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Future Uncertain for Illinois Minimum Wage Increase
In recent months, lawmakers in Illinois have begun a serious push for raising the state's minimum wage by nearly three dollars over the next two years. As one of 29 states with a minimum wage above the $7.25 per hour required by federal law, the minimum wage in the state is $8.25 per hour. With public pressure mounting, however, members of the Illinois legislature have proposed plans which would increase minimum wage to $11.00 per hour by July 1, 2017.
Illinois residents also had the opportunity in November to express their opinion on Election Day by means of an advisory question on the general election ballot. The advisory measure was approved by a margin of more than two to one, with nearly 64% of voters expressing their support of raising the minimum wage to $10.00 per hour in 2015.
Overtime, Productivity, and the 40-Hour Work Week
When most people think about the requirements of a full-time job, they typically envision the average eight hour day and a resulting 40-hour week. Recent economic trends, however, are quickly proving that image to be no longer true. In fact, a recent Gallup study suggests that half of all full-time workers in the United States work more than 40 hours per week, and almost 40 percent work 50 hours or more. While expectations for longer work days and weeks are becoming increasingly common in many jobs, there are indications that putting in all the overtime may not actually be worth it.
In 1926, Henry Ford was the first prominent American business owner to experiment with a new expectation for his employees. After years of research within his company and against the recommendations of his contemporaries, Ford made the drastic decision to increase his workers' wages while reducing the length of a standard work day to eight hours. The years that followed for the Ford Motor Company were among the most successful of any company in the country's history, and unsurprisingly, other business owners took notice, making similar changes within their own organizations.
Independent Contractors or Employees?
For a small business owner, one of the most important decisions he or she must make is how to acquire the help needed to run the company. An owner must choose between hiring employees, utilizing independent contractors, or some combination of both. It is very important to understand the difference between employees and independent contractors, as each classification carries with it different requirements and responsibilities.
According to labor and tax regulations, there is no single standard for determining employee or contractor status. There are, however, a number of factors which, when weighed together, may offer some clarification to an individual's classification. The Internal Revenue Service (IRS) has divided the relevant considerations into three basic categories:
Protecting Your Business from Wrongful Termination Action
Like many states, Illinois is an “at-will” employment state. In simple terms, at-will means that, unless there is a specific agreement in place, employment may be terminated by either the employer or employee at any time, without advance notice, and for almost any reason or no reason at all. Employment contracts, employee handbooks, and verbal promises may create exceptions to an at-will arrangement, and situations may still arise in which an employee was wrongfully terminated.
According to Illinois law, it is illegal to fire an employee on the basis of certain protected characteristics. Among others, such characteristics include race, religion, gender, nationality, and disability. In order to be considered a wrongful termination, however, the employee must be completely terminated from the company. Demotions or pay decreases based on illegal discrimination are not considered under Illinois labor laws. Instead, such cases may be investigated by the Illinois Department of Human Rights.
Tips for Avoiding Employee Lawsuits
A business owner never hires an employee expecting to be sued. Employment agreements are based on trust that both the employer and employee will act in accordance with the best interest of the company while adhering to all applicable laws. Over time, however, even the best employment-based relationships can break down, and in an ever-increasingly litigious environment, it is all too common for a disgruntled worker to file a lawsuit against the business owner.
Of course, many such lawsuits may be groundless to the point of frivolity, but they still require time, attention, and money to defend. While there may be no way to prevent frivolous litigation, there are some things a business owner can do to make sure neither employees nor the government have legitimate grounds upon which to file suit.
Non-Exempt Until Proven Otherwise
Are My Employees Exempt or Nonexempt?
While many employees may not realize its impact, the Fair Labor Standards Act (FLSA) applies to most jobs in America, mandating employers to act in accordance with the law's requirements for both minimum wage and overtime pay. A very small percentage of jobs fall completely outside the purview of the FLSA and those under within its scope are divided into two classifications: exempt and nonexempt. It is extremely important for employers to know the difference so as to remain in compliance with the law.
Nonexempt
In most companies, the average worker is “nonexempt” meaning the FLSA standards generally apply to that individual. The employee must be paid at least the federal minimum wage for every hour he works and at least time and a half as overtime pay for any hours above 40 per workweek. Nonexempt employees typically comprise most of a company's workforce and include general laborers, clerks, production or line workers, customer service representatives, and “inside” sales staff.
FMLA and Employer Notification Requirements
Most American workers are aware of the existence of the Family Medical Act (FMLA). While they may not be familiar with the specific details, they know that FMLA provides for employees to take leave from their job for family and medical reasons. The details, of course, are extremely important in determining whether an employee's leave qualifies under the FMLA. Perhaps more important, though, is first establishing whether the employer is even subject to the law's requirements.
Covered Employers
It may come as a surprise that the FMLA does not apply to all business owners or even all employers. It is only applicable to employers who meet the act's definition of a “covered employer.” Under the FMLA this refers to:
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Private employers with at least 50 employees;
Women Face More Challenges Starting Businesses Than Men
In the wake of the worst economic downturn in two generations, the American economy is beginning to revive. One indication of a healthy national economy is the number of businesses being started, as revealed through the number of entrepreneurs applying for loans. While it is not an easy time to get funding to start a business, some people may have a natural lagniappe for such a venture: men.
A Congressional report released in July revealed that though women own approximately one-third of small businesses in America, they only “account for less than 5 percent of dollars borrowed through traditional small business loans.”
This is not the only indicator that women are getting less financial help than their male counterparts: the report also showed that women are more frequently turned down for private loans, and those who do secure capital “generally do so under much less favorable terms,” reports the Washington Post.
Voters in Illinois to Have Say in Raising Minimum Wage
In recent years, the debate surrounding raising the minimum wage is one that has been raging at both the federal and state levels. And in late June, the Chicago Defender reported that Governor Pat Quinn signed a House Bill allowing voters to “make their voices heard on an important issue that would benefit hundreds of thousands of working people across Illinois.”
Supporters of raising the minimum wage claim that it will help American families who are strapped for cash and are having difficulty making ends meet. However, critics of the law claim that it will strap small businesses with unreasonable expectations and stagnate the job market and economic growth.
Independent Contractors vs. Employees in Illinois
To be one's own boss is a deep thread in the narrative of the American dream. And in recent years, employers — especially in major cities like Chicago —have been utilizing independent contractors. And unlike employees, these employers have not been providing independent contractors with the same benefits as salaried workers.
According to Business & Legal Resources, Illinois state law states that an employer must adhere to strict requirements regarding unemployment tax, workers' compensation, and wage laws for employees. Yet these restrictions do not necessarily extend to independent contractors.
However, in July 2013, Governor Pat Quinn signed the Employee Classification Act into law in an attempt to bring independent contractors, specifically construction workers, some of the protections offered to salaried workers.The Employee Classification Act "establishes specific criteria to determine if an individual performing services for a construction contractor is an employee or an independent contractor." The law went into effect in January.
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