Illinois Governor J.B. Pritzker signed the Lifting Up Illinois Working Families Act into law on February 19, 2019. The Act gradually increases the minimum wage to $15 per hour over the next six years. Illinois is now the fifth state (after California, New Jersey, New York, and Massachusetts) to raise the minimum wage to $15 per hour. While the Act is receiving a lot of press for the minimum wage increase, it makes other changes to Illinois law about which Illinois employers must also be aware.
Minimum Wage Increases to $15
With respect to minimum wage, the rate remains at its current $8.25 through the end of 2019 (but higher in Chicago and a few other municipalities). Thereafter, the minimum wage rate increases:
- To $9.25 per hour on January 1, 2020;
- To $10.00 per hour on July 1, 2020;
- To $11.00 per hour on January 1, 2021;
- To $12.00 per hour on January 1, 2022;
- To $13.00 per hour on January 1, 2023;
- To $14.00 per hour on January 1, 2024; and
- To $15.00 per hour on January 1, 2025.
Certain Employees Younger than 18 Must Be Paid Standard Minimum Wage
The Act also amends the minimum wage rates required to be paid to workers who are younger than 18 years old. Currently, the Illinois Minimum Wage Law (IMWL) provides that wages paid to employees under 18 must not be more than fifty cents less than the minimum wage for adult workers. But under the recent amendment, beginning on January 1, 2020, employers must pay the adult minimum wage to employees who are under 18 years of age and who work more than 650 hours during any calendar year. For employees who are under 18 who do not work more than 650 hours, the minimum wage rates are:
- $8.00 per hour from January 1, 2020 through December 31, 2020;
- $8.50 per hour from January 1, 2021 through December 31, 2021;
- $9.25 per hour from January 1, 2022 through December 31, 2022;
- $10.50 per hour from January 1, 2023 through December 31, 2023;
- $12.00 per hour from January 1, 2024 through December 31, 2024; and
- $13.00 per hour on and after January 1, 2025.
Penalties Increase for Underpayment and Recordkeeping Violations
In addition to the minimum wage increases, the Act increases certain penalties for recordkeeping violations and underpayment of wages. Employers who fail to keep payroll records as required by the IMWL are now subject to a new penalty of $100 per impacted employee. This penalty arguably will accrue each day that the violation continues under the IMWL’s existing provisions.
The Act also increases employers’ exposure in the event of underpayment of wages. An employee who is able to show underpayment of wages is entitled to recover three times the amount of the underpayment. Previously, the law limited recovery to the amount of the underpayment. For each month that the amount of the underpayment remains unpaid, a prevailing employee can recover damages in the amount of 5% of the underpayment. Prior to the Act, employees could recover 2% as damages.
The Act authorizes random audits by the Illinois Department of Labor of employers subject to the IMWL. It also amends the Illinois Income Tax Act to provide a tax credit to employers with fewer than 50 full-time-equivalent employees beginning January 1, 2020.
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