Publications: Illinois Rejects Proposed Federal Wage & Hour Changes

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Proposed Federal Overtime Changes

March 31, 2004’s Federal Register included the U.S. Department of Labor’s long-awaited proposed changes to the Federal regulations governing the Fair Labor Standards Act’s (FLSA) exemption of executive, administrative and professional employees from mandatory overtime pay (of time and ½ for hours worked over 40 hours per week). If adopted by the Office of Management and Budget, the controversial regulations, championed by the Bush Administration and opposed by congressional Democrats, would overhaul the complex “duties tests,” now used under the FLSA to determine whether employees are exempt from overtime pay because they work “in a bona fide executive, administrative or professional capacity” (the “executive exemption”).

While serving one of their stated purposes of simplifying application of the executive exemption, the DOL’s proposed rules would also cut, Congressional Democrats say by as many as 8 million, the number of American workers eligible for overtime wages. At the same time the DOL’s proposed rules would also mandate that employers pay overtime to employees earning less than $22,100 per year; the FLSA’s executive exemption will not apply to such employees under the DOL’s proposed regulations. According to the DOL, this new salary threshold would “automatically guarantee overtime to 1.3 million additional low-wage workers,” while its revision of the existing “duties test” would cost less than half that number of workers their overtime eligibility.

Illinois Rejection of Overtime Changes

However, even before adoption of the proposed DOL rules on the FLSA’s executive exemption, Illinois has adopted legislation to prevent them from disqualifying certain Illinois workers from overtime pay. On April 2, 2004, Illinois Gov. Rod Blagojevich signed into law a measure providing that the DOL’s proposed rules changing the “duties test” and broadening application of the FLSA’s executive exemption will have no such effect on the executive exemption of Illinois’ overtime law, the Illinois Minimum Wage Law. The Illinois Bill does, however, adopt the DOL’s proposed requirement that employees making less than $22,100 annually be paid time and ½ for overtime hours notwithstanding the executive exemption of the State law. Thus, whatever the fortunes of the DOL’s proposed executive exemption rules, Illinois employers applying state overtime law will still be subject to the arcane rules of the “duties test” as it existed before the DOL’s revision efforts. The FLSA does not preempt states from legislating exemption standards stricter than those of the FLSA and the DOL regulations that enforce it.