New Illinois Department of Labor Regulation

Employers must be mindful of a recently enacted but often overlooked Illinois Department of Labor regulation which requires employers to track hours worked by all employees. The law applies regardless of whether employees are "exempt" or "non-exempt" as defined by the federal Fair Labor Standards Act. The law (56 Ill. Admin. Code ?300.630) provides, in part:

a) Regardless of an employee’s status as either an exempt administrative employee, executive or professional, every employer shall make and maintain, for a period of not less than 3 years, the following true and accurate records for each employee: the name and address, the hours worked each day in each work week, the rate of pay, copies of all notices provided to the employee as required by subsection (d), the amount paid each pay period and all deductions made from wages or final compensation. Additionally, any employer that provides paid vacation to its employees must maintain, for a period of not less than 3 years, true and accurate records of the number of vacation days earned for each year and the dates on which vacation days were taken and paid.

b) In the absence of employer records, a claimant may not be denied recovery of wages or final compensation on the basis that the employee is unable to prove the precise extent of uncompensated work or final compensation. An employee need only produce sufficient evidence to demonstrate the amount and extent of work or time earned as a just and reasonable inference. The employer must then produce evidence of the exact amount of work or time earned or produce evidence to negate the reasonable inferences drawn from the employee’s evidence. The employer’s failure to make and maintain records as required under subsection (a) shall not preclude a finding based on the information available that wages or final compensation are due, even though the award may be only approximate.

A lack of hours worked tracking records will cause an employee to instantly prevail in a wage claim against his employer. Therefore, employers must track the hours of all of their employees, exempt and non-exempt alike. One easy way to do this is to require all employees to submit time sheets. Notably, merely requiring an exempt, salaried employee to clock in and out will not destroy the employee’s exemption, as long as the employer does not make any deductions from his or her salary based on the amount of time worked.

Employers may be concerned that compliance with this law, i.e. requiring exempt employees to track and report hours worked, could create a perception that the employee is not truly functioning with the discretion and independence necessary to qualify as an exempt employee. Regardless, all employers must adhere to the law. The benefits to employers from tracking exempt employee time include:

It allows the employer to better track and compare productivity, efficiency, and attendance among exempt employees.
It establishes proof of how many hours the employee is working, in case there is ever an issue that the employer misclassified the employee incorrectly. Employees who claim they have been misclassified as exempt also tend to claim they worked a lot of overtime; if the employer has records showing that was not the case, the employer will have a stronger argument.
It assists in tracking accrual and use of paid leave and in tracking Family and Medical Leave Act (FMLA) usage.

Under the Illinois Wage Payment and Collection Act (820 ILCS ?115/1), those employers found not to be in compliance face criminal and civil penalties, including jail and fines of several hundred thousand dollars. Accordingly, employers need to be aware of the regulations of the Labor Department and Wage Act, including keeping detailed records of hours worked by all employees and ensuring timely payments of all wages and benefits owed to employees.

The Builders Association ran a short survey to gauge the knowledge our members have of this law and to learn how some of our members are dealing with it. 70% of those responding were not aware of the requirement. All of those responding stated that no changes to their payroll operations have been made as of yet, in part because they felt their payroll systems were currently asking for and recording the information required. 80% felt this was one more additional burden to deal with. Our survey was a small sampling but did show that if you aren’t aware of this newer law, you’re not alone. However, meeting the requirements of this new law may save you money and problems in the future.

This article was contributed by Robert McLaughlin, Partner at Hart McLaughlin & Eldridge.