We require exempt employees to complete timesheets tracking their daily hours worked. Should these employees account for time spent working at home or on the weekends outside of our regular hours? Should these employees also log hours spent at meetings for outside organizations that the bank is involved with?

Yes, if you require your salaried exempt employees to maintain timesheets, we believe they should include the actual number of hours worked, including work performed at home or outside of your regular business hours (subject to the discussion below). We believe this also would include time spent at meetings for organizations that your employees participate in due to their employment at your bank.

The Illinois Wage Payment and Collection Act (Act) requires employers to keep records of the names and addresses of their employees and of the wages paid to their employees each payday. The Illinois Department of Labor’s rules implementing the Act add the additional requirement that employers maintain records of “the hours worked each day in each work week” for each employee, “regardless of an employee’s status as either an exempt administrative employee, executive or professional.”

We note that there is no express penalty for noncompliance with this additional requirement, with the proviso that if an employee claims they were misclassified as an exempt employee and demands overtime pay, under the rules, the employer cannot defend itself against the claim without producing the required records of the employee’s hours (or evidence negating the reasonable inferences drawn from the employee’s evidence). Consequently, employers confident that their salaried employees are correctly classified as exempt — meaning that they meet the “salary test” (at least $35,568 per year beginning January 1, 2020) as well as the “duties test” (having duties that are administrative, executive or professional in nature) — may determine that the risk of a misclassification claim is low and decide to eschew the timesheets for salaried employees. However, if an employer is in doubt about the classification of any of its salaried employees, it would be prudent to require these employees to maintain the required daily records (in addition to all non-exempt employees).

For resources related to our guidance, please see:

Illinois Wage Payment and Collection Act, 820 ILCS 115/10 (“Employers shall keep records of names and addresses of all employees and of wages paid each payday, and shall furnish each employee with an itemized statement of deductions made from his wages for each pay period.”)

Illinois Department of Labor Administrative Rules, 56 Ill. Admin. Code 300.630(a) (“Regardless of an employee's status as either an exempt administrative employee, executive or professional, every employer shall make and maintain, for a period of not less than 3 years, the following true and accurate records for each employee: the name and address, the hours worked each day in each work week, the rate of pay, copies of all notices provided to the employee as required by subsection (d), the amount paid each pay period and all deductions made from wages or final compensation.”)

Final Rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 84 Fed. Reg. 51230, 51230 (September 27, 2019) (“The Department of Labor is updating and revising the regulations issued under the Fair Labor Standards Act implementing the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees.”)

Final Rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 84 Fed. Reg. 51230, 51302 (September 27, 2019) (“In this final rule, the Department sets the standard salary level equal to the 20th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (currently the South) and/or the retail industry. Based on 2018/19 data, this results in a salary level of 684 per week, or 35,568 annually for a full-year worker.”)

Illinois Department of Labor Administrative Rules, 56 Ill. Admin. Code 300.630(b) (“In the absence of employer records, a claimant may not be denied recovery of wages or final compensation on the basis that the employee is unable to prove the precise extent of uncompensated work or final compensation. An employee need only produce sufficient evidence to demonstrate the amount and extent of work or time earned as a just and reasonable inference. The employer must then produce evidence of the exact amount of work or time earned or produce evidence to negate the reasonable inferences drawn from the employee's evidence. The employer's failure to make and maintain records as required under subsection (a) shall not preclude a finding based on the information available that wages or final compensation are due, even though the award may be only approximate.”)