Submitted by Joel Shabsin, CPA
July 1st each year brings in a new minimum wage for the state of Illinois, Chicago and Cook County.
After increasing by $1.00 per hour on January 1, 2020, statewide the minimum wage is increasing from $9.25 per hour to $10.00 per hour on July 1, 2020. Under the new law signed by the Governor last year, the State minimum wage will increase by $1.00 per hour each January 1 until it reaches $15.00 an hour on January 1, 2025. The minimum wage for tipped
employees is also increasing from $5.55 per hour to $6.00 per hour. Tipped employees minimum wage will be 60% of the statewide minimum wage in the future.
In Chicago, the new minimum wage will be $14.00 per hour, an increase of $1.00 from the previous level. This increase is also effective July 1. It will increase once again on July 1, 2021 to $15.00 per hour. There is an exception for small businesses with less than 20 workers. For these businesses, the increase will be from $13.00 per hour to $13.50 per hour. Small business
minimum wages will increase by $.50 per hour on July 1, 2021, July 1, 2022 and will finally reach $15.00 per hour on July 1, 2023. Tipped workers (workers who receive tips as part of their wage, like restaurant servers) have a minimum wage of $8.10 for employers with 4 to 20 workers, and $8.40 for employers with 21 or more workers.
If a tipped worker’s wages plus tips do not equal at least the full minimum wage, the employer must make up the difference throughout the state.
Cook county businesses outside of Chicago in the municipalities that have not opted out of the county minimum wage ordinance (105 municipalities have opted out) is going up to $13 per hour. Beginning next year it will go up based on the rate of inflation.
If you have clients who are affected by this change, you need to let them know about the increases before their first payroll after June 30th. Wages for work after June 30 must be paid at the new minimum wage levels for any businesses with more than 3 employees. Businesses with 3 or less employees are not covered by the minimum wage laws.