The statute commonly referred to as "Section 1981" has its origins in the reconstruction-era civil rights acts. It provides that all citizens shall have the same rights to make and enforce contracts as are enjoyed by white people. As interpreted over approximately 120 years, and as amended by the Civil Rights Act of 1991, this statute prohibits all discrimination in employment on the basis of race, not just in the making of the initial employment agreement. The concept of "race" has been interpreted to mean the same thing as it did in the late nineteenth century, and includes groups such as "Asians," "Jews," and "Arabs," as well as whites and blacks.
Unlike its twentieth century counterpart, Title VII, section 1981 does not have any numerical jurisdictional requirements. Therefore, it applies to any private employer, regardless of the number of its employees. Patterson v. McClean Credit Union, 491 U.S. 164 (1989). The practical effect is that all employers are covered by the law's prohibition against race discrimination.
Because the statute prohibits discrimination by "persons" rather than employers, individual supervisors ad employees may arguably be held individually liable for violations of section 1981.
There is no statutory cap on the extent of liability for compensatory and punitive damages as under Title VII.
C. The Federal Age Discrimination in Employment Act
The federal Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621, et seq., prohibits discrimination in employment on the basis of age. It protects only those employees or applicants who are 40 or older. It does not protect against "reverse age discrimination"; i.e. it does not protect against discrimination in favor of an older employee that may run to the detriment of someone under 40 years of age.
The ADEA covers employers engaged in commerce who employ 20 or more employees for each working day in each of 20 or more weeks in the current or preceding year. 29 U.S.C. § 630(b). As under Title VII, one should count carefully, and consider excluding those who are owners or partners rather than employees. See, Fountain v. Metcalf, Zima, & Co., 925 F.2d 1398 (11th Cir. 1991).
The ADEA contains an exemption for high-level executives who may be compelled to retire if they are entitled to receive more tan $44,000 annually in retirement benefits. 29 U.S.C. § 631(c).
D. American With Disabilities Act
The Americans with Disabilities Act ("ADA") prohibits discrimination in employment based upon an employee's or applicant's disability. It also prohibits discrimination against someone with a record of a disability or someone who an employer regards as having a disability.
1. Coverage
Similarly to Title VII, the ADA covers employers who have 15 or more employees in 20 or more calendar weeks in the current or preceding calendar year.
2. Obligations of employer
Unlike most of the other federal employment laws, which are merely prohibitory, the ADA requires an employer to take positive action with regard to an employee with a disability. The ADA requires the employer to offer "reasonable accommodation" to a qualified employee or applicant with a disability. Reasonable accommodation does not require an employer to remove essential functions of the job. It only requires the employer to take reasonable steps that will allow the employee to perform the essential functions of the job. Some examples include schedule changes, elimination or transfer of nonessential, peripheral job functions, provision of aids and interpreters, and provision of mechanical aids that facilitate the performance of the job. The only potential reasonable accommodation that does not involve facilitating the performance of essential functions of a job is the potential that an employer may have to transfer an employee to an available position for which he is qualified. (Transfer is not available to applicants; they must be able to perform the essential functions of the job for which they apply.)
An employer is not required to make an accommodation if it imposes an "undue hardship" on the employer. This is where the size of the business affects the employer's responsibilities under the ADA. In determining whether an accommodation would impose an undue hardship, the following factors should be considered:
* the nature and cost of the accommodation;
* the size, type and financial resources of the facility where the accommodation would have to be made;
* the size, type and financial resources of the covered employer; and
* the employer's type of operation, including the composition, structure and functions of the work force, the geographic proximity and administrative or fiscal relationship of the specific facility to the covered employer.
Thus, the duty of General Motors to provide an interpreter to a hearing-impaired employee is probably not the same as the duty of a 20-employee automobile repair shop with little capital and small annual sales.
3. Damages
Damages recoverable under the ADA are the same as those available under Title VII. The same caps on punitive and compensatory damages also apply.
E. Illinois Human Rights Act (775 ILCS 5/1-101 to 5/2-105)
Illinois employers also must abide by the Illinois Human Rights Act. Under this law all private employers with 15 or more employees cannot discriminate in the employment of an individual because of the individual's sex, race, religion, color national origin, age, ancestry, handicap, marital status, or unfavorable military discharge (Except where the discharge was dishonorable). This law also prohibits retaliation against persons who have exercised their right to oppose discrimination. As to handicap discrimination and sexual harassment, the Act applies regardless of the number of employees. Employers in Chicago and Cook County also are subject to anti-discrimination ordinances. Other counties in Illinois also have such laws. When advising an Illinois employer, it is important to determine whether the county it is located in has its own such ordinance.
II. Wage payment laws
A. Fair Labor Standards Act
The Fair Labor Standards Act ("FLSA") generally requires the payment of a minimum wage set by Congress, and the payment of wages at a "time-and-a-half" rate for all hours worked over 40 hours per week. The statute and its regulations are complicated, having been amended and revised over the course of more than 50 years.
The FLSA contains certain exemptions from the minimum wage and maximum hours provisions of the FLSA. See 29 U.S.C. § 213. The most common are the so-called "white-collar" exceptions, for executive, administrative, and professional employees. 29 U.S.C. § 213(a)(1). Although the Department of Labor regulations governing this exemption are fairly complicated requiring a fact laden analysis, 29 C.F.R. 541.118, it can be said generally that these employees must be paid on a salary basis and must meet certain job description requirements relating to the use of discretion and independent judgment.
Compensatory and punitive damages are not available under the FLSA. Liquidated damages in the form of double-backpay, however, are available for "willful" violations.
B. The Equal Pay Act
The Equal Pay Act, 29 U.S. C. § 206(d), is technically an amendment to the FLSA. It requires equal pay for work on jobs requiring equal skill, effort and responsibility, and under similar working conditions, unless the difference in payment is based on a bona fide seniority system, a merit system, a quantity or quality of work system, or any other factor other than sex.
As an amendment to the FLSA, the Equal Pay Act contains the same coverage and jurisdictional requirements of the FLSA, but the exemptions to the minimum wage and overtime provisions do not apply to the Equal Pay Act.
C. Illinois Minimum Wage Law (820 ILCS 105/1-15)
Every Illinois employer who has four or more employees, excluding the employer's immediate family, is covered by the Illinois Minimum Wage Law. The adult minimum wage in Illinois is the same as under the federal law. Under Illinois law an employer may pay an employee who is under 18 $0.50 less than the adult minimum wage, but the federal law only permits a youth differential for the first 90 consecutive calendar days of employment with an employer. An employee paid less than the minimum wage requirement of the Illinois law must initiate a civil action for the back pay within three years of the underpayment. The employer is also liable for punitive damages to each employee in the amount of two percent of the underpayment for each month the underpayment is unpaid.
D. Illinois Wage Payment and Collection Act (820 ILCS 115/1-16)
The Wage Payment and Collection Act was enacted to ensure that employees are paid their wages, final compensation, vacation pay and other fringe benefits at the appropriate time. The Act applies to all employers and employees including employees of local governments and school districts, but excludes employees of the state and federal governments.
1. Wages defined
The term "wages" is defined as any compensation owed any employee by an employer according to an employment contract or agreement, whether the amount is determined on a time, task, piece, or any other basis of calculation. Payments to separated employees constitute "final compensation" and include wages, salaries, earned commissions, earned bonuses and the monetary equivalent of earned vacation and earned holidays owed to the employee.
2. Pay periods
All wages must be paid no less often than semi-monthly, unless the employee is exempt as an administrative, executive, or professional employee, in which cases wages must be paid no less often than monthly. Wages must be paid within a prescribed number of days after they are earned.
3. Final compensation
The Act requires employers to pay "final compensation" to all departing employees, regardless of whether the employee is leaving voluntarily or involuntarily. The employer must pay the final compensation at the time of separation, if possible, but in no event later than the next regular payday. In most circumstances final compensation will include all earned but unused vacation pay.
4. Deductions
The general rule is that an employer cannot deduct anything from any employee's paycheck, including his or her final paycheck. Limited exceptions exist for deductions required by law or made with the express and freely given written consent of the employee. Beyond that, deductions may be made only by following the procedures outlined in the Act.
5. Violations
Any employer that willfully refuses to pay wages or final compensation while under a duty to do is guilty of Class C misdemeanor. Each day during which a violation exists constitutes a separate and distinct offense. In addition, any employer who knowingly discharges or discriminates against an employee for exercising his or her rights under the Act, also is guilty of a Class C misdemeanor.
Furthermore, any employer who has been ordered by the Illinois Department of Labor or a court to pay wages and fails to do so within 15 days of the order is liable to pay a penalty of one percent per day for each day of delay up to an amount equal to twice the sum of the unpaid wages.
III. Family and Medical Leave Act
The Family and Medical Leave Act ("FMLA"), a federal law, requires covered employers to provide to eligible employees up to 12 weeks of unpaid leave per year for the following purposes:
* to care for a newborn child or newly-placed adopted or foster child;
* to care for a parent, child or spouse with a serious medical condition;
* to care for the employee's own serious medical condition.
The employer must return the eligible employee to the same or an equivalent position upon the employee's return from leave.
The FMLA covers employers engaged in commerce or in any industry or activity affecting commerce that employ 50 or more employees for 20 or more work weeks in the current or preceding year. The Department of Labor regulations provide that the "payroll method" of counting employees, discussed above, must be followed. 29 C.F.R. 825.105. Employees on leave are counted for purposes of coverage, but laid-off employees are not.
IV. Conclusion
Other laws also govern the employment relationship but those outlined above are the ones most frequently used by employees. Businesses big and small may at some point find themselves at the center of a controversy involving one of these statutes. Preventing the dispute from happening in the first place is the best defense. Knowing the laws that govern the work place is the best starting point.
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Richard L. Samson is a shareholder and Alan A. Satyr is an associate in the Chicago office of Ogletree, Deakins, Nash, Smoak Stewart, P.C. where they concentrate in the representation of employers in the labor and employment area. Ogletree Deakins is a nationally recognized law firm representing management in labor and employment matters. The labor and employment practice is complemented and supported by related practice groups in the areas of litigation, construction and surety law, employee benefits, environmental law, immigration and occupational safety and health.
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