employees or by adjusting work scheduled and
• Business necessity and economic conditions making such a request necessary.

An employer desiring a permit shall submit to the Director of the IDOL ("Director") in written form a request for each permit. Such request shall contain the following:

• A statement that all employees involved are truly volunteers.
• The anticipated number and skills of said volunteer employees.
• Number of days covered by the permit including inclusive dates and hourly times starting on Sunday.
• A statement that no person possessing skills in subsection (b) above is laid off.

Telephone requests to the Director shall be honored; however, the employer shall within two working days of the telephone call forward to the Director a letter consistent with the requirements in Section 220.300.

Employers shall retain for two years (and make available to the Director upon request) letters and related correspondence granting permits.

CONCLUSION: There are other provisions and exemptions under this detailed law, so check the entire One Day Rest in Seven Act before making any decisions under it. The entire Act and Administrative Rules can be found on the IDOL website: http://www.illinois.gov/idol/Laws-Rules/FLS/Pages/ODRISA.aspx

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.

 

 

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.

How Employers Can Avoid Overtime Problems and Other Wage and Hour Concerns

October 2009
By: Nancy E. Joerg, Esq.

In this very tough economy, which is affecting businesses across the United States, many businesses are worried with good cause about wage and hour audits by government agencies and/or civil action lawsuits brought by disgruntled employees, sometimes on behalf of just themselves (or, with increasing frequency, by very costly and complex class action lawsuits).

Shareholder and Senior Attorney, Nancy E. Joerg, questioned an outstanding consultant in the wage and hour field. The consultant, who works frequently with Wessels Sherman, was one of the lead people in the Illinois Department of Labor in administering the Illinois minimum wage law from its inception. The consultant spent over ten years of her career with the IDOL as the manager in charge of all field audits.

The below question-and-answer session addresses some of the key wage and hour danger spots for employers:

1. Nancy Joerg: Does Illinois have the same minimum wage requirements as the federal government?

Consultant: No. Illinois has a much higher minimum wage. As of July 1, 2009, Illinois' minimum wage is $8.00, and effective July 1, 2010, Illinois' minimum wage will be $8.25. The Federal minimum wage, as of July 24, 2009, is $7.25.

2. Nancy Joerg: What explanation do you have for the Illinois minimum wage being higher than the federal?

Consultant: The Illinois minimum wage was changed with a long range effort in mind. Instead of passing a law that was only for one or two years, Illinois extended the increases in the minimum wage for up to six years.

3. Nancy Joerg: What should an employer do if it realizes that it is violating the minimum wage? If the employer makes a sudden increase, would that be tipping off their employees that the employer has been doing things incorrectly all along?

Consultant: Dependent upon the time frames that are involved, if an employer realizes they have not been paying the minimum wage, my advice would be to increase to the minimum wage immediately. Then go back and take a look at what the liability would be and evaluate whether to reimburse these employees (if it's a short time period involved) or whether to wait out the statutory time frame of three years and hope that the mistake goes undetected during that period of time.

4. Nancy Joerg: Are you saying that if three years have passed since the employer made the mistake, the employer is home free so to speak?

Consultant: Yes.

5. Nancy Joerg: If the employer is incorrectly paying the minimum wage and the employer is audited by the Illinois Department of Labor, what happens?

Consultant: If the employer is incorrectly paying the minimum wage, the employer will be required to repay the employee all the back wages that are due, and, should there be a penalty attached, and it becomes a second violation or a willful violation, there could be some interest attached as well.

6. Nancy Joerg: What interest rate is that usually?

Consultant: Two percent per month for the underpayment. In the case of a willful violation, a 20% penalty could go to the Illinois Department of Labor.

7. Nancy Joerg: Twenty percent of the total amount owed?

Consultant: Yes.

8. Nancy Joerg: If an employer is not aware that it is violating the minimum wage laws, and then the employer is audited, is that a good defense that they did not know they were in violation?

Consultant: No, it is not an excuse, but if there has been no case of previous violations - simply an error in not paying the minimum wage - it would not be construed as willful.

9. Nancy Joerg: So the employer would have to pay the back money owed?

Consultant: Yes, for the period going back three years.

10. Nancy Joerg: Is it only the Illinois Department of Labor who is interested in minimum wage, or does the U.S. Department of Labor also look at the minimum wage?

Consultant: Absolutely. The U.S. Department of Labor first looks at the federal minimum wage because it is less than many states. Like Illinois, many states have a higher minimum wage than the Fair Labor Standards Act. The U.S. Department of Labor seeks to get at least the federal minimum wage for workers who are not being paid correctly. The U.S. Department of Labor also looks at overtime, record keeping, proper exemption classification, calculations, etc.

11. Nancy Joerg: Does the employer have to pay for lunch breaks?

Consultant: No. Lunch breaks of 30 minutes or longer (and in some instances of 20 minutes or longer) are not required to be compensated.

12. Nancy Joerg: What if the employee is very conscientious and wants to work straight through their lunch break. Should the employer allow that?

Consultant: Absolutely not. Compliance with the statute is the employer's responsibility and not the employee's. The employer must insist that the employee take their lunch and get away from the desk.

13. Nancy Joerg: What does the Illinois Department of Labor generally look for when they audit?

Consultant: The same thing: minimum wage, overtime, overtime exemptions, record keeping, calculations, working off the clock, time cards, and they would be doing some interviews to make sure that the records the employer is presenting are correct.

14. Nancy Joerg: What is the most common mistake that you saw employers make?

Consultant: The misclassification of non-exempt workers (that is, workers who may be very valuable to their company but don't meet the exemptions that are allowed under the law). I think the best way for an employer to evaluate the classification of workers is to assume that everyone in their establishment is entitled to overtime after 40 hours of work per week. Then you start to look at the exemptions and see if you can prove that these employees are in fact exempt from the provisions of the overtime requirement (instead of just saying, "All salaried employees are exempt," or, "Well, you know, she runs my entire business. She must be exempt.

15. Nancy Joerg: What are the most common mistakes that you saw with classifying exempt and non-exempt?

Consultant: Well, there are three "white collar" classifications for exemptions: executive, administrative, and professional.

The executive exemption from overtime is pretty clear-cut. The employee has the power to hire and fire, supervise, make recommendations, and is paid on a guaranteed salary.

The professional exemption from overtime is pretty clear inasmuch as that it requires a four-year degree in a field of science or learning, with a guaranteed salary.

The administrative exemption from overtime is one where employers tend to put employees who don't meet one of the other classifications. Example: Sally worked for Company "A" for 30 years. She is classified as an executive secretary, but in essence Sally, by law, is actually the payroll clerk. She has been in that position for so long that everyone assumed that she was classified as an administrative employee and exempt from overtime. It's a very small office. She doesn't have people that she supervises. She gets a salary, but the duties in fact are not the kind that would allow her to be exempt from overtime.

Also with the administrative exemption, employers need to look at employees who are not on the employer's premises (who the employer thinks is running a secondary operation, for example). Employers need to evaluate the duties of their off-premises employees to make sure that they would meet the exemption.

16. Nancy Joerg: In a small office where there are a few other employees in the office, is it successful to say that Sally is supervising two employees?

Consultant: If Sally is in fact supervising those two employees. If she hires, fires, directs their work, is part of the evaluation process when an employee is given a raise and Sally's input has some value, then she would probably meet the exemption as an executive as long as there were two full-time employees.

Many employers fail to realize that for the executive exemption, there must be two full-time employees supervised or the equivalent of 80 hours of direct supervision. So you can have four 20-hour people or three 30-hour people or two 40-hour people, but it has to be a direct supervision of a minimum of 80 hours of labor (to meet the executive exemption from overtime).

17. Nancy Joerg: If an employee is an Assistant Manager, is that a good enough explanation to an auditor as to why that person doesn't get overtime?

Consultant: First, the word "Assistant" is a bad word. It indicates under the federal law and under the Illinois law that the employee has not reached the level of exemption that may or may not be needed to actually be exempt. An assistant is still learning. They are still working at it. They are not the Administrator. They are not the Supervisor. If you are going to claim an Assistant Manager as an exemption, you need to be able to prove that Assistant Manager has separate duties that they perform that are not part of the Manager's duties.

18. Nancy Joerg: Have you ever seen an Assistant Manager successfully claim an exemption from overtime?

Consultant: Yes, I have. That would be in the fast food industry where the Assistant Managers have the same duties as the Managers but work a different shift. It is the Assistant Manager who works a night shift and has those clear responsibilities-the same ones as the General Manager has during the day.

19. Nancy Joerg: Do employers tend to make mistakes with the guaranteed salary requirement?

Consultant: Yes, employers fail to pay the full guaranteed salary in weeks in which the employee doesn't work the 40 hours. There isn't a problem if the employee shows up every day and works 40 or 50 hours a week. But, if an employee happens to be gone two days or happens to have taken a half-day off, oftentimes the employer wants to deduct from that guarantee, and that destroys the guaranteed salary concept.

20. Nancy Joerg: If the guaranteed salary concept is destroyed, what impact does that have?

Consultant: If there was no intent to pay this employee a guaranteed salary, regardless of the number of hours of work, the Illinois Department of Labor will try to establish that the employee is non-exempt, and the employer could be subject to paying the additional overtime.

21. Nancy Joerg: Is that also governed by a three-year statute of limitation?

Consultant: Yes, it is.

22. Nancy Joerg: And does that also involve interest?

Consultant: Not unless it's a willful violation.

23. Nancy Joerg: Employers frequently ask me, "What do I do when I find out I am going to be audited by the Illinois Department of Labor?" Is it normally a letter or a phone call that the company would get?

Consultant: The Illinois Department of Labor's responsibility is to diligently enforce. Most often you can expect to get either a phone call or a letter telling you that an auditor will be coming to make an initial investigation, but that isn't necessarily required. If there is a suspicion of child labor being involved, chances are you will get no notification and the Illinois Department of Labor auditor will simply walk in.

24. Nancy Joerg: Is that on purpose - that they are trying to surprise the employer?

Consultant: Exactly.

25. Nancy Joerg: What happens in those cases?

Consultant: In those cases actually the investigation itself proceeds about the same (whether you have received notice or not). If you haven't received notice and the IDOL auditor walks in and asks to see records, the auditor is actually probably only going to want to see what you have right on the premises. Then the auditor will give you time to prepare and make the other records available.

26. Nancy Joerg: If the employer receives a letter from the IDOL, does the letter indicate exactly which years they want to audit?

Consultant: It should.

27. Nancy Joerg: Does the letter tell you who made the complaint?

Consultant: No. Under the provisions of the Illinois minimum wage law, it will never reveal who the Complainant is. Under the provisions of the Illinois minimum wage law, the IDOL has no obligation to reveal the source of their investigation.

28. Nancy Joerg: Who in the Company who do you suggest should interact with the auditor?

Consultant: The employer should be protecting his/her business, so someone at the highest level (the CEO, the President, the Owner) should interact with the auditor. Human Resources may have that authority; your Payroll Supervisor may have that authority, but you really want to have your thumb on it and make sure that you know what that IDOL investigation is going to constitute. That doesn't mean that you can't pass this off to your Human Resource or Payroll people, but I think it behooves the employer to know what is going on with the IDOL audit. Oftentimes you will find that there are untruths or there are statements that are floating around (that you didn't even know were going on within the confines of your own business).

29. Nancy Joerg: What would be an example of an untruth floating around in a business under audit?

Consultant: "Nobody gets lunch hours, no one takes any lunch." "We don't have lunch hours." "I am required to work off the clock all the time." "The records are all doctored."

Some of these untruths can be squelched right away. "We have records here." "We make them require in-and-out punches." "Everyone gets a lunch hour." "Here are our records backing up these untruths that are going around."

30. Nancy Joerg: What mistakes do you see employers make when they are being audited?

Consultant: Not taking hold of the IDOL audit and being uncooperative. You need to be cooperative, and you need to be aware of what the auditor is looking for.

31. Nancy Joerg: If an employer receives a letter from the Illinois Department of Labor saying they want to see the records for three years, should the employer give the auditor records for all three years immediately, or do you think you should just start with one year?

Consultant: You have to make the records available by statute. If the records are going to be mailed to a third location (for example, to the IDOL Chicago or Springfield offices), then the employer has to send all three years. But, if the records are being looked at or reviewed at your location, then at your discretion, you can say, "Here are last year's records." Start there, if possible.

32. Nancy Joerg: As we conclude this article, do you have any special tips you would like to share?

Consultant: Absolutely. Record keeping, record keeping, record keeping! In this day and age with sophisticated record keeping, it's far better to have good records than no records at all. Both the U.S. Department of Labor and the Illinois Department of Labor rely heavily upon interviews, and the Courts have looked at those interviews and those statements from those employees and have usually sided with the employee because it is the employer's responsibility to maintain the records. In the absence of those records, pretty much whatever that employee says, the Courts have agreed upon. Employers really need to have very, very good records. It used to be the opposite of that. Thirty years ago, if you didn't have any records, nobody did much about it. It was his word against yours. No one went to Court. No one ever got anywhere, and the employer perhaps was not obligated, but not anymore. We have educated a lot of our workers. They have access to websites and information that was not available 20 years ago.

33. Nancy Joerg: When you look at records, what are the most common mistakes you see?

Consultant: Probably the punching in and punching out, or failure to punch. If the employer doesn't look at that payroll record or that time card and catch it right away, that employee is going to be the one that says, "I was required to work off the clock all the time." The employer can't prove that statement false unless the employer has good hourly records that are complete.

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.