Yesterday, Illinois joined a growing number of states, including California, New Jersey and Massachusetts, in passing legislation that will eventually push the state-wide minimum wage to $15.00 per hour.
The first increase is slated to go into effect on January 1, 2020, raising the minimum wage to $9.25 per hour. The next increase goes into effect on July 1, 2020, raising the minimum wage to $10.00 per hour. On January 1, 2021, the minimum wage goes up to $11.00 per hour and on January 1, 2022, it will reach $12.00 per hour. On January 1, 2023, the minimum wage goes up to $13.00 per hour, and on January 1, 2024, it will reach $14.00 per hour. Finally, on January 1, 2025, it will reach $15.00 per hour.
For employers in the service industry, the new law importantly preserves the “tip credit” allowance, permitting employers to count gratuities toward up to forty percent of the newly increased minimum wage obligations relating to their tipped employees. A lower minimum wage rate applies to employees under the age of 18 who work less than 650 hours per year, with that rate going up to $13.00 by January 1, 2025.
The new minimum wage scheme will provide impacted employers with “credit” in exchange for their compliance. A tax credit, that is. Specifically, any employer with 50 or fewer full-time employees is eligible to receive a tax credit equivalent to 25 percent of the cost of their wage increases in fiscal year 2020, subject to certain limitations.
As a reminder, if an employer is located within the boundaries of Cook County/Chicago, even more stringent minimum wage rates currently apply, with Cook County minimum wage peaking at $13.00 by July 20, 2019.
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