New Exception to the Illinois Minimum Wage Law

The Illinois Minimum Wage Law (IMWL) generally provides that non-exempt employees must be paid one-and-one-half times their regular rate of pay for all hours worked over 40 in a workweek. However, on July 10, 2015, Governor Rauner signed legislation amending the IMWL as it pertains to public employees who are members of a bargaining unit recognized by the Illinois Labor Relations Board.

The amendment provides that on January 1, 2016, a new exception will go into effect that will exclude from the overtime provisions of the IMWL:

Any employee who is a member of a bargaining unit recognized by the Illinois Labor Relations Board and whose union has contractually agreed to an alternate shift schedule as allowed by subsection (b) of Section 7 of the Fair Labor Standards Act of 1938. 820 ILCS 105/4a(2)(J).

In other words, the overtime provisions do not apply if a unionized public employee is covered by a collective bargaining agreement under the following two exceptions:

(1) the agreement limits the employees’ hours to no more than 1,040 hours in a 26-consecutive week period; or  

(2) the agreement provides:   

• During a specified period of 52 consecutive weeks, an employee will not work more than 2,240 hours;

• Guarantees an employee a minimum amount of work during the 52-week period, which must fall between either, at the low end of 1,840 hours or 46 weeks at the normal number of hours worked per week (not to total less than 30 hours per week), and 2,080 hours at the high end;

• That the employee receive compensation at the rate specified in the agreement for all hours worked or guaranteed, and compensation at one-and-one-half times their regular rate for all hours worked over the guaranteed number that are also in excess of 40 in a workweek; and

• That the employee receives overtime pay at one-and-one-half times the regular rate for all hours in excess of 2,080 hours during the 52-week period.

If the employee works a schedule under one of these two exemptions, the employee must receive compensation for all hours in excess of 12 in a workday or 56 in a workweek at the rate of one-and-one-half times their regular rate of pay.

Obviously, this exception does not apply to all employers. Although this exception has limited application, public employers should consider whether this exemption will potentially provide an avenue for reducing overtime costs.