A state appeals panel said Illinois wage law doesn’t force businesses to calculate bonuses and other incentives when making overtime payments.
Carmen Mercado and Jorge Lopez filed a class action complaint against S&C Electric Company, alleging their former employer underpaid them according to the Illinois Minimum Wage Law. S&C is a Chicago-based maker and seller of electrical distribution components and parts.
Both men were factory assembly workers, paid by the hour, and alleged such employees collected nondiscretionary bonuses — a “KPI initiative,” an “MIS bonus” a seniority award and a success sharing bonus — which weren’t categorized as gifts but paid recognition of the services they performed.
Illinois First District Appellate Justice Aurelia Pucinski
| Illinoiscourts.gov
In July 2020, with both men no longer working for the company, they say S&C gave Mercado $486 and Lopez $10 as “adjustment payments,” but they say they still are owed more because their overtime wage rate was calculated on only their base pay and without factoring the four bonuses.
Cook County Judge Allen Walker dismissed the complaint, agreeing the adjustment payments satisfied any discrepancies. Still, Walker said the issue of whether the bonuses were measured by or dependent on the number of hours employees worked as a material factual dispute.
The workers challenged the dismissal before the First District Appellate Court. Justice Aurelia Pucinski wrote the panel’s opinion, issued March 6; Justices Michael Hyman and Mary Ellen Coghlan concurred.
The panel said the minimum wage law allows companies to exclude several types of payments when calculating the pay rate used as a basis for time-and-a-half overtime compensation. The workers said Illinois courts should consider the federal Fair Labor Standards Act to interpret state law.
Judge Walker disagreed, saying the state law is sufficiently clear in its exclusion of things like holiday gifts.
“What the circuit court did not rule on, however, was whether the bonuses paid to plaintiffs fell under the gift exception,” Pucinski wrote.
The panel noted Walker struck part of an affidavit from Aurelie Richard, S&C’s chief human development and strategy officer, in which she asserted “none of the bonuses were measured by or dependent on hours worked, finding her statement to be conclusory and unsupported by any other facts. Beyond the affidavit, there were no other facts in the record explaining these bonuses.”
The panel said it disagreed with Walker’s ruling on the affidavit, saying Richard’s position with the company would entitle her to make such an assertion and further noting the workers didn’t present any argument to the contrary.
“Nowhere in the statute or its enacting regulations did our legislature provide an exclusion for bonuses or other such payments that are paid to hourly workers based on hours worked,” Pucinski wrote. “It is plaintiffs’ burden to show that the bonuses at issue qualify as such and do not fall under any other exclusion.”
The panel said Richard’s affidavit explained how the company accounted for bonuses and interest when calculating the adjustment payments, restated the workers’ complaint fell short of adequately alleging bonuses should’ve been used to calculate overtime pay, and failed to prove the adjustment payments were inadequate.
“The Wage Law includes an exception for bonuses and incentive payments,” Puckinski wrote. “Plaintiffs admit that they received, accepted and kept the adjustment payments. Richard’s affidavit, which, again, we believe not to be conclusory as the circuit court found, provided that the bonuses were not dependent on or measured by hours worked, and we agree with the circuit court that they therefore should not have been included in calculating overtime.”
Attorneys Christopher J. Wilmes and Margaret E. Truesdale, of the firm of Hughes Socol Piers Resnick & Dym, of Chicago, represented the workers.
Representing S&C were attorneys John T. Roache and Megan M. Kokontis, of the Chicago firm of Akerman LLP.