As of July 1, 2015, Ordinance 02014-9680 became effective, which increased the minimum wage for employees in the Chicago to $10 per hour for non-tipped employees and $5.45 for tipped employees. The Ordinance provides for subsequent raises on July 1 of each subsequent year until the hourly minimum wage reaches $13 for non-tipped employees in 2019.
The following is a timeline of incremental increase for non-tipped employees:
| Effective Date | Non-Tipped Employees | Tipped Employees |
| Current | $8.25 | $4.95 |
| July 1, 2015 | $10.00 | $5.45 |
| July 1, 2016 | $10.50 | $5.95 |
| July 1, 2017 | $11.00 | Increases with CPI* |
| July 1, 2018 | $12.00 | Increases with CPI* |
| July 1, 2019 | $13.00 | Increases with CPI* |
| July 1, 2020 | Increases with CPI* | Increases with CPI* |
For tipped employees, the hourly minimum wage will increase to $5.95 in 2016 and will then increase based on the Consumer Price Index measure beginning in 2017. Importantly, as previously required, a tipped employee’s wage plus tips must equal at least the minimum wage, or the employer must make up the difference.
For both tipped and non-tipped employees, the scheduled annual increases will not occur if the unemployment rate in Chicago for the preceding year, as calculated by the Illinois Department of Employment Security, was meets or exceeds 8.5%. Furthermore, the ordinance also provides that if the Consumer Price Index (CPI) increases by more than 2.5 percent in any year, the minimum wage increase shall be capped at 2.5 percent (as opposed to the 5% – 17.5% range listed in the chart).
The ordinance applies to all employers with at least four employees (and at least one covered employee) and who maintain a business facility within the geographical boundaries of Chicago or are required to obtain a business license to operate in the city, pursuant to Title IV of the Municipal Code of Chicago. A “covered employee” is defined as one who works at least two hours within Chicago’s geographic boundaries in any two-week period. This includes employees who are compensated for time spent traveling in the City, such as those making deliveries, sales calls, or other travel related to business activity. Thus, an employee’s uncompensated commuting time would not be covered, but employees who travel and work throughout the City, but are based in the suburbs, would be covered.
In addition to increasing the minimum wage, employers are required to post a specific “Notice” explaining the minimum wage increases and employees’ rights in their business facilities. The Notice has three requirements: (1) It must be posted at every work site; (2) It must be provided with the first paychecks issued to existing non-exempt employees after the wage increase goes into effect; and (3) it must be provided to every new non-exempt employee hired after the wage increase goes into effect. The Notice can be downloaded from the City’s official website directly at the following URL: http://www.cityofchicago.org/content/dam/city/depts/bacp/general/mwnoticefinal.pdf.
Employees that are exempt from the ordinance include those taking part in government-subsidized temporary youth employment programs or transitional programs, and employees of any governmental entity other than the City. Certain employees already exempt under state law are also not governed by the ordinance, including employees under 18 years of age, adult employees in the first 90 days of employment, and employees working at a business with four or fewer employees. Disabled employees and trainees taking part in a program for no more than six months may also be exempted, pending approval by the state.
It is important to become well-versed in these laws and how they may or may not affect your business. If an organization is found to have violated the law, it could be subject to fines of $500.00- $1,000.00 per violation. Further, an organization that admits to violating the law, or which is found guilty of violating the law within the preceding 24 months, may be denied a City of Chicago business license. In addition, employees may bring a private lawsuit against their employers and, if successful, could recover triple the amount of underpayment and their costs and attorneys’ fees.
Rock Fusco & Connelly, LLC’s, labor and employment attorneys can help any local business stay on the right side of the law to help ensure continued growth and to help avoid costly and unnecessary litigation.