DOL Proposes $35,308 Minimum Salary For Exempt Employees

Posted in *New Exemption Rules, DOL News

Earlier today (March 7, 2019), the U.S. Department of Labor announced new proposed regulations (.pdf) that would increase the minimum salary for employees to qualify for the Executive, Administrative, and Professional exemptions under the Fair Labor Standards Act to $679 per week, equivalent to $35,308 per year. This is an increase from the current minimum of $455 per week ($23,660 per year), set in 2004. However, it is significantly less than the $913 per week ($47,476 per year) minimum established in final regulations issued in 2016 and later blocked by a federal court.

Unlike the ill-fated 2016 regulations, the new proposed rules do not provide for automatic increases of the minimum salary. Instead, the Department proposes to review the minimum salary threshold every 4 years.

One new wrinkle included in the proposed rules is a provision that would allow employers to use non-discretionary bonuses and commissions paid annually or more frequently to satisfy up to 10% of the minimum salary obligation.

The Department will accept public comments on the new rules for a period of 60 days after the Notice of Proposed Rulemaking is formally published in the Federal Register. The timing of a final rules remains uncertain, but it is likely that the Department will aim to have final rules in place before the 2020 election.

For now, no need to panic even if you have exempt employees whose salaries fall below the proposed new minimum. It will be months before we know exactly what the final rules will look like, let alone whether they will survive the inevitable legal challenges.

Stay tuned for updates and further analysis.

DOL Releases Additional Guidance on Dual Jobs for Tipped Employees

Posted in Tip Credit

On February 15, 2019, the U.S. Department of Labor issued Field Assistance Bulletin No. 2019-2, providing additional guidance for Wage and Hour Division staff regarding how to apply tip credit rules for employees who perform both tip-generating work (like taking orders and serving) and other duties. We provided an overview of the DOL’s position on the issue in an earlier post (“What Duties Can a Server Perform Under the Tip Credit Rules?“).

This latest bulletin doesn’t break new ground, but does provide a useful summary of the DOL’s current take on how the tip credit under FLSA Section 3(m) applies to employees who perform differing tasks for an employer. It’s worth a read for any employers in the hospitality industry. Keep in mind – the DOL’s revised position may not carry the day in litigation, and state laws may vary.

Stiff New Employer Penalties Included In Illinois $15 Minimum Wage Law (Updated)

Posted in Minimum Wage, State Regulation

On February 19, 2019, Illinois Governor J.B. Pritzker signed Senate Bill 1, which increases the minimum wage in Illinois to $15 per hour by 2025. Under the new law, the minimum wage will increase from $8.25 to $9.25 on January 1, 2020, to $10.00 on July 1, 2020. Thereafter, the minimum wage will increase by $1.00 per hour each January 1, until it reaches $15.00 per hour on January 1, 2025. To mitigate the sting for small employers, the law allows employers with 50 or fewer employees to claim a tax credit for 25% of the cost of the increase in 2020. The credit gradually phases out over the next several years.

While most of the headlines about the new law focus on the minimum wage increase, the law also dramatically increases employers’ potential liability for minimum wage and overtime violations. Previously, employees who sued to recover wages and overtime pay under the Minimum Wage Law were entitled to recover the amount of any underpayment plus a statutory penalty of 2% of the amount of the underpayment per month that amount goes unpaid. The new law more than doubles the statutory penalty to 5% per month. Even more significantly, the law creates a new provision allowing employees to recover not just the amount of wages owed, but treble that amount.

To put this in dollar terms, before this new law, an employee who was underpaid by $100 per month over three years could recover $4,932 ($3,600 in wages plus $1,332 in penalties). Under the new law, the same employee could recover $14,130 ($10,800, or three times the amount of wages owed, plus $3,330 in penalties). These changes are likely to encourage employees and plaintiffs’ lawyers to pursue claims for even modest underpayments. Employers may also find it far more difficult and expensive to settle minimum wage and overtime claims under the new law.

The law also adds other new penalties payable to the Illinois Department of Labor. The Minimum Wage Law already provided that if an underpayment is found to be willful, repeated, or reckless, the employer is liable to the Department of Labor for a penalty of 20% of the amount of the underpayment. The new law adds an additional penalty of $1,500, payable to the Department of Labor’s “Wage Theft Enforcement Fund.”

The law also adds new teeth to the Minimum Wage Law’s record keeping provisions. Until now, the Minimum Wage Law did not provide for any monetary penalties for failure to keep required records. Under the new law, an employer that fails to maintain records required by the Minimum Wage Law is subject to a penalty of $100 for each impacted employee, also payable to the Department of Labor’s Wage Theft Enforcement Fund. Among other things, the Minimum Wage Law requires employers to keep a record of “the hours worked in each day and in each work week by each employee.” The law does not create any exception to this timekeeping requirement for exempt employees, and the Department of Labor’s regulations under the Wage Payment and Collection Act expressly state that employers are required to keep daily time records for all employees “regardless of an employee’s status as either an exempt administrative employee, executive or professional.”

The penalty provisions of the law are effective immediately.

In light of the new law, Illinois employers should consider the following steps:

  • Review all wage rates and begin planning for how to address the increased minimum wage taking effect on January 1, 2020.
  • Plan for how the increased minimum wage may affect bargaining with unions and existing wage schedules under union contracts.
  • With the assistance of legal counsel, conduct a comprehensive wage and hour compliance review.
  • If your organization does not currently keep a daily record of hours worked by exempt employees in Illinois, start doing so.
  • If you have fifty or fewer employees, be sure to talk with your tax advisers about the new tax credit.
  • Don’t hesitate to seek professional advice about wage and hour questions. The cost of a fifteen minute phone call with an experienced wage and hour lawyer is a drop in the bucket compared to the severe new penalties for even innocent mistakes under the new law.

Pay Freeze? Winter Weather and the FLSA

Posted in Exemptions, Salary Basis

Oh the weather outside is frightful …

No, seriously, it’s actually dangerous here in Chicago. Since much of the city seems to be on lock-down today as we all try not to freeze to death, this seems like a good time to review the rules relating to employee pay during weather-related shut-downs.

For non-exempt employees, the rule is pretty simple: Unless you have promised to do otherwise, you only have to pay non-exempt employees for the hours that they actually work. If you are shut down due to weather, you are not typically obligated to pay non-exempt employees. If you choose to pay for time that the employees do not actually work, you do not have to count the hours of non-work for overtime purposes, or include the pay in the “regular rate” calculation for computing overtime.

Exempt employees are another story. Most employees who are exempt under the executive, administrative, and professional exemptions have to be paid on a salary basis, meaning that they receive the same pay each workweek, regardless of their work hours. You can deduct from pay if an employee does not show up to work for a full day for personal reasons, but that exception does not apply if the employer elects to shut down for weather, lack of work, or other reasons. As long as the employee is ready, willing, and able to work, they are entitled to their full pay for the week.

You can require exempt or non-exempt employees to draw down any available vacation, PTO or personal time to cover the hours missed due to your shut down. However, once exempt employees are out of paid time, you still have to pay them their full salary for the week.

If you are open for business but your exempt employees decide on their own that they prefer not to brave the cold, you might be able to take deductions for any full days missed. Just beware – most exempt employees these days have at least some ability to work from home. Even if they are just taking a few calls or replying to e-mail, that counts as work, and if they work part of the day, they are entitled to pay for the full day.

As always, mileage may vary depending on your jurisdiction, and be sure to check and follow your policies, handbooks, agreements, etc.

Stay warm!



It's BAAA-aaack - Illinois Supreme Court Revives Biometric Data Claims

Posted in Recordkeeping, State Regulation

Back in 2008, Illinois enacted what at the time must have seemed like a relatively obscure law to address privacy concerns associated with biometric information – the Biometric Information Privacy Act or “BIPA”. At the time, biometric devices existed, but they weren’t terribly common. Today, many of us carry a sophisticated fingerprint reader or face scanner in our pockets, and many businesses have adopted biometric security for everything from company phones and computers to timekeeping systems to door access. Unfortunately, many of those same businesses had never heard of BIPA. Cue the lawyers.

Back in July 2017, we reported on several class action lawsuits filed against employers who allegedly failed to comply with BIPA. These lawsuits were potentially a big deal for organizations of any size, because BIPA provides for liquidated damages of $1,000 for each negligent violation, and $5,000 per willful violation, plus attorneys’ fees. In December 2017, the Illinois Appellate Court for the Second District threw potential defendants a break, holding in Rosenbach v. Six Flags Entertainment Corp. that plaintiffs could recover liquidated damages under BIPA only if they could show that they were actually harmed in some way by a violation. Many organizations breathed a sigh of relief after this decision. If the rule had held, it would have greatly diminished the pool of potential plaintiffs who could bring BIPA lawsuits. However, in September 2018, the Appellate Court for the First District reached the opposite conclusion in Sekura v. Krishna Schaumburg Tan, Inc. The Illinois Supreme Court resolved this brief split in authority last week, when it reversed the Second District’s ruling in Rosenbach, allowing Six Flags Great America patrons whose fingerprints were used to verify their identities when reentering the park to pursue claims for liquidated damages under BIPA. (See our write-up on that decision here.)

If you manage payroll for a “private entity” operating in Illinois that uses biometric time clocks to track employee hours, now would be a really good time to make sure that you have BIPA-compliant policies and procedures in place. Ditto if your organization uses biometric technology for anything else – company phones, laptops, door locks, etc.

Unlimited Vacation - Wave of the Future or Potential Liability?

Posted in Vacation and PTO

The idea seems so simple: Instead of carefully tracking how much time each employee takes off during the year, we all agree to treat one another as professional, responsible adults, and take off whatever time we need consistent with getting our work done. That’s the idea behind unlimited vacation or PTO policies, and it does seem great in theory. Employees get flexibility. Employers don’t have to book accrued vacation or PTO or worry themselves about complicated recordkeeping. Everyone is happy.

Until, that is, the government and the lawyers get involved.

Lawmakers and regulators often are not “out of the box” thinkers. To the contrary, their whole job is to define the legal boxes that we all live in. Often this is for the general good, but it does make things complicated when someone tries to implement a new approach to an issue like vacation pay.

Here in Illinois, like a number of states, employers are required to keep track of employees’ work hours as well as their vacation or PTO accruals and usage. The Illinois Wage Payment and Collection Act requires employers to pay employees for any accrued, unused vacation or PTO remaining to them at the time of termination. But how does that work with an “unlimited” PTO policy?

Employers with such policies might argue that the payout requirement does not apply because employees do not accrue any guaranteed vacation time. Employees simply take time off when needed without having their salaries docked.

Unfortunately, that is not how the Illinois Department of Labor sees things. According to the Department’s FAQs on vacation pay, employers with such policies “must pay an employee who separates from employment a monetary equivalent equal to the amount of vacation pay to which the employee would otherwise have been allowed to take during that year but had not taken.” That obviously creates a problem – how do you know how much leave a given employee “otherwise would have been allowed to take,” if you don’t limit or even track vacation or PTO usage? Do you take an average of the number of days used by all employees, or by each specific employee? Do you look at what if any scheduled time off the employee may have had coming up later in the year? Do you look at the calendar year? Anniversary year? What sort of evidence is required? Is an employee’s testimony about how much vacation he would have used sufficient to sustain a claim? On top of the practical problems, it is not clear whether the IL DOL’s interpretation of this issue in its FAQ would govern any actual claims, since the FAQ page is not a binding regulation and the courts have yet to weigh in on this issue. Indeed, the impracticality of measuring how much vacation an employee “otherwise would have been allowed to take” is a strong argument against the IL DOL’s interpretation. However, until the issue is addressed by binding legal authority, Illinois employers are left to wonder.

Unlimited vacation and PTO policies can also create issues when accounting for other forms of leave. For example, the FMLA requires employers to allow available paid leave to run concurrently with an employee’s FMLA leave. When employees have a set number of days or weeks of PTO available, the employer’s obligation to provide paid leave is limited to the number of days allowed by policy. But if an employer’s policy simply provides for unlimited PTO with no cap, arguably that would mean that an employee’s entire 12-week FMLA leave entitlement must be paid.

Finally, employers should be mindful of the criticism that because unlimited leave policies do not provide concrete guidance on how much time off the organization regards as reasonable, unlimited PTO policies can actually result in employees taking less time away from work than they would if they might if they had a fixed amount of PTO or vacation. For some employers perhaps that is part of the point, but most employers recognize that taking appropriate time away from work is important for employee productivity and retention.

While unlimited PTO policies are not as simple as they seem on their face, the complications and risks associated with such policies can generally be managed or minimized through careful planning and implementation. Here are a few tips for employers that are considering (or that already have) such a policy:

  • If you are transitioning away from a system in which employees accrued a fixed amount of vacation or PTO, talk with your legal counsel about how to manage the transition without violating your state and local wage laws.
  • Don’t make your policy truly “unlimited.” Establish reasonable parameters around when and how employees are able to use PTO, such as a requirement that employees obtain management approval for time off and an upper limit on the number of consecutive work days an employee can take off with pay.
  • Make sure that your policy is coordinated with other benefits that your organization offers, such as paid parental leave or short-term disability.
  • Be aware of the laws in your jurisdiction, and try to craft your policy in a way that ensures compliance. For example, if you are in a jurisdiction that requires employers to provide a certain number of days of paid sick leave, consider adding language to your policy to make clear that employees will be provided at least the number of paid sick days required by the law, and for all of the purposes provided by the law.
  • Even if you do not restrict the time that employees take off, keep track of the days your employees take and the reasons for their absences. Yes, having to keep these records does reduce one potential advantage of an unlimited PTO policy, but in many cases it is required by law. Even if it were not required, having a record of when people were and were not at work can be very important for defending against certain kinds of claims.
  • Ensure that your managers understand that they still need to manage employees’ time off, not just to prevent employees from taking too much time, but also to ensure that employees take enough time off to remain satisfied and productive.
  • In states like Illinois that require employers to pay employees for accrued, unused PTO and vacation upon termination of employment, make sure you understand how the law might apply to employees covered by your policy.
  • This is a rapidly evolving area of the law. Regularly review and update your policy to comply with changes in the law.





Are your bonuses really discretionary?

Posted in Bonus, Overtime

As the holiday lights start to fade, we come to one of the most anticipated times of the year – bonus season!

Such a happy time. Who doesn’t love getting a bonus, and what employer doesn’t like rewarding good performance with some extra monetary recognition? Bonuses are great, but keep in mind that they also carry some legal obligations. In the case of non-exempt employees, that might include paying additional overtime based on your bonus payment. The FLSA requires employers to pay overtime based upon an employee’s “regular rate” of pay. The regular rate is not simply the employee’s base hourly pay rate. Rather, it is the rate calculated by adding up all of an employee’s non-overtime compensation for each workweek, then dividing by the total hours worked during the workweek. Non-discretionary bonuses are part of an employee’s total compensation, so must be included in this calculation even if the bonus is not calculated or paid out until after the employee’s regular pay.

“Ha!”, you might be thinking to yourself as you read this, “we don’t have to do that because our bonus policy says right in the title that bonuses are discretionary.” You might be right, but it’s not quite that simple. The FLSA regulations (specifically 29 C.F.R. § 778.211), discuss which bonuses can be considered “discretionary”:

 In order for a bonus to qualify for exclusion as a discretionary bonus under section 7(e)(3)(a) the employer must retain discretion both as to the fact of payment and as to the amount until a time quite close to the end of the period for which the bonus is paid. The sum, if any, to be paid as a bonus is determined by the employer without prior promise or agreement. The employee has no contract right, express or implied, to any amount. If the employer promises in advance to pay a bonus, he has abandoned his discretion with regard to it. Thus, if an employer announces to his employees in January that he intends to pay them a bonus in June, he has thereby abandoned his discretion regarding the fact of payment by promising a bonus to his employees. Such a bonus would not be excluded from the regular rate under section 7(e)(3)(a). Similarly, an employer who promises to sales employees that they will receive a monthly bonus computed on the basis of allocating 1 cent for each item sold whenever, is his discretion, the financial condition of the firm warrants such payments, has abandoned discretion with regard to the amount of the bonus though not with regard to the fact of payment. Such a bonus would not be excluded from the regular rate. On the other hand, if a bonus such as the one just described were paid without prior contract, promise or announcement and the decision as to the fact and amount of payment lay in the employer’s sole discretion, the bonus would be properly excluded from the regular rate. (Underlining added.)

In sum, a bonus is not “discretionary” under this rule if an employer either commits in advance to paying a bonus or states the amount of the bonus or method of calculation in advance. Merely sticking a disclaimer at the end of your bonus policy or calling your bonuses “discretionary” doesn’t necessarily make it so.

So what if your bonus plan is non-discretionary – how do you calculate any overtime due? Look for a later post with the answer to that question, including a method of calculating bonuses that might allow you to skip the extra math altogether.

What Duties Can A Server Perform Under the Tip Credit Rules? [Wage & Hour FAQ]

Posted in Tip Credit, Wage and Hour FAQs

Q. We use the tip credit for servers who work in our restaurant. When service is slow, we ask our servers to pitch in with other jobs around the restaurant, like sweeping up the dining room and cleaning the restroom. Can we still take the tip credit for time that our servers spend working on these tasks?

A. Short answer: it depends.

Long answer: Specifically, it depends on whether the extra duties assigned to your servers are directly related to the servers’ “tip-producing occupation.” The U.S. Department of Labor recently re-issued a previously-withdrawn opinion letter dealing with this subject. The letter is worth a read if you are a wage & hour wonk, but the upshot is that the DOL will look to the job duties listed in the Occupational Information Network database, O*NET, available at, to determine whether duties are directly related to a tip-producing occupation. Tipped employees can perform any of the job duties listed in the “tasks” section of the Details report for their occupation in the O*NET database, without regard to whether they involve direct customer service, so long as the duties are “performed contemporaneously with the duties involving direct service to customers or for a reasonable time immediately before or after performing such direct-service duties.” For “waiters and waitresses”, this includes such tasks as setting up and cleaning tables and restrooms, among others. (See the O*NET report for waiters and waitresses for the full list.) Conversely, employers cannot take the tip credit for any work not included in the O*NET task list.

So, the duties listed in the question above would count as duties “directly related” to a server’s tip-producing job if performed while a server is also waiting tables, or immediately before or after the meal service. However, if a server was called in to clean the dining room and restrooms on a day when the restaurant is closed, the server would likely have to be paid the full minimum wage for that time. Likewise, a server who is asked to help enter payroll on a slow night may have to be paid at the full minimum wage for any time spent on that work, because entering payroll is not among the tasks included in the O*NET task list.

This guidance replaces the “80/20 rule,” which said that an employer can take the tip credit only if a tipped employee spends no more than 20% of their time performing “related duties” that do not directly involve customer service.

Insights for Employers

While the new guidance provides employers with greater flexibility, caution is still warranted.

DOL opinion letters represent the agency’s interpretation of the law at the time of the letter. They are not themselves legally binding. As this reversal indicates, they are subject to change by the DOL, without Congressional action or even the more formal “notice and comment” rulemaking process used for binding regulations. Courts may or may not agree with the DOL’s interpretation of the law. Some states and localities may also impose different limitations on the amount of non-tipped work a tipped employee can perform. In New York state, for example, employers of service employees and food service workers cannot take a tip credit for days in which an employee works more than 20% or two hours, whichever is less, of the workday in a non-tipped occupation.

The U.S. DOL’s new interpretation also leaves plenty of unanswered questions. For example, new occupations may not be listed in O*NET. The guidance says that employers should look at similar occupations for guidance, but that leaves room for interpretation, which leaves potential risk for employers. The regulation also leaves room for debate about what is a “reasonable” amount of time for tipped employees to perform related duties.

In light of these uncertainties, be sure to speak with an employment attorney familiar with wage and hour law in your jurisdiction and your specific situation before making decisions regarding application of the tip credit to your work force.



Can Exempt Employees Earn Overtime Pay? [Wage & Hour FAQ]

Posted in Salary Basis, Wage and Hour FAQs

Q. Our company’s busy season is coming up, meaning we will be asking employees to work longer hours. Our non-exempt employees will all receive overtime pay when they work more than 40 hours in a week. Some of them will actually end up earning more per week than some exempt employees. We would like to address this by offering extra pay to our exempt employees who work extended hours during the busy season. Can we do this without converting our exempt employees to non-exempt?

A. To qualify for the executive, administrative, or professional exemptions under the FLSA, employees generally have to be paid on a “salary basis.”* That means that an employee must receive the same guaranteed salary for each workweek in which they perform any work, regardless of the quality or quantity of work performed or the number of hours worked. Taking impermissible deductions from an employee’s guaranteed salary can result in loss of exempt status not just for that employee, but for other employees in the same job classification. The idea here is that exempt executive, administrative, and professional employees are paid to perform a certain job, regardless of how many hours it takes to get that job done. Given that requirement, it’s understandable to wonder whether offering extra pay to an exempt employee based upon work hours might also jeopardize an employee’s exempt status.

This issue is addressed in the FLSA regulations at 29 CFR § 541.604, “Minimum guarantee plus extras.” That section provides that so long as an exempt employee receives a guaranteed salary of at least the minimum weekly salary level (currently $455 per week), providing an extra payment above the minimum guarantee does not jeopardize the employee’s exempt status. There is a caveat however. Under 29 CFR § 541.604(b), if the extra pay is computed on an hourly, daily, or shift basis, there must be a “reasonable relationship” between the guaranteed weekly salary and the amount that the employee actually earns. The regulations state that a “reasonable relationship” exists when “the weekly guarantee is roughly equivalent to the employee’s usual earnings at the assigned hourly, daily, or shift rate for the employee’s normal scheduled workweek.”

The regulations include an example stating that a guaranteed weekly salary of $500 is “roughly equivalent,” and therefore “reasonably related,” to typical weekly earnings of $600 to $750. In a recent opinion letter, the DOL found based on this example that a 1.5-to-1 ratio of actual earnings to guaranteed weekly salary would constitute a “reasonable relationship” under the regulations. The DOL noted that this is not necessarily the ceiling. However, it found that a ratio of 1.8-to-1 was too great, and did not bear a “reasonable relationship” to earnings.

The DOL also commented on the question of how an employer should calculate “usual earnings.” It found that looking at an employee’s actual earnings over the course of a year would be reasonable. However, it noted that the inquiry must be “employee-specific,” so simply looking at earnings for an entire job classification or group “may not yield accurate ‘usual earnings’ for each individual employee.”

Insights for Employers

Returning to the question, yes, you can provide “overtime” pay to exempt employees based upon an hourly, daily, or shift rate without jeopardizing their exempt status. However, you must ensure that the employee still receives a guaranteed salary of at least $455 per week, and that the guaranteed salary is “reasonably related” to the employee’s “usual earnings” including the additional pay. To be safe, you should make sure that the ratio between the employee’s “usual earnings” and guaranteed pay does not go much beyond the 1.5-t0-1 ratio specifically endorsed by the regulations.

If this seems like a bit much to keep track of, consider alternatives that are not based on hours, days, or shifts worked. The “reasonable relationship” requirement does not apply to additional pay such as commissions or performance bonuses that, while perhaps indirectly related to the work an employee puts in, are not computed on an hourly, daily, or shift basis.

Also, keep in mind that the discussion above relates to federal law. Some state or local governments may have different requirements, so be sure to check with your employment counsel to make sure that your practices comply with the law in your jurisdiction.

*Administrative, professional, and computer employees can also be paid on a “fee basis,” and certain computer professionals can be paid at an hourly rate.

Illinois Employers - Update Your Expense Reimbursement Policies

Posted in Expenses

There’s nothing like a looming deadline to prompt action. Back in August, Governor Rauner signed into law an amendment to the Illinois Wage Payment and Collection Act that, for the first time, requires Illinois employers to reimburse employees for reasonable expenditures or losses required in the course of their employment duties and that primarily benefit the employer. Because the new law takes effect January 1, 2019, we’ve been receiving quite a few questions from employers about what they should be doing to comply. Right now, there is very little guidance on how the statute will be interpreted by the Illinois DOL or the courts, so anything we can say at the moment is provisional. With that caveat, here are a few preliminary “dos” and “don’t’s”:

DO have a written expense reimbursement policy. Even if you have a very small business and a workforce that should have few if any business expenses, having an express policy on employee express reimbursement is your best defense to claims under the new law. The statute expressly provides that an employer is “not required to reimburse expenses that are not authorized or required by the employer,” and permits employers to set caps on the amount of reimbursements.

DO be explicit about what you will and will not reimburse. If there are certain categories of expenses that your organization does not require employees to incur and for which you will not pay, say so in your policy. For example, if you have employees who sometimes elect to work from home for their personal convenience, you might state in your policy that working from home is not required, and that you will not reimburse employees who elect to work from home for any home phone or Internet service that they may use, because they have the option of coming in to the office. Similarly, if you will only reimburse for travel expenses up to a certain amount or require employees to use a specific travel provider, say so.

DO Include Reimbursement Procedures. Employees are entitled to reimbursement under the new law only if they comply with the employer’s written expense reimbursement policy. Because of this, it pays to be explicit. If you require employees to submit an electronic report, say so. If reports are due by a certain date, say so. (But see the note below about the 30-day rule.)

DO Include a catch-all provision for any expenses not expressly discussed. Your policy should address common expense categories that you know your employees might incur or ask about. However, trying to address every possible expense that employees might incur is an impossible task. For that reason, you should include language stating that employees must request advance approval before incurring any expense not expressly provided for in your policy. This is not necessarily a “get out of jail free” card, because it’s possible that employees might incur one-off expenses in circumstances that do not allow for prior approval. However, it may help avoid those recurring situations that present the largest risk of liability.

DON’T Refuse to reimburse for expenses legitimately required for the job. The main effect of the new law is to force employers to really give some thought to what they expect and require of employees. Say for example that your company uses an app-based timekeeping and scheduling system that employees access using their personal smartphones. If that is the only way that employees can record their time or check their schedules, having a smartphone with data service is arguably a requirement of the job, and you may have to reimburse employees for at least a portion of the cost of their device and monthly service. If you provide an alternative, like an onsite kiosk and local phone number where they can check their schedule, you might plausibly be able to say that having a smartphone is a convenience for employees, not a requirement of the job.

DON’T Set artificially low reimbursement rates. While the new law allows employers to set caps for what they will reimburse, it also provides that employers may not establish a “de minimus” reimbursement rate. So, if you have employees who routinely drive their personal vehicles between worksites during the work day, you can’t avoid the law by setting a mileage reimbursement rate of $.01 / mile. Right now we don’t have any guidance on exactly how far this principle goes, so employers should do their best to tie any reimbursement caps to employees’ reasonably anticipated expenses.

DON’T Require employees to request reimbursement sooner than 30 days after the expense is incurred. The statute provides that an employee must request reimbursement and provide documentation within 30 days after the expenditure. Although this is not expressly stated, the conservative interpretation is that while employers can give employees more than 30 days to request reimbursement, they cannot shorten the period. This may require employers to change how they administer expenses. Suppose for example that an employer requires employees to report expenses by the 10th day of each month for the preceding calendar month. Bob incurs an expense on November 30. Under the policy, Bob would have to report that expense by December 10. But under the new law, he would have 30 days, or until December 30. If Bob gets his expense report in within 30 days, his employer may be able to delay payment of his expense until January, but might run into trouble if it refused reimbursement altogether.

And finally,

DO talk to your employment counsel and stay on top of developments under this new law. Right now there are more questions than answers, but we expect further guidance from the Illinois DOL and eventually the courts to emerge over time.