Illinois Employment Laws for Salaried Workers

Illinois is an employment-at-will state, which mandates that an employer or employee may terminate the relationship at any time. There does not need to be a reason or cause to terminate employment. This means that an employee can be fired for no reason or any reason, as long as the reason is not illegal.

An employer cannot terminate a relationship or discriminate against an employee because the employee has certain legally protected qualities, such as the employee is a certain race, religion, sex or age. An employee is not required to give two weeks' notice when quitting a job.

As of January 1, 2022, the minimum wage in Illinois is $12.00 per hour for workers 18 and older. An employer whose employees receive gratuities or tips may pay 60 percent of the minimum wage to employees. An employer may apply for a license to pay sub-minimum rates to learners and certain workers with physical and mental limitations. An employer must pay overtime after 40 hours of work per week, at a rate that is one and one-half the regular rate.

Salaried employees are likely to qualify for overtime pay. A salaried employee can be required to work overtime unless the work would violate the state's One Day Rest in Seven Act (ODRISA),which provides that employees are due a minimum of 24 hours of rest in each calendar week.

ODRISA also provides a meal period of 20 minutes for every shift of seven and one-half hours. The meal period must begin no later than five hours after the start of the shift. Illinois has no law regarding breaks. The state of Illinois allows employers to get permits from the Illinois Department of Labor (IDOL) to work employees the seventh day if the employees have voluntarily elected to work.

Illinois employment law declares a number of exemptions for certain employees who are not eligible for overtime pay. These employees include: salespeople and mechanics who sell or service cars, trucks or farm implements at dealerships; agricultural labor; executive, administrative or professional employees as defined by the Fair Labor Standards Act; and employees of certain educational or residential child care institutions.

Federal law requires that two tests must be met to determine if an employee is an executive, administrative or professional employee. First, the individual must be a salaried employee. Second, the primary duties the employee performs must be exempt. Exempt duties include managing an enterprise, performing work that requires advanced knowledge in a field of science or learning, and acting as an advisor to an employer’s clients or customers, such as a tax expert or financial consultant.

The Illinois Freedom to Work Act has amendments that took effect January 1, 2022 that impact non-compete and non-solicitation clauses in contracts. These clauses reduce the protections available for Illinois employers to guard trade secrets and other proprietary information.

The law now prohibits the use of non-compete agreements for workers earnings less than $75,000 a year. The minimum threshold rises to $80,000 per year on January 1, 2027; $85,000 per year on January 1, 2032; and $90,000 per year on January 1, 2037. As of January 1, 2022, the law prohibits Illinois employers from requiring non-solicitation agreements with employees earning less than $45,000 per year. The amount will rise to $47,500 on January 1, 2027; $50,000 on January 1, 2032; and $52,500 on January 1, 2037.

The Illinois Freedom to Work Act also does not allow the enforcement of non-compete and non-solicitation agreements with an employee terminated, furloughed or laid off because of the COVID-19 pandemic or under circumstances similar to the COVID-19 pandemic. An employer can circumvent this restriction if, for the time of the enforcement of the non-compete agreement, the employer pays the employee their base salary at the time of termination, minus the compensation the employee earns from other sources.

The Illinois Freedom to Work Act further restricts non-compete covenants for individuals employed in construction or covered by a collective bargaining agreement under the Illinois Public Labor Relations Act or the Illinois Educational Labor Relations Act.

The 2022 requirements for a non-compete or non-solicitation agreement include:

• The employee is adequately compensated.
• The agreement is ancillary to a valid employment relationship.
• The agreement is no greater than required to protect a legitimate business interest of the employer.
• The agreement does not impose undue hardship on the employee.
• The agreement is not harmful to the public.
  

The 2022 amendment to the Illinois Freedom to Work Act also requires employers to advise employees in writing that they need to consult an attorney before entering into a non-compete agreement. The employer must provide the employee with a copy of the agreement at least 14 days before employment or with at least 14 days to review.

An employer must pay an employee for all time worked. For salaried and hourly employees, if the employee does not complete a portion of the work week, the employer does not have to pay the entire salary amount. The employee may agree with their employer to use benefits, such as holiday time, sick leave or paid time off (PTO) for days that they do not work.

By law, an employee is not entitled to vacation, severance pay, sick pay or holiday pay. If the employer has a policy that guarantees any of these benefits, the employee may be entitled to receive payment when they separate. A company can have a policy that accrued vacation time must be used by a certain date or it is lost. A former employee who quits or is fired has a claim to collect the monetary equivalent of unused vacation time in accordance with an employment contract, agreement or policy.

An employer must make a decision to classify a worker as an employee or an independent contractor. Misclassifying a worker has legal consequences for the employer. An employer should deem a worker to be an employee unless these conditions are met: the individual is free from control or direction over the performance of their services; the service the individual provides is outside the usual course of business; and the individual is engaged in an independently established trade, occupation, profession or business.

An employer who fails to pay legally required workers' comp insurance premiums, unemployment insurance premiums and income tax withholding for employees is subject to investigation and penalty from the Illinois Workers’ Compensation Commission, the Illinois Department of Employment Security and the Illinois Department of Revenue.

Further, IDOL is authorized to investigate and issue additional penalties against employers who engage in misclassification of employees in the construction industry who are wrongfully classified as independent contractors. Officers and employees who willfully prevent a business from making payments into the system may be held personally liable for the payments that the business owes.

A 2019 amendment to the Illinois Equal Pay Act bars employers and employment agencies from asking about a job applicant’s past wage and compensation histories. Illinois state law imposes a penalty for asking the applicant or the applicant’s current or former employers for the worker’s wage or salary history. There is no prohibition if the applicant’s salary history is a matter of public record or if the applicant is a current employee applying with the same employer.

If the applicant voluntarily provides their wage or salary history, the employer has not violated the law and they cannot be penalized. An employer cannot use an applicant’s wage or salary history to make a hiring decision or to determine the applicant’s salary. The law does not prevent an employer from asking the applicant what they want to make in the new position.

A worker can file a complaint against an employer with IDOL for multiple reasons. There are specific forms for different types of complaints. For example, there is a single form for minimum wage, overtime and unpaid wages. The most efficient way to file a wage claim is with IDOL’s online system.

Other complaint forms include meal period violations, six-day week complaint form, temporary staffing agency complaint form, medical insurance coverage required disclosure complaint form and child labor complaint form.

An employee bonus is compensation given in addition to the required compensation for services performed. Severance is a payment to which certain employees are entitled upon separation from employment. There must be an agreement between the employer and employee regarding severance pay or awarding such pay must be an established practice of the employer.

A commission is compensation for services performed pursuant to an employment contract or an agreement between the parties. The commission must be earned under the terms of the contract or agreement.

A minor aged 14 or 15 must get a work permit or employment certificate from their local school before beginning work. A 14- or 15-year-old is prohibited from working before 7 a.m. and after 7 p.m. between Labor Day and June 1; after 9 p.m. between June 1 through Labor Day; over eight hours when combining work and school hours; over 24 hours during school weeks; more than 48 hours during non-school weeks; and more than six days a week. For example, a 15-year-old who attends school for seven hours from 8 a.m. to 3 p.m. can work only for one hour between 3 p.m. and 7 p.m.

A minor who gets out of school early, attending for five hours from 8 a.m. to 1 p.m., can work for three hours between their release time and 7 p.m. The maximum number of hours a 14- or 15-year-old may work on any school day is three hours. Minors are prohibited from performing 26 occupations that are considered hazardous, including oiling and cleaning machinery; in or about a mine or quarry; and in stone cutting or polishing. A minor under the age of 16 who is doing modeling, acting or performance work must apply for and receive an employment certificate before performing the work.

In Illinois, an employer may pay an employee via an electronic payroll debit or credit card. The employee must voluntarily agree to the use of a payroll card as the method to receive their wages and/or final compensation. It is not voluntary if the employee is told that receiving payment in this method is a condition for hire or their working conditions will be affected if they choose not accept this option.

If the employee chooses this option, the employer must disclose the fees, penalties and costs associated with the payroll card in writing. The employee must be able to deposit or obtain the full monetary value on the payroll card without a discount.

If the employee chooses the payroll card, the employer must provide an itemized statement of all hours worked, rate of pay and lawful deductions from the wages and/or final compensation. An employee can revoke their authorization of the payroll card at any time. The employer must provide an alternative method for payment, such as cash or check.

An employer cannot use a payroll card program that charges fees for point-of-sale transactions, application, initiation, loading of wages by the employer, or participation in the payroll card program. The payroll card or payroll account cannot be linked to any form of credit, such as overdraft fees or overdraft service fees.