On December 2, 2014, the Chicago City Council followed several other municipalities around the country and approved an ordinance to raise the minimum wage. Effective July 1, 2015, Chicago employers of all sizes will be required to pay a minimum hourly wage of $10.00 (from its current $8.25 per hour) with successive increases to $13.00 per hour by July 1, 2019. Specifically, the minimum wage increases will be as follows:
$10.00/hour by July 1, 2015
$10.50/hour by July 1, 2016
$11.00/hour by July 1, 2017
$12.00/hour by July 1, 2018
$13.00/hour by July 1, 2019
Thereafter, beginning on July 1, 2020, the minimum wage in Chicago will increase on an annual basis indexed to the rate of inflation (as measured by the Consumer Price Index). However, there will be no increases if the unemployment rate in Chicago is 8.5% or higher in the preceding year, and any increases will be capped at 2.5% regardless of the inflation rate.
The Chicago ordinance also impacts employers with tipped employees, such as bars and restaurants. Under federal and state wage laws, Illinois employers can take a “tip credit” and pay tipped employees an hourly wage as low as $4.95, provided that the employees make at least minimum wage with their tips. By July 1, 2015, however, Chicago employers with tipped employees must pay $5.45/hour and $5.95/hour by July 1, 2016. And, beginning on July 1, 2017, the minimum hourly wage for tipped employees will be indexed to inflation using the same measure as regular wages discussed above.
Should you have any questions regarding this ordinance, please contact Arnstein & Lehr LLP.