By: Paula E. Pitrak

New Annual Overtime Pay Threshold Figure

On September 24, 2019, the U.S. Department of Labor (“DOL”) released its final rule on the new annual overtime pay threshold. To be exempt from overtime pay under the Fair Labor Standards Act, an employee must earn $35,568.00 per year ($684.00 per week). This is an increase from the DOL’s current overtime pay threshold of $23,660.00 per year ($455.00 per week). Similarly, the annual overtime pay threshold for highly-compensated employees increased from $100,000.00 per year to $107,432.00 per year. The duties test remains unchanged. Employers may consider base salary, commissions, nondiscretionary bonuses and incentive payments that occur at least annually to satisfy up to 10% of the aggregate annual pay. Nonexempt employees are entitled to 1.5 times their regular hourly rate for overtime work of more than 40 hours per workweek.

New Illinois Employment Laws

Senate Bill 75 was signed into law on August 9, 2019; it enacted two new laws, the Illinois Workplace Transparency Act (“WTA”) and the Sexual Harassment Representation Act, and amended certain existing laws. The bill contains several provisions that will impact Illinois employers beginning in 2020. In general, the WTA provides certain guidelines to address unlawful discrimination. The WTA defines Unlawful Discrimination as:

discrimination against a person because of his or her actual or perceived: race, color, religion, national origin, ancestry, age, sex, marital status, order of protection status, disability, military status, sexual orientation, pregnancy, or unfavorable discharge from military service

as those terms are defined within the WTA. 775 ILCS 5/1-103 (I) – (Q). The key provisions of WTA include the following:

(A) Limitations on Employers’ Use of Non-Disclosure, Non-Disparagement, and Mandatory Arbitration Clauses

The WTA aims to stop employers from preventing employees from talking about discrimination and harassment. Specifically, the law prohibits employers from including unilateral non-disclosure clauses in employment agreements that prevent former, prospective, or current employees from reporting to federal, state or local authorities unlawful conduct, including criminal conduct and unlawful employment practices, such as sexual harassment, discrimination, and retaliation, or  prevent disclosure of “truthful statements” or that demand confidentiality relating to allegations of discrimination, harassment and retaliation.

The WTA permits, however, parties to enter into mutual agreements that include provisions otherwise considered unilateral and against public policy only if the agreement 1) is in writing; 2) is supported by valid bargained for consideration; and 3) acknowledges the employee’s right to report good faith allegations of unlawful employment practices and criminal conduct to authorities, to participate in proceedings with enforcement agencies, to make truthful disclosures required by law, and to request and receive legal advice.

With respect to settlement or separation agreements, these clauses may be acceptable, provided that: 1) the harassment or discrimination claims arise before the agreement is signed; (2) the clauses are mutually agreed upon and the documented preference of the employee/applicant; (3) the agreement is supported by valid bargained for consideration; (4) the employee/applicant is given 21 days to review the agreement and to consult an attorney before its execution; and (5) the employee/applicant has seven days after signing the agreement to revoke it, and the agreement is not enforceable until that revocation period ends. (Note: These requirements are similar to those found under the Older Workers’ Benefit Protection Act for employees over the age of 40.)

The restrictions on mandatory arbitration clauses incorporate excluding discrimination and harassment claims altogether, prohibiting employers from shortening applicable periods for filing claims, and preventing class actions. The WTA bars any unilateral agreement that attempts to waive, arbitrate or diminish the right to pursue existing or future claims of harassment, discrimination or retaliation under federal or state law. (Note: the legality of these provisions was already unclear given previous Supreme Court rulings, and the WTA’s limitations on arbitration are likely preempted by the Federal Arbitration Act (FAA) for any arbitration agreement governed by the FAA.)

The WTA does not apply to terms of collective bargaining, nor does it prevent an employer from requiring certain employees to maintain confidentiality as to allegations made by others in certain narrow circumstances.

(B) Mandatory Sexual Harassment Training

Pursuant to the WTA, all employers in Illinois, regardless of size or type of employer, will be required to provide sexual harassment training to all employees on a yearly basis. The IDHR will be working on providing regulations addressing the requirements for the training program, reporting information, and other details.

(C) Employer Mandatory Disclosures to the IDHR

Beginning July 1, 2020, all employers in Illinois will be required to report, on an annual basis, any final, non-appealable settlement, adverse judgement, or ruling against them involving harassment or discrimination. This report will be made to the Illinois Department of Human Rights (“IDHR”). Employers must report the total number of settlements and judgments with regard to each protected class. (For example, “We settled a claim with regard to age and race discrimination.”) Data submitted by the employer is exempt from disclosure under FOIA. While the information will not be subject to public disclosure, the IDHR can use the information to begin an investigation or when already conducting an investigation. Failure to report can result in fines ranging from $500 to $5,000 depending on the size of the employer and whether there have been previous violations. Employers that fail to comply with the disclosure requirements are subject to civil penalties. The mandatory disclosure requirement includes a sunset provision repealing the disclosure obligation as of January 1, 2030.

 (D) “Regarded As” Discrimination Claims

Most employers are familiar with the concept of a “regarded as” claim under the Americans with Disabilities Act (“ADA”).  This concept now makes its way to the Illinois Human Rights Act (“IHRA”), which, per an amendment under the WTA, will prohibit discrimination based on an employee’s “perceived” protected characteristic. This means that like the ADA, even if the employee isn’t actually in a protected class, the employee could bring a claim under the IHRA because she was discriminated against or harassed because the employer treated her like she was. (Example: Employees at an office start a rumor that a male employee is gay because they don’t think he exhibits traditionally masculine qualities. He is subjected to demeaning comments and remarks on a day-to-day basis and ultimately denied a promotion. Although the employee isn’t gay, he could bring a claim under this amended section of the IHRA on the basis that his employer “regarded him” as gay and discriminated against him and harassed him based on the protected class of sexual orientation. – this example was selected in part to highlight that the WTA does not limit its coverage to those protected classes identified by Title VII. This is important because the Supreme Court is currently reviewing whether Title VII applies to sexual orientation or gender identity. The EEOC has interpreted the law to cover these areas, but the Supreme Court could rule otherwise.)

Additionally, the definition of work environment protects the employee beyond the physical location to which the employee is assigned to work.

(E) Protection of Non-Employees and Employees from Co-Worker Harassment

The WTA amends the IHRA by extending the protections against harassment to non-employees who are defined as individuals who are not employees of the employer but who are providing services to the employer pursuant to a contract, including contractors, and consultants. Employers will be held liable to non-employees and employees for harassment by non-managerial, non-supervisory employees to the extent the employer is aware of the harassment and fails to take corrective action.

(F) Unpaid Leave Following a Claim of Sexual Harassment – VESSA Amended

The WTA amends the Victims’ Economic Safety and Security Act (“VESSA”) to include sexual harassment as a reason for leave under the law. The harassment need not have a connection to the workplace in order for the employee to qualify for the leave under VESSA. The newly included definition of “gender violence” is defined as violent or aggressive acts that are committed at least in part on the basis of a person’s actual or perceived gender or sex and that constitute a criminal offense. Includes coverage of electronic communications on social media, website or application.

(G) The Sexual Harassment Victim Representation Act

The newly enacted Sexual Harassment Victim Representation Act prohibits a union representative from representing both a union member who accused another member of sexual harassment and the accused member. Instead, the union must designate separate union representatives to represent the victim member and the accused member in the disciplinary proceeding.

(H) City of Chicago’s Minimum Wage to Increase

 On July 1, 2020, the City of Chicago’s minimum wage will increase from $13.00 to $14.00, and it will again increase on July 1, 2021 from $14.00 to $15.00. This wage increase applies to employers with more than 20 workers. Employers with fewer than 20 workers will have until 2023 to increase wages to $15.00 per hour, and employers with fewer than 4 workers are exempt (with few exceptions). The City’s minimum wage will increase annually based on the consumer price index. This wage increase puts Chicago ahead of the State of Illinois’s mandated wage increases—which will not require an increase to $15.00 per hour until 2025.  (Tipped wages will also increase but are not addressed in this article.)

Employers are advised to reference, if applicable, the Hotel and Casino Employee Safety Act, Cannabis Regulation and Tax Act, and certain amendments to Illinois Minimum Wage Law and Illinois Tax Act—as these are not addressed in this article.

Action Items

• Monitor the progress on any reporting and training structure to be outlined by the IDHR. Employers are permitted to use the training outlined by the IDHR or to conduct their own training. Once the reporting process is determined: (a) ensure timely reporting of any violations (or settlements) by July of 2020; and (b) complete necessary training of employees by December 2020.
• Review and modify all employment, settlement, termination, and related agreements to remove language excluding disclosure of harassment, discrimination, and retaliation claims.
• Review and modify all arbitration agreements.
• Review and modify harassment and discrimination policies and procedures to comply with expanded protections and obligations.
• Maintain a list of final, non-appealable, adverse judgment or administrative rulings relating to claims of harassment, discrimination and prepare a template to use for filing with the IDHR.
• Review and modify leave policies to take into consideration the expanded rights for VESSA victims and their family members.

Contact Fletcher & Sippel’s Labor and Employment Group for more information.

Resources:

A link to the full text of DOL Wage and Hour Division’s Final Rule: Overtime Update: https://www.dol.gov/whd/overtime2019/

A link to the full text of Public Act 101-0221: https://ilga.gov/legislation/publicacts/101/101-0221.htm