How do you calculate overtime pay in Illinois?

July 26th 2024

Understanding how to accurately calculate overtime pay is essential for compliance with state and federal wage laws. With specific regulations governing how overtime is calculated, employers in Illinois must ensure that employees are fairly compensated for any hours worked beyond the standard 40-hour workweek. Whether you have hourly workers, salaried employees, or those earning on piece rates or commissions, each scenario requires a precise approach to calculating overtime.

This guide provides a comprehensive overview of the methods to calculate overtime pay in Illinois for different types of employees.

This Article Covers

Understanding Overtime in Illinois
Overtime for Hourly, Salaried, and Tipped Employees in Illinois
Overtime for Complex Pay Structures in Illinois
Additional Considerations for Illinois Overtime

Understanding Overtime in Illinois

Which Overtime Laws Apply in Illinois?

In Illinois, both federal and state laws govern overtime pay. The federal Fair Labor Standards Act (FLSA) establishes standards for overtime pay, generally requiring that covered employees receive overtime pay at one and a half times their regular hourly rate for hours worked beyond 40 in a workweek. The FLSA sets forth exemptions for certain job categories and industries.

Under the Illinois Labor Code (820 ILCS 105/4a), employers must pay overtime at one and a half times the employee’s regular rate for hours worked over 40 in a workweek. Employers in Illinois may require up to 10 additional hours of work per week without overtime pay if the employee is receiving remedial education. Remedial education is provided to those who lack a high school diploma or educational attainment at the eighth-grade level, it is designed to provide reading and other skills at an eighth-grade level or below, and it does not include job-specific training.

In addition to Illinois laws, governmental bodies are not required to pay overtime if they provide compensatory time or are involved in fire protection or law enforcement activities under specific federal provisions.

How Much is Overtime Pay in Illinois?

Overtime pay in Illinois is calculated at one and a half times the employee’s regular hourly rate for any hours worked beyond 40 in a workweek.

If you want to learn more, check out our guide on Illinois Overtime Laws

Who is Eligible for Overtime Pay in Illinois?

In Illinois, most employees are eligible for overtime pay unless they fall under specific exemptions. This applies to both hourly and salaried workers. Federal and state laws outline these exemptions, which include certain administrative, executive, or professional employees. In addition, some agricultural workers, salespeople, and mechanics may be exempt depending on their job roles and payment structure.

While most employees over the age of 18 are entitled to overtime, those aged 16 and 17 are only eligible if they are not attending school and are legally permitted to work.

Check out our guide on Overtime Rights in Illinois.

Who is Exempt from Overtime Pay in Illinois?

Certain employees in Illinois are exempt from overtime pay based on specific criteria established by state law. These exemptions primarily cover “white collar” workers, which include those in executive, administrative, or professional roles that involve high-level decision-making. To qualify for this exemption, these employees must earn a salary that is at least twice the minimum wage for a full 40-hour workweek. As of 2024, the minimum salary required for exemption in Illinois is $844 weekly or $43,888 annually.

In addition, Illinois law exempts the following roles from overtime:

  • Certain computer professionals
  • Outside sales employees
  • Family members working in the business
  • Some transportation workers
  • Employees under collective bargaining agreements
  • Medical and creative professionals, including student nurses and artists
  • Babysitters under 18

What is the Regular Rate of Pay in Illinois?

The regular rate of pay in Illinois is the hourly rate used to calculate overtime compensation.

  • For hourly employees, the regular rate is simply the amount paid per hour of work.
  • For salaried employees, the regular rate is calculated by dividing the employee’s weekly salary by 40 hours. For instance, if an employee earns $800 per week, the regular rate of pay is $20 per hour ($800 / 40).
  • For commission-based employees, add the employee’s commission to their base pay, then divide the total by hours worked to find the regular rate.
  • For employees who are earning based on piecework, employers must know the employee’s piece rate and calculate their weekly earnings accordingly.

Overtime for Hourly, Salaried, Tipped Employees in Illinois

How do you Calculate Overtime for Hourly Employees in Illinois?

Calculating overtime pay for hourly employees in Illinois is a straightforward process, here’s how:

  • Determine the regular hourly rate: Identify the employee’s standard hourly rate.
    Calculate the overtime rate: Multiply the regular hourly rate by 1.5 to determine the overtime rate. If an employee is paid $12.5 per hour, then the overtime rate would be $18.75.

Overtime rate = Regular hourly rate x 1.5 = 12.5 x 1.5 = $18.75

  • Determine the overtime hours: Identify the number of hours the employee has worked beyond 40 in the workweek. If an employee worked 48 hours in the week, the overtime hours would be 8.

Overtime hours = Hours worked beyond 40 during the week – 40 = 48 – 40 = 8

  • Calculate overtime pay: Multiply the overtime hours worked by the employee by the overtime rate. If the employee worked 8 additional hours, then the overtime pay for those hours would be $150.

Overtime pay = Overtime hours worked x Overtime rate = 8 x $18.75 = $150

To learn more, you can read our guide on Your Rights as an Hourly Employee in Illinois.

How is Overtime Calculated for Salaried Employees in Illinois?

Only non-exempt salaried employees in Illinois are entitled to overtime pay. Calculating overtime pay for salaried employees is not as straightforward compared to hourly wages, in this case, you have to determine the employee’s total wages first. Here is how to calculate overtime pay for salaried employees in Illinois:

  • Calculate the regular hourly rate: Salaried employees are paid at a fixed salary. Identify the employee’s weekly salary and divide it by the number of hours worked during the week (40 hours) to determine the regular hourly rate. If an employee is paid $500 a week then the employee’s regular hourly rate would be $12.5.

Hourly rate = Weekly salary / 40 hours = $500 / 40 hours = $12.5

  • Calculate the overtime rate: Multiply the regular hourly rate by one and a half to determine the overtime rate. If the employee’s hourly rate is $12.5, then the overtime rate would be $18.75 per additional hour.

Overtime rate = Regular hourly rate x 1.5 = $18.75

  • Determine the number of overtime hours worked: Identify how many hours the employee has worked beyond 40 in the workweek. If an employee worked 47 hours during the week, the hours qualified for overtime pay would be 7.

Overtime hours = Hours beyond 40 – 40 = 47 – 40 = 7 hours

  • Calculate the overtime pay: Multiply the overtime hours by the overtime rate. If the employee worked an additional 7 hours, then the overtime pay for those hours would be $131.25.

Overtime pay = Overtime hours x Overtime rate = 7 hours x $18.75 = $131.25

For more details, check out our guide on Your Rights as a Salaried Employee in Illinois.

How do you Calculate Overtime Pay for Tipped Employees in Illinois?

In Illinois, most tipped employees are entitled to overtime pay for hours worked beyond 40 in a workweek. The overtime rate is calculated based on the full minimum wage, not the lower cash wage the employer pays. Here’s how to calculate overtime pay for tipped employees:

  • Determine the full minimum wage: Identify the full minimum wage applicable for the overtime calculation. Generally, tipped employees are entitled to a minimum of $8.40 per hour, this lower rate is permissible because tips are expected to make up the difference between this rate and the full minimum wage. In Illinois, the full minimum wage for 2024 is $14 per hour, which is required for overtime calculations.
  • Calculate the overtime rate: Multiply the full minimum wage by 1.5 to find the overtime rate. If the minimum wage is $14 per hour, the overtime rate would be $21 per additional hour.

Overtime rate = Minimum hourly wage x 1.5 = $14 x 1.5 = $21

  • Determine the overtime hours: Identify how many hours the tipped employee worked beyond 40 in the workweek. Any hours beyond 40 are considered overtime. If the employee worked 50 hours in a week, the overtime hours are 10.

Overtime hours = Hours beyond 40 – 40 = 50 hours – 40 hours = 10 hours

  • Calculate overtime pay: Multiply the number of overtime hours worked by the overtime rate. If the overtime rate is $21 per additional hour and the tipped employee worked an additional 10 hours, then the overtime pay would be $210.

Overtime pay = Overtime rate x Overtime hours = $21 x 10 = $210

Overtime for Complex Pay Structures in Illinois

How do you Calculate Overtime for Piece Rate Employees in Illinois?

To calculate overtime pay for piece rate employees in Illinois, employers must:

  • Calculate weekly earnings: Start by calculating the employee’s total weekly earnings from piece rates. For example, if the employee earns $2 per piece and produces 200 pieces in a week, their total earnings for the week would be $400.
  • Determine the regular rate of pay: To find the regular hourly rate, divide the total weekly earnings by the total hours worked. For instance, if the employee worked 50 hours, the regular hourly rate would be $8 ($400 / 50).
  • Calculate overtime rate: overtime is paid at 1.5 times the regular hourly rate. Using the above example, if the employee’s regular hourly rate is $8, then the overtime rate would be $12 per hour ($8 x 1.5).
  • Determine overtime hours: Determine how many hours the employee has worked beyond the standard 40-hour workweek. In this case, the employee worked 50 hours, which would be 10 hours of overtime.
  • Calculate overtime pay: Multiply the number of overtime hours by the overtime rate. In this example, if the employee worked an additional 10 hours of work, the employee is entitled to $120 in overtime pay (10 hours x $12).

How do you Calculate Overtime Pay for Commission Employees in Illinois?

When calculating overtime pay for commission-based employees in Illinois, employers must factor in commissions to the hours worked. To determine overtime wages that include commissions:

  • Calculate the normal rate of pay: Determine the employee’s normal rate of pay, which includes their hourly rate and any commissions earned using this formula:

Normal Rate = [(Total hours worked x Hourly rate) + Commission for the Week] / Number of hours in the workweek

  • Determine the overtime rate: The overtime rate for commission-based employees is half the employee’s normal rate.

Overtime rate = Normal rate / 2

  • Determine the overtime hours: Determine how many hours the employee worked beyond the standard 40-hour workweek.

Overtime hours = Hours beyond 40 – 40

  • Calculate the overtime pay: Multiply the number of overtime hours by the overtime rate.

Overtime pay = Overtime hours x Overtime rate

For instance, a commission-based employee works 45 hours, the regular hourly rate of the employee is $10 per hour and receives a commission of $200 for the week. The employee’s overtime pay would be $36.11.

  • Total Weekly Earnings = (45 hours x 10) + $200 = $450 + $200 = $650
  • Normal Rate = $650 / 45 hours = $14.44
  • Overtime Rate = $14.44 = $7.22
  • Overtime Hours = 45 – 40 = 5
  • Overtime Pay = 5 hours x $7.22 = $36.11

Additional Considerations for Illinois Overtime

What is the Statute of Limitations for Claiming Unpaid Overtime in Illinois?

Employees can file a complaint with the Illinois Department of Labor (IDOL) or the U.S. Department of Labor’s Wage and Hour Division (WHD) for unpaid wages including overtime. Before filing a claim for unpaid overtime compensation in Illinois, employees are advised to be aware of the relevant time limits:

  • Under Illinois state law, employees have up to three years to file a claim for unpaid minimum and overtime wages.
  • Under federal law, employees have up to two years to file a claim for unpaid wages, extending to three years if the employer’s violation was willful.

If the resolution through IDOL or WHD is unsuccessful, employees may file a lawsuit in state or federal court.

What are the Recordkeeping Requirements for Overtime Wage Compliance in Illinois?

In Illinois, employers must keep detailed records for each non-exempt employee to comply with overtime wage laws. Records must accurately include the employee’s full name, social security number, address, birth date (if under 19), sex, occupation, work schedule, hours worked each day, total weekly hours, and wage details. This includes the basis for wage payment (e.g., hourly rate or piecework), regular and overtime earnings, and any wage additions or deductions. In addition, employers should track the total wages paid per pay period, payment dates, and the covered pay period.

For employees on fixed schedules, employers may maintain a record of scheduled hours and note compliance with the schedule is followed. However, actual hours must be recorded for deviations from the schedule.

Payroll records should be retained for at least three years, including wage and hour records, collective bargaining agreements, and sales records. Wage computation records must be kept for at least two years. These records must be available for inspection by the Illinois Department of Labor. Employers may use various time and attendance tracking systems provided they are accurate and complete.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.