WAGE AND HOUR UPDATE
By Edward W. Bergmann
FLSA MINIMUM WAGE
AMENDMENTS TAKE EFFECT ON
APRIL 1
Effective April 1, 1990 the federal
minimum wage will increase from $3.35
per hour to $3.80 per hour (with an additional increase to $4.25 per hour effective April 1, 1991) under the provisions
of the Fair Labor Standards Amendments of 1989. Additional minimum
wage amendments to the Fair Labor
Standards Act are reviewed below.
Amended Enterprise Coverage for
Minimum Wage Purposes
The dollar value test for enterprise
coverage has been raised from $250,000
($362,500 for retail firms) to $500,000.
Employees of firms that have an annual
volume of business of less than $500,000
are covered by the FLSA in any workweek
in which they are individually engaged in
commerce, the production of goods for
commerce, or in a closely related activity.
Construction and laundry/dry cleaning enterprises, which previously were
subject to enterprise coverage irrespective
of their annual dollar value of business,
become subject to the $500,000 test
under the Fair Labor Standards Amendments of 1989. Hospitals, schools, and
public agencies continue to be subject to
enterprise coverage without regard to
their volume of business.
Repeal of the Retail Exemption
The minimum wage and overtime pay
exemptions for small retail establishments
have been repealed. Thus, employees of
such establishments become subject to
minimum wage and overtime pay requirements in so far as they are
individually engaged in commerce or in
the production of goods for commerce in
a workweek.
Grandfather Clause
Any enterprise that ceases to be
covered by virtue of the increase in the
enterprise coverage dollar value test must
continue to pay its employees not less
than $3.35 per hour, and continues to be
subject to the overtime pay and child
labor provisions of the FLSA.
Tip Credit Increases
Employers can take a tip credit of up
to 40 percent of the minimum wage for
certain tipped employees. This credit increases to 45 percent on April 1, 1990
and to 50 percent on April 1, 1991.
Remedial Education Provision for 40 +
Hour Workweeks
Employers may employ employees who
lack a high school diploma, or who have
not attained educational level of the
eighth grade, for up to ten hours over forty in a workweek without paying overtime
if the employees are provided with
remedial reading or other basic skills during such hours. The training provided,
however, must not be job specific under
this provision.
The New Training Wage and Its
Restrictions
Relative to job specific training, under
certain conditions employers may pay
employees age 16 through 19 a wage rate
of at least 85 percent of the minimum
wage but not less than $3.35 per hour for
up to ninety days. An employee who has
been paid at this subminimum training
wage for ninety days can be employed for
ninety additional days by a different
employer, if that employer provides job
training in accordance with the rules to
be issued by the Department of Labor.
The training wage provision, which expires on March 31, 1993, includes the
following restrictions. Employers are prohibited from displacing regular
employees in order to hire employees
eligible for the subminimum training
wage. Also, only a maximum of one-
fourth of the total of all the establishment's employees monthly hours can be
paid at the subminimum rate.
Impact of Changes on Illinois Park
Districts
Where state minimum wage laws impose requirements greater than the
federal law, including the above-
mentioned Fair Labor Standard Amendments of 1989's requirements, state law
takes precedent. Thus, since The Illinois
Minimum Wage Law has more stringent
requirements in a number of areas, that
law will control. These areas are as
follows:
A. In Illinois subminimum wage rates
only apply to employees under age 18
and the tip credit remains at 40 percent. Thus, Illinois Park Districts will
not be able to hire 18 and 19 year old
workers at subminimum wages. They
will also have to continue to apply the
40 percent tip credit in restaurant
operations.
B. Since Illinois only recognizes the
organized camp exception to the
minimum wage requirement, park
districts will have to pay minimum
wages to other recreational and
amusement establishment employees.
Illinois has adopted the federal
minimum wage levels except for the
differences to teenagers discussed
above.
Edward W. Bergmann
SEYFARTH, SHAW, FAIRWEATHER
& GERALDSON
55 E. Monroe Street
Suite 4200
Chicago, Illinois 60603
(312) 346-8000
February, 1990
Illinois Parks and Recreation
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March/April 1990
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