Starting July 1, 2016, the minimum hourly wage for workers in Chicago increased to $10.50 per hour for those who do not receive tips. Tipped workers must now receive a minimum cash wage of $5.95 per hour (and enough in tips to at least bring them to minimum wage). The Chicago minimum wage is significantly higher than the current Illinois rate of $8.25. This wage increase is just the next step in the city’s plan to bring the minimum wage up to $13 per hour by 2019 (The Chicago Minimum Wage Ordinance) that was adopted at the end of 2014. The scheduled increases are:
- $10.50 per hour on July 1, 2016,
- $11.00 per hour on July 1, 2017,
- $12.00 per hour on July 1, 2018, and
- $13.00 per hour on July 1, 2019.
Future increases in the minimum wage for tipped employees will be tied to increases in the Consumer Price Index and will also occur each July 1st. However, any increase is capped at 2.5 percent per year and will not be effective in any year when the Illinois Department of Employment Security reports that the unemployment rate in Chicago is equal to or greater than 8.5 percent.
The Ordinance generally provides that the Chicago minimum wage is subject to the overtime pay provisions in the Illinois Minimum Wage Law. This means that non-exempt hourly workers in Chicago who earn the new minimum wage are entitled to time and a-half ($10.50 x 1.5 = $15.75) for all hours worked over 40 per workweek.
The Chicago Wage Laws Apply to:
- Employers that maintain a business facility within the City of Chicago and/or are required to obtain a business license to operate in the City are subject to the minimum wage ordinance.
- Employees who work two hours in the City within the period of two weeks qualify for the minimum wage required by the ordinance. This includes domestic employees and home health care workers. A union may waive its members’ rights to collect the minimum wage as part of a collective bargaining agreement.
- Employers with a business facility in the City at which a covered employee works must post notice at the facility of: (i) the City minimum wage and (ii) the employee’s rights under the ordinance.
- Employers must provide with the first paycheck issued to any covered employee a form notice advising the employee of: (i) the City minimum wage and (ii) the employee’s rights under the ordinance. The Commissioner of Business Affairs and Consumer Protection will prepare a form notice and make it available online to employers.
- Employers may not discriminate or take any adverse action against any covered employee in retaliation for exercising any right covered under the ordinance.