Big changes are coming to Illinois minimum wage laws and it is important for employers with employees in Illinois to understand these new laws and the impact the laws will have on their businesses.
Illinois Minimum Wage Increases begin January 1, 2020
On February 19, 2019, the Illinois legislature enacted Public Act 101-0001, which creates a series of minimum wage hikes to take place over a five-year period beginning January 1, 2020. By January 1, 2025, the Illinois minimum wage will have increased from its current $8.25 per hour to $15.00 per hour for most employees.
Illinois minimum wages will see two hikes in 2020. The first hike will be January 1, 2020 when the minimum wage increases by $1.00 to $9.25 per hour. Later in the year, on July 1, 2020, minimum wage will increase again to $10.00. Thereafter, minimum wage will increase by $1.00 each January 1st until it reaches $15.00 on January 1, 2025. Below is a chart showing the minimum wage increases:
|
EFFECTIVE DATE |
MINIMUM WAGE AMOUNT |
|
January 1, 2020 |
$9.25 per hour |
|
July 1, 2020 |
$10.00 per hour |
|
January 1, 2021 |
$11.00 per hour |
|
January 1, 2022 |
$12.00 per hour |
|
January 1, 2023 |
$13.00 per hour |
|
January 1, 2024 |
$14.00 per hour |
|
January 1, 2025 |
$15.00 per hour |
Employers should take note that the above increases do not apply to all employees and, as with most laws, there are important exceptions that employers must be careful of. Specifically, the above-described minimum wage increases apply to employees who are 18 years of age or older. For employees under age 18, the minimum wage amount and increases are tied to the amount of time worked by the employee. In addition, there are different rules for employees who are tipped, recent hires, or temporary employees.
Employees Who are Minors
For employers who have employees under the age of 18, minimum wage is tied to whether the employee works more than 650 hours in a calendar year. This law is a change from previous law, which allowed employers to pay minor employees a maximum of 50 cents below minimum wage.
Under the new law, beginning January 1, 2020, employers must pay minor employees who work more than 650 hours in a calendar year the same rate as employers pay employees over the age of 18. In other words, employees must be paid at the rates and pursuant to the schedule set forth in the table above.
Beginning January 1, 2020, employers will also have to increase wages for their employees under age 18 who work 650 hours or less. Similar to adult employees, the minimum wage for these employees will be increased in stages over a period of 5 years. The first increase will begin January 1, 2020, when minimum wage for these employees will increase to $8.00 per hour. Thereafter, minimum wage will increase incrementally each year until it reaches $13.00 per hour on January 1, 2025.
Allowance for Tipped Employees
Every employer who has employees engaged in an industry in which the employees are commonly paid in part through tips is entitled to an allowance for gratuities as part of the hourly wage rate. The allowance must not exceed 40% of the applicable minimum wage rate. Each employer seeking an allowance for gratuities must provide substantial evidence that the amount claimed was received by the employee and not returned to the employer.
Minimum Wage for Recent Hires and Temporary Workers
Beginning January 1, 2020, for most recent hires, employers may reduce their wages during the first 90 days of employment by a maximum of 50 cents per hour under the applicable minimum wage rate. After 90 days, these employees must be paid the full applicable minimum wage rate. Employers must be careful, however, as this decrease in the first 90 days only applies to certain employees. For example, day and temporary laborers must be paid the full minimum wage with no reduction. Similarly, employers must pay occasional and irregular employees whose work takes no more than 90 days to complete at the full minimum wage rate. There are other exceptions as well and it is important for employers to be mindful of these exceptions.
Minimum Wage in Chicago and Cook County
It is important for employers with employees in Chicago and Cook County to be aware of local minimum wage rates, which are much higher that the Illinois minimum wage.
In Chicago, minimum wage is currently $13.00 per hour. Beginning July 1, 2020, Chicago’s minimum wage rate will increase and be indexed annually to the Consumer Price Index (CPI). The Chicago minimum wage rate applies to businesses located in Chicago and/or who have employees who work a minimum of 2 hours in Chicago during any two-week period.
In Cook County, minimum wage is currently $12.00 per hour and will increase to $13.00 per hour on July 1, 2020. Thereafter, each July 1st, the minimum wage rate will be indexed annually to the CPI, not to exceed 2.5%.
Employers Must be Aware of Changes to Illinois Minimum Wage
It is important for employers to be aware of the rapidly changing minimum wage rates in Illinois in order to comply with state and local laws. For more information about this article, or Illinois minimum wage laws in general, please feel free to contact Albee Law PC at (312) 279-0115 or info@albeelaw.com.
