New changes to the Illinois Minimum Wage Law: increases in the hourly rate, treatment for younger workers and recoverable damages

On Feb. 19, 2019, Illinois Governor J.B. Pritzker significantly increased Illinois’ minimum wage from its present rate of $8.25 per hour to $15.00 per hour by January 1, 2025. Gov. Pritzker signed the Lifting Up Illinois Working Families Act, which sailed through both state houses. Although the law was immediately effective, the minimum wage increase will take effect in the following seven gradual adjustments starting next year:

• Jan. 1, 2020, increase to $9.25 per hour
• July 1, 2020, increase to $10.00 per hour
• Jan. 1. 2021, increase to $11.00 per hour
• Jan. 1, 2022, increase to $12.00 per hour
• Jan. 1, 2023, increase to $13.00 per hour
• Jan. 1, 2024, increase to $14.00 per hour
• Jan. 1, 2025, increase to $15.00 per hour

Under the new law, employers will be permitted to pay certain employees $.50 less per hour during their first 90 calendar days of employment.

The Illinois Minimum Wage Law provides an interesting history of its incremental increases in Sec. 4(a) (1). It begins with “every employer shall pay to each of his employees in every occupation wages of not less than $2.30 per hour.” Then it increased to $3.35 in 1984 and continued to climb until it reached $8.25 per hour on July 1, 2010, and then it stopped completely. It has been nearly nine years since the last increase in the Illinois’ minimum wage.

The City of Chicago’s current minimum wage of $12.00 per hour is increasing to $13.00 per hour on July 1, 2019. Cook County’s current minimum wage is $11.00 per hour which will increase to $12.00 on July 1, 2019. But, as we have reported, there are many Cook County communities that have opted out of Cook County’s minimum wage ordinance. The statewide increase will not change these rates or planned increases. 

Employees working less than 650 hours in a year

The amended law will change the rate of pay for employees younger than 18 years of age (presumably students) who are working less than 650 hours in a calendar year. An employer will be obligated to pay at a rate no less than the following:

• Currently it is $7.75 per hour
• Jan. 1, 2020, $8.00 per hour
• Jan. 1, 2021, $8.50 per hour
• Jan. 1, 2022, $9.25 per hour
• Jan. 1, 2023, $10.50 per hour
• Jan. 1, 2024, $12.00 per hour
• Jan. 1, 2025, $13.00 per hour

Penalties for non-compliance

When implementing changes to the Minimum Wage Law, the legislature provides for “random audits” to determine compliance and also imposes a $100 penalty per employee for employers who fail to keep required payroll records.

One amendment that significantly changed the legal landscape for wage claims is the increase in damages available to employees issuing private claims. The legislature increased the monthly interest rate on unpaid wages from two percent per month to five percent and trebled the amount for underpayment.

It also provides, in certain circumstances, that an employer may be liable to pay an additional penalty of $1,500 to the Wage Theft Enforcement Fund. Changing the potentially recoverable damages should make the Illinois Minimum Wage Law more attractive to attorneys assisting employees in private actions to recover unpaid wages. Already employees recover their costs and reasonable attorneys’ fees, but now, in addition to monthly penalties of five percent on unpaid wages, they will also be able to recover three times their underpayments.

Putting this in context, the federal Fair Labor Standards Act provides for the recovery of costs and reasonable attorneys’ fees, no monthly interest penalty and a doubling of underpayments in certain circumstances. Therefore, Illinois employers may face additional Illinois Minimum Wage Law actions.

For more information on how employers may adapt to these changes, contact one of Chuhak & Tecson’s Employment law attorneys. 

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.

Client alert authored by: Jeralyn H. Baran, Principal