Employers must comply with state and federal wage and hour laws in order to avoid costly penalties, but understanding these complex rules and regulations can be challenging without a dedicated human resources department. If you have employees in more than one state, you’ll need to comply with the laws in each state.
What is the Illinois minimum wage?
Federal minimum wage – that is, the lowest hourly rate of pay you can pay a non-tipped employee – is $7.25 per hour. Five states have not adopted their own minimum wage rate, while most states including Illinois have a state minimum wage rate. The minimum wage in Illinois is $12.00 per hour in 2022, but the state has already outlined increased minimum wage rates for the next several years; it will increase to $13.00 on January 1st, 2023, to $14.00 on January 1st, 2024, and to $15 on January 1st, 2025.
In many states, a separate minimum wage rate is established for tipped employees. In Illinois, tipped employees can be paid 60% of the hourly minimum wage or $7.20 in 2022, but employers must be able to demonstrate that wages plus tips bring the employee to the full minimum wage rate on average.
Illinois also reduces the minimum wage rate for employees under 18 as long as they work less than 650 hours per calendar year; the minimum wage for this population is $9.25 per hour in 2022, $10.50 per hour in 2023, $12 per hour in 2024, and $13 per hour beginning January 1st, 2025.
How to calculate Illinois overtime salary
State and federal law also govern the calculation and payment of overtime. According to the Fair Labor Standards Acts or FLSA, non-exempt employees must be paid at least 1.5 times their regular rate of pay, or time and a half, for hours worked over forty in any single work week. While some states have more stringent overtime rules (like requiring employers to pay time and a half for hours worked over eight in a single day, for example), Illinois employers follow federal law in this arena.
In order to calculate overtime salary, take the number of hours over forty an employee worked in a single work week (isolated in a given pay period) and multiply it times their hourly rate of pay times 1.5. A common mistake employers make is calculating overtime for the entire pay period instead of for each week individually. For example, an employee who worked 50 hours in week one and 30 hours in week two totaled 80 hours. If you calculate according to FLSA standards, the employee worked only 80 hours but is entitled to 10 hours of overtime. If you calculate incorrectly for the entire pay period instead of week by week, the employee may not receive the overtime pay he or she is owed.
How to track minimum wage and overtime
Minimum wage and overtime require careful monitoring, tracking, and calculating. Using timekeeping and payroll software can help ensure ongoing compliance and prevent costly mistakes. ASAP payroll offers a suite of business solutions to take the pain out of payroll so you can focus on what you do best. To learn more about ASAP payroll’s suite of solutions, request a free quote today.
