April 5, 2004

On April 2, 2004, Governor Blagojevich signed into law Senate Bill 1645, which amends the Illinois Minimum Wage Law and its rules regardi ng the “white collar” overtime exemptions. Until Senate Bill 1645, the Illinois Minimum Wage Law followed the white collar exemptions as established under the Federal Fair Labor Standards Act.

Senate Bill 1645 has two important consequences for Illinois employers (and some out of state employers with Illinois employees). First, it freezes the Fair Labor Standards Act’s white collar exemptions as they existed on March 30, 2003 and prevents the U.S. Department of Labor’s anticipated revisions to the white collar exemptions from taking effect in Illinois. Second, it mandates that an employee cannot be considered exempt unless his or her salary is at least $22,100 per year.

Senate Bill 1645 is potentially troublesome because, if the U.S. Department of Labor releases the new white collar exemption regulations as expected, employers will be faced with complying with two separate standards when determining whether a particular employee is exempt or non-exempt. Unfortunately, until the U.S. Department of Labor releases the final regulations (which we anticipate will occur in the very near future), we do not know exactly what impact Senate Bill 1645 will have.

In light of Senate Bill 1645, we would advise Illinois employers as follows:

• If you have any employees who you are treating as exempt who are making less than $22,100 annually, you need to either increase their pay or start treating them as non-exempt.
• If your exempt employees are making more than $22,100 annually, do not to make any changes to exempt/non-exempt determinations based on changes to the Federal regulations.

If you have any further questions regarding Senate Bill 1645 or the white collar exemptions generally, please contact any member of Schiff Hardin LLP’s Labor & Employment Group.