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Illinois employers navigated an avalanche of new laws in 2023, with more on the horizon in 2024 (and even 2025). New paid leave obligations for Illinois (and Chicago and Cook County) employers are a significant change, and additional developments expand employer liability in some circumstances where individuals are victims of gender-related violence. There are also new obligations for employers who use temporary employees, and increased protections for striking workers–not to mention a soon-to-be requirement for employers to include pay scale and benefits information in job postings starting January 1, 2025.

Here are key updates that Illinois employers should be aware of for 2024–and beyond.

1. New paid leave laws in Illinois, Chicago and Cook County

Employers in Illinois, Chicago and Cook County have new paid leave obligations for 2024 under three new laws:

  • The Illinois Paid Leave for All Workers Act (PLAWA) (effective January 1, 2024) requires Illinois employers to provide most employees with a minimum of 40 hours of paid leave per year to be used for any reason at all–not just for sick leave.
  • The Cook County Paid Leave Ordinance (effective December 31, 2023, the sunset date of the prior Cook County Earned Sick Leave Ordinance) covers employees who work in Cook County and largely mirrors the PLAWA. The Cook County Commission on Human Rights will begin enforcement of the paid leave Ordinance on February 1, 2024.
  • The Chicago Paid Leave and Paid Sick and Safe Leave Ordinance (effective July 1, 2024) will require covered employers to provide eligible employees 40 hours of paid sick leave and 40 hours of paid leave (the latter usable for any reason) per 12-month accrual period, for a total entitlement of up to 80 hours of PTO per 12-month period.

Importantly, under both the PLAWA and the Cook County Paid Leave Ordinance:

  • Eligible employees earn 1 hour of paid leave for every 40 hours worked, up to a minimum of 40 hours in a 12-month period (with exempt employees presumed to work 40 hours per workweek for accrual purposes, but leave accrues based on their regular workweek if their regular workweek is less than 40 hours)
  • Though unused accrued paid leave from one 12-month period can be carried over to the next, employers can cap the use of paid leave in one 12-month period to 40 hours
  • Frontloading is permitted, and employers who frontload 40 hours at the beginning of the 12-month period are not required to carry over unused accrued paid leave
  • Employers cannot require employees to provide a reason they are using paid leave, or any documentation or certification as proof or in support of paid leave

The Chicago Paid Leave Ordinance diverges from the PLAWA and the Cook County Ordinance in several ways, including:

  • Covered employees will accrue one hour of paid sick leave and one hour of paid leave for every 35 hours worked-five hours less than what is required to accrue an hour of paid leave under the PLAWA or Cook County Ordinance
  • Employees may carryover up to 80 hours of paid sick leave and up to 16 hours of paid leave from one 12-month accrual period to the next
  • Employers may frontload 40 hours of paid sick leave and 40 hours of paid leave on the first day of the 12-month accrual period. Frontloaded paid leave does not carry over from one 12-month period to the next (unless the employer prevents the employee from having meaningful access to their PTO), but up to 80 hours of unused paid sick leave does
  • Employers with more than 50 employees in Chicago are required to pay the employee the monetary equivalent of unused accrued paid leave when an employee separates from the employer or transfers outside of the City of Chicago (see chart below for specifics)
  • Unlike in the PLAWA or Cook County Ordinance, unlimited PTO is specifically addressed in the Chicago Paid Leave Ordinance (so employers with unlimited PTO policies should review the Ordinance closely)

The chart below provides a quick comparison of some highlights of the three laws.

Illinois Paid Leave for All Workers Act (PLAWA)Cook County Paid Leave OrdinanceChicago Paid Leave and Paid Sick and Safe Leave Ordinance
Effective DateJanuary 1, 2024December 31, 2023July 1, 2024
CoverageEssentially applies to all employers with at least one employee, and employees in Illinois with some notable exceptions (including independent contractors under Illinois law and individuals who meet the definition of “employee” under the federal Railroad Unemployment Insurance Act or the Railway Labor Act).Essentially applies to all employers with at least one employee, and employees working in Cook County with exceptions (including independent contractors under Illinois law and individuals who meet the definition of “employee” under the federal Railroad Unemployment Insurance Act or the Railway Labor Act).Essentially applies to all employers who employ at least one employee, and employees who work at least 80 hours for an employer within any 120-day period while physically present within the geographic boundaries of the City of Chicago (with some notable exceptions, including employees working in the construction industry who are covered by a bona fide collective bargaining agreement).
Accrual1 hour of paid leave for every 40 hours worked, up to a minimum of 40 hours in a 12-month period. Leave begins to accrue on the employee’s first day of employment, or on the law’s effective date, whichever is later.Same as PLAWA.1 hour of paid leave and 1 hour of paid sick leave for every 35 hours worked, up to 40 hours each in a 12-month period.
Waiting period to use leave?Employees can begin using paid leave 90 days after commencement of their employment.Same as PLAWA.Employees can begin using paid leave on the 90th calendar day after commencement of their employment. Employees can begin using paid sick leave no later than the 30th calendar day after commencement of their employment.
Permitted reasons for useFor any reason.Same as PLAWA.Paid leave can be used for any reason.   Paid sick leave can be used for various reasons including when the employee or the employee’s family member is ill, injured, or receiving professional care; if the employee or family member is the victim of domestic violence, a sex offense or trafficking; or if the employee’s place of business is closed due to a public health emergency.
Can employers require notice prior to leave?Employers can require employees to provide 7 calendar days’ notice before the date of leave is to begin for paid leave that is foreseeable (and as soon as practicable if paid leave is not foreseeable).Same as PLAWA.Employers may require up to seven days’ advance notice of a foreseeable need for paid leave or paid sick leave.
Can employers require a reason, documentation or certification for leave?No.Same as PLAWA.No for paid leave. For absences of more than three consecutive work days, an employer may require certification (such as documentation signed by a licensed health care provider or a police report) that paid sick leave was used for a permissible reason.
Can employer set a minimum increment for the use of paid leave?Employers can set a reasonable minimum increment for the use of paid leave not to exceed 2 hours per day (and if an employee’s scheduled workday is less than 2 hours a day, the employee’s scheduled workday will be used to determine the amount of paid leave).Same as PLAWA.Employers can set a minimum reasonable increment not to exceed four hours of paid leave per day or two hours of paid sick leave per day (and if an employee’s scheduled workday is less than these minimum increments, the minimum increment of time must not exceed the employee’s regular scheduled workday).  
Are employers required to carry over unused accrued PTO?Yes, but employers are not required to provide more than 40 hours of paid leave for an employee in the 12-month period.Same as PLAWA.No for paid leave (unless employer prevents employee from having meaningful access to PTO).   Yes for paid sick leave, requiring carryover of up to 80 hours from one 12-month accrual period to the next.
Is frontloading allowed?Yes, with no carryover requirement.Same as PLAWA.Yes, with no carryover requirement for paid leave–but employers are still obligated to carry over up to 80 hours of unused paid sick leave from one 12-month accrual period to the next.
Are employers required to pay out unused accrued paid leave?Generally, no. But if employers allow paid leave to be charged or otherwise credited to an employee’s paid time off (PTO) bank or employee account (which can only occur if the employer’s policy permits such a credit), any unused paid leave must be paid to the employee upon the employee’s termination, resignation, retirement, or other separation to the same extent as vacation time under existing Illinois law. Same as PLAWA.Employers with more than 50 employees in Chicago are required to pay the employee the monetary equivalent of unused accrued paid leave upon termination, resignation, retirement, other separation, or transfer outside of the geographic limits of the City. (Employers with 51-100 covered employees are required to pay out up to 16 hours of paid leave on separation or transfer until July 1, 2025, but will be required to pay out all unused paid leave on separation or transfer effective July 1, 2025. Employers with more than 100 covered employees must pay out all unused paid leave upon separation or transfer starting July 1, 2024.) Also, if an employee has not been offered a work assignment for at least 60 days, the employer must notify the employee in writing that the employee may request a payout of their accrued paid leave.
Can employers use their current paid leave policy?Yes, with no requirement to modify the policy as long as the policy meets (or exceeds) the minimum amount of leave required under the Act and the policy offers an employee the option, at the employee’s discretion, to take paid leave for any reason.Same as PLAWA.If an employer has a policy that grants paid leave / paid sick leave in an amount and manner that meets or exceeds the requirements of the Ordinance, the employer is not required to provide additional paid leave or paid sick leave–but the existing policy must be modified to comply with all other aspects of the Ordinance.
Notice and posting requirements?Employers are required to post this IDOL notice in a conspicuous place on the employer’s premises where notices to employees are customarily posted, and must include notice in a written document (or written employee manual or policy if the employer has one). The notice must be provided 90 days following the effective date of the Act (or upon commencement of employment, whichever is later). If the employer’s workforce is comprised of a significant portion of workers who aren’t literate in English, the employer must notify IDOL, who will prepare a notice in the appropriate language.    Employers must post a notice advising employees of their rights to paid leave in a conspicuous place at each facility where any employee works that is located within the geographic boundaries of Cook County. The Cook County Commission on Human Rights developed a model paid leave Workplace Poster for employers to use. In addition, employers must provide employees with written notice advising them of their rights to paid leave at the commencement of their employment.Employers must post a notice in a conspicuous place at each facility within the geographic boundaries of the City–in English and other languages if the employer’s workforce includes a significant portion of non-English speakers. (Note: The Department of Business Affairs and Consumer Protection (the “Department”) will provide a model notice in English and other languages, so employers should be on the lookout for such model notices.) Employers must provide a notice of the employee’s rights under the Ordinance with the employee’s first paycheck and annually thereafter with a paycheck issued within 30 days of July 1. (A form notice for this purpose will also be provided by the Department.) Employers must provide employees with written notification of the employer’s PTO policy, including accrual rates and any PTO notification requirements, at the commencement of employment.
Recordkeeping requirements?Employers will have to maintain records documenting hours worked, paid leave accrued and taken, and the remaining paid leave balance for each employee for a period of not less than 3 years. In addition, the records must be preserved for the duration of any pending claim under the law.  Same as PLAWA.Employers must retain records for five years or the duration of a claim, civil action, or investigation, whichever is longer. Records must include information such as employee names, hours worked, paid sick leave and paid leave hours earned each year and dates paid sick leave and paid leave was used and paid, and any other records necessary to demonstrate compliance. Employers must also comply with these requirements for employees whose regular work duties take place within the geographical boundaries of Chicago, even if those individuals do not meet the definition of a “covered employee” under the Ordinance and therefore are not entitled to paid leave or paid sick leave.
Is there a private right of action?There is no express private right of action under the Act.Yes.Yes.

How do you know which law(s) applies to your workforce?

  • Effective January 1, 2024, all employees in Illinois except for those located in Cook County are subject to the PLAWA.
  • Cook County employees, including those in Chicago, are covered by the Cook County paid leave Ordinance effective December 31, 2024. 
  • On July 1, 2024, employees in Chicago will be subject to the Chicago paid leave Ordinance. (Though nothing exempts employees in Chicago from coverage by the Cook County paid leave Ordinance, but the requirements of the Chicago paid leave Ordinance meet or exceed the requirements of the Cook County paid leave Ordinance.) 

Employer takeaways:

  • Employers who are covered by PLAWA and / or the Cook County Paid Leave Ordinance who haven’t already done so should immediately review the law, address any compliance gaps in their current policies, and train HR on any changes.
  • Employers covered by PLAWA should review the Illinois paid leave FAQs as a start. IDOL indicates in the FAQs that further clarification will be in expected rulemaking, and that IDOL expects finalized rules to be in place before March 31, 2024–so employers should keep an eye out for more guidance from IDOL.
  • The Cook County Commission’s Paid Leave website recently indicated that draft rules will be available for public comment in early 2024, so employers covered by the Cook County Paid Leave Ordinance should monitor for more guidance. As of now, employers should review and utilize the Cook County Commission on Human Rights’ FAQs (updated January 2, 2024) and model Paid Leave Workplace Poster.
  • Employers should become familiar with the Chicago Paid Leave Ordinance and make preparations, including addressing any compliance gaps in their current policies and training HR, to meet the July 1, 2024 compliance date. The Office of Labor Standards (OLS) published proposed rules on the new Ordinance (with public comments accepted until February 16, 2024), as well as FAQs and an informational flyer that employers should review as well. And more guidance is expected to be forthcoming from the OLS, including final rules. Employers should continue to check back here, and check the OLS website for ongoing updates.

Quick note about the effective date of the Chicago Paid Leave Ordinance–and other changes

The Chicago Paid Leave Ordinance’s original effective date was December 31, 2023, but on December 13, 2023, the Chicago City Council passed an amending ordinance, delaying implementation of the Chicago Paid Leave Ordinance to July 1, 2024, (amongst other changes). The amending ordinance also amended the General Employment Requirements of the Chicago Municipal Code (Chapter 6-100). Effective December 31, 2023:

  • Employers must provide their employment policies to workers whose regular work duties take place within the geographical boundaries of Chicago, in the primary language of each worker.
  • Employers must provide workers with a 14-day notice of changes to employment policies.

The amending ordinance also clarifies that “wage theft” under Chicago’s General Employment Requirements includes “not granting or properly paying required” paid time off.

2. New bereavement leave for loss of a child

Effective January 1, 2024, the Child Extended Bereavement Leave Act (CEBLA)(SB 2034) provides job-protected, unpaid leave for parents who experience the loss of a child through suicide or homicide.

Covered employers / employees

The Act only applies to employers who have 50 or more employees, and the length of leave covered employees are entitled to take depends on the size of the employer:

  • For employers of 50-249 employees, employees are entitled to 6 weeks
  • For employers of 250+ employees, employees are entitled to 12 weeks

Covered employees are employees who have worked for their employer for at least 2 weeks.

Taking leave

Employees can choose to take the leave in a single continuous period or intermittently in increments of at least 4 hours, but all leave must be completed within one year after the employee notifies the employer of the loss. And employees who are entitled to take other paid or unpaid leave can elect to substitute any period of such leave for an equivalent period of leave provided under the Act. However, the Act does not extend the maximum period of leave an employee is entitled to under the federal Family and Medical Leave Act (FMLA), any other paid or unpaid leave provided under law, a collective bargaining agreement, or an employment benefits program or plan.

Notice and documentation

Employers can require reasonable advance notice of the employee’s intention to take leave (unless providing such notice is not reasonable and practicable), and can require reasonable documentation (such as a death certificate, published obituary, or written verification of death, burial or memorial services).

Violations and penalties

Under the Act, employers are prohibited from taking any adverse action against an employee because the employee exercises rights (or attempts to do so) under the Act, opposes practices the employee believes are in violation of the Act, or supports another person’s exercise of rights under the Act.

Employees can file a complaint with the Illinois Department Of Labor, or file a civil action, within one year of the last event constituting the alleged violation of the Act. Civil penalties are not to exceed $500 for a first offense and not to exceed $1,000 for a second offense, and the Act explicitly permits employees to seek equitable relief in a civil action in circuit court.

Employer takeaways:

  • Employers who haven’t already done so should update leave policies and train supervisors, managers and HR on the new leave entitlement.

3. A new leave for loss of a family or household member due to a violent crime

Effective January 1, 2024, HB 2493 amended the Victims’ Economic Security and Safety Act (VESSA) to allow employees to take a total of not more than 2 workweeks (10 work days) of unpaid leave for specified reasons (see below) relating to a family or household member who is killed in a crime of violence. The leave must be completed within 60 days after the date on which the employee receives notice of the death of the victim.

  • The three specified reasons employees can take this unpaid leave are:
    • To attend the funeral (or alternative to a funeral) or wake of a family or household member killed in a crime of violence;
    • To make arrangements necessitated by the death of a family or household member killed in a crime of violence; or
    • To grieve the death of a family or household member killed in a crime of violence.

For more details on the law, including how the new VESSA leave interacts with bereavement leave under the Family Bereavement Leave Act, see our prior blog here.

Employer takeaways:

  • Employers who haven’t already done so should train HR and managers and update leave policies in accordance with the new law.

4. New leave for organ donation

Effective January 1, 2024, under HB 3516, amendments to the Employee Blood Donation Leave Act (now known as the Employee Blood and Organ Donation Leave Act) adds leave entitlements for organ donors.

Prior to the amendments, employers with 51 or more employees were required to provide eligible employees with one hour of paid leave (or more if authorized by a collective bargaining agreement) to donate blood every 56 days. The amendments add that employees may use up to 10 days of paid leave in any 12-month period to serve as an organ or tissue donor.

Employees are entitled to leave under the Act only if they have (i) been employed on a full-time basis for at least six months and (ii) have received approval from their employer to participate in blood, organ, or tissue donation.

Employer takeaways:

  • Update leave policies and handbooks. Train supervisors, managers and HR on the new leave entitlement.
  • Monitor for new rules. The Act requires the Department of Public Health to adopt rules that (i) establish conditions and procedures for requesting and approving leave and (ii) require medical documentation of the proposed blood or organ donation before leave is approved by the employer.

5.  Employers may now face liability under amendments to the Illinois Gender Violence Act

The Illinois Gender Violence Act (GVA) was amended (under HB 1363) to impose employer liability in certain circumstances where individuals are victims of gender-related violence, effective January 1, 2024. Under the GVA, a person who has been the victim of gender-related violence can sue the person who committed the act of violence and seek damages. As of January 1, not only do perpetrators of gender-related violence face liability under the Act–employers can be liable, too.

For liability to extend to an employer (among other requirements), employers must fail to investigate complaints or reports of offending conduct and fail to take remedial measures, or fail to supervise, train or monitor the employee who engaged in the gender-related violence–but employers who provide sexual harassment prevention training pursuant to Section 2-109 of the Illinois Human Rights Act (IHRA) have an affirmative defense that adequate training was provided to the employee. For more details, see our prior blog here.

Employer takeaways:

  • Employers who haven’t already should train HR and managers on the law, and make sure employees receive appropriate sexual harassment prevention training under Section 2-109 of the IHRA to at least have the affirmative defense available should they face employee claims under the new law.

6. The Illinois Labor Disputes Act has expanded protections for striking workers

The Illinois Labor Disputes Act has been amended (pursuant to HB 2907 and HB 3396) to restrict defensive measures available to employers affected by picket activity, effective January 1, 2024. HB 2907 limits the amount an employer can recover for damages it suffers as a result of a labor dispute. HB 3396 makes it a Class A misdemeanor with a minimum fine of $500 to place any object in the public way with the intent of interfering with, obstructing, or impeding a picket or other demonstration or protest.

Employer takeaway:

  • Employers who haven’t already should train managers, supervisors and HR on the new law.

7. New obligations for employers engaging temporary employees

Under HB 2862, effective August 4, 2023, employers who use temporary employees have new obligations.

Before a staffing company employee starts to work at an employer’s (or other client’s) worksite, the employer must meet several health and safety requirements:

  • Document and inform the staffing company employee of any anticipated job hazards to be encountered;
  • Review the safety and health awareness training the staffing company employee received from the staffing company to determine whether such training addresses the recognized hazards for the industry;
  • Provide specific training in the particular hazards of the worksite; and
  • Document and maintain records of worksite-specific training and confirm to the staffing company within three business days of the training that such training was completed. (And if the employer requires a staffing company employee to switch roles, updated safety training must be given to address any specific hazards of the new role.)

The employer must also allow the staffing company to visit the worksite to confirm the training and information provided to staffing company employees.

Employers are also required to provide the staffing company with information regarding their regular employees’ job duties, pay, and benefits upon request to allow the staffing company to comply with new equal pay and equal benefits obligations. Those obligations require the staffing company to pay temporary workers who are assigned to a client for more than 90 calendar days the same wages and benefits the client provides to its lowest paid comparable employee (known as the “equal pay for equal work” provisions). Originally, this 90-day period began to run on August 4, 2023, so the earliest date on which temporary employees could have reached the 90-day threshold for equal pay and equal benefits was November 2, 2023. However, on November 17, 2023, Governor Pritzker signed HB 3641 into law, delaying the beginning of the 90-day calculation period to April 1, 2024 and granting staffing companies more time to comply with the equal pay for equal work provisions.

Penalties under the law can be steep, with violations of the new law ranging from $100 to $18,000 for a first violation, and $250 to $7,500 for each repeat violation. The law also allows the Illinois Attorney General to request that a circuit court suspend or revoke a temporary agency’s registration for any violations of the new law.

For more details on employer (and staffing company) obligations under the law, see our prior blogs here and here.

Employer (and staffing company) takeaways:

  • Employers who have not already done so should familiarize themselves with the law’s new requirements for staffing company clients and ensure compliance to avoid harsh penalties.
  • Staffing companies should keep close watch on the 90-calendar day threshold for the equal pay for equal work provisions of the Act. The emergency rules provide that the 90-calendar day threshold is determined by aggregating the number of days worked by a temporary employee in “any 12-month period, whether consecutively or intermittently.” Therefore, staffing companies will need to closely monitor employee assignments to ensure they do not run afoul of the Act.
  • Employers and staffing companies alike should watch for permanent rules. IDOL issued proposed permanent rules on August 7, 2023 to eventually replace the emergency rules issued the same day. The minimum public comment period for the proposed rules ran 45 days after publication of the permanent rules, through October 2, 2023–and permanent rules are likely imminent.

8. Employers must now allow employees to exclude public transit costs from taxable wages

Effective January 1, 2024, under HB 2068, the Transportation Benefits Programs Act (TBPA) requires covered employers to provide a pre-tax commuter benefit to full-time employees who work at least 35 hours per week. Employers must allow employees to use pre-tax dollars to purchase a transit pass for public transit (i.e. any transportation system of the Regional Transportation Authority) via payroll deduction, such that the costs for the purchase can be excluded from the employee’s taxable wages and compensation up to the maximum amount permitted by federal law.

For more on the Act’s requirements, see our prior blog here.

Employer takeaways:

  • Importantly, under the Act, a “covered employer” is one located in Cook County or one of several specified townships (listed in the Act) who employs 50 or more covered employees within one of those specified areas at an address located within one mile of fixed-route transit service. Illinois employers located outside of Cook County who haven’t already should review the law to determine whether they are “covered” and take steps to comply.

9. Employers have additional obligations to “modernize” labor notices and procedures

Effective January 1, 2024, HB 3733 “modernizes” labor notices and procedures, imposing additional obligations on employers. Changes include:

  • Employers can no longer submit their most recent EEO-1 report to meet EPRC requirements (and instead must submit a list of all employees during the past calendar year, separated by gender, race and ethnicity as reported in the business’ most recently filed EEO-1);
  • Employers must now provide personnel records by email upon employee request; and
  • Employers with employees who do not regularly report to a physical workplace must distribute notices required by the Illinois Minimum Wage Law, the Illinois Equal Pay Act of 2003, the Illinois Wage Payment and Collection Act, and the Illinois Child Labor Law either by email or conspicuous posting on the employer’s website or intranet site.

For more details, see our prior blog here.

Employer takeaway:

  • Employers who haven’t already done so should review policies and practices and make any required changes to comply.

10. And don’t forget: the Illinois minimum wage increased on January 1, 2024

The Illinois hourly minimum wage increased from $13 / hour to $14 / hour on January 1, 2024, one more step in the schedule of state minimum wage increases that is set to culminate in a $15 / hour minimum wage in 2025. The minimum wage for tipped workers rose to $8.40 per hour and youth workers (under 18) working fewer than 650 hours per calendar year saw their hourly wage increase to $12 per hour.

Employer takeaways:

  • Employers should (a) check with their payroll providers to ensure appropriate changes have been made to the hourly pay of any minimum wage employees, (b) closely review the schedule for future minimum wage increases, and (c) keep an eye on possible legislation to increase the minimum wage further after January 1, 2025.

What’s coming down the pike

11. “Pay scale and benefits” information required in job postings starting January 1, 2025

Under amendments to the Illinois Equal Pay Act (HB 3129), Illinois employers with 15 or more employees will have to disclose “pay scale and benefits” in any job posting, starting on January 1, 2025. The disclosure requirement applies to positions that will be physically performed (at least in part) in Illinois, as well as those that will be physically performed outside of Illinois where the employee reports to a supervisor, office or other work site in Illinois. So US employers staffing remote or hybrid positions that report to a supervisor or office in Illinois need to pay close attention.

Employers should note that the definition of “pay scale and benefits” in the Act is broad, continuing the trend we’ve seen in other states requiring inclusion of stock-based compensation, but without any clear guidance at this point as to what employers will be required to disclose in this regard. Among other new obligations, the new law will also require employers to maintain pay scale and benefits records for each position, as well as the job posting for each position, for at least five years (along with the already-required recordkeeping under the Act that requires employers to preserve information such as the name, address, occupation and wages paid to employees). For more details on the law, see our prior blog here.

Employer takeaways:

  • Employers should become familiar with and train HR, managers and supervisors on the new law in advance of the January 1, 2025 effective date, and work with counsel to determine how to implement necessary changes.
  • For a quick and easy way to stay on top of pay transparency obligations globally, we offer a fixed fee Global Pay Equity Compliance Compendium that monitors the legal pay equity requirements and forthcoming developments across 70+ jurisdictions (of which over 40 currently have transparency or reporting requirements). Please contact a member of our team for more information.

12. The subminimum wage for tipped employees in Chicago is set to be eliminated by July 1, 2028

Chicago’s  “One Fair Wage” Ordinance (approved by City Council on October 6, 2023) will gradually phase out the tip credit over a five-year period starting July 1, 2024.

Currently, employers of covered employees in occupations that customarily earn tips (such as restaurant servers, bartenders, bussers and runners) can take a credit against the standard minimum wage rate if those workers earn enough in tips to bring them up to Chicago’s hourly minimum wage. If employees’ tips combined with their direct pay at the subminimum hourly rate do not add up to the standard minimum wage, employers must make up the difference. 

The Ordinance provides for the wages of tipped workers (who earn a subminimum wage of $9.48 per hour) to increase by 8 percent per year until reaching parity with Chicago’s standard hourly minimum wage of $15.80. 

Currently:

  • For employers with at least 21 employees, the subminimum wage for tipped employees is $9.48 / hour (a 40% credit against the standard minimum wage of $15.80 / hour), and
  • For employers with more than three but fewer than 21 employees, the subminimum wage for tipped employees is $9.00 per hour (a 40% credit against the standard minimum wage of $15.00 per hour).

Under the Ordinance, the tip credit will be gradually decreased, so the tip credit to employers does not exceed:

  • 40% of the applicable minimum wage rate until July 1, 2024
  • 32% of the applicable minimum wage rate on and after July 1, 2024
  • 24% of the applicable minimum wage rate on and after July 1, 2025
  • 16% of the applicable minimum wage rate on and after July 1, 2026
  • 8% of the applicable minimum wage rate on and after July 1, 2027, until and including June 30, 2028

As of July 1, 2028, employers of covered employees will not be able to take a tip credit. Instead, the standard minimum wage rate in effect at that time will apply to all employees, including those in occupations that customarily receive tips (but servers and other employees in occupations that are customarily tipped will still be entitled to earn and keep their tips).

Employer takeaway:

  • Employers of covered employees should determine how the changes will affect payroll, and monitor the annual decreases of the tip credit.