All small enterprise house owners know the significance of paying folks pretty and staying aggressive within the labor market. Complying with minimal wage rules is essential to your workforce — nevertheless it’s additionally your obligation. Failing to comply with Illinois’ minimal wage legal guidelines means risking penalties, lawsuits, and injury to your status.
But maintaining with altering state, metropolis, and county minimums in Illinois can really feel like a full-time job. Do you have to price range for $13 per hour paychecks? $14? How will rising labor prices affect your slim margins and operations?
This information will aid you reply these questions and extra. This information breaks down Illinois’s minimal wage legal guidelines in clear, easy phrases. You’ll study the baseline pay charges, upcoming will increase, and find out how to comply and keep inside price range, making an allowance for extra time and different elements.
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Illinois minimal wage defined
The Illinois minimal wage is greater than the federal minimal (presently $7.25 per hour, in 2023). Plus, totally different localities like Chicago and Cook dinner County have handed even greater native minimums.
That makes it much more essential for Illinois companies to plan for labor prices and ensure they’re paying their folks appropriately.
Present minimal wage in Illinois
Proper now, and since January 1, 2023, the Illinois minimal wage is $13 per hour for non-tipped, grownup employees.
There are some essential exceptions to this minimal pay price.
For instance, employees underneath 18 who work lower than 650 hours per calendar 12 months can legally be paid lower than the complete Illinois minimal wage. In 2023, their minimal is $10.50 per hour. Nevertheless, employees underneath 18 years of age who work 650+ hours per 12 months should be paid the usual $13 per hour minimal.
In some instances, employers can apply for a particular waiver to pay a decrease wage to sure employees with disabilities.
Illinois labor legal guidelines are additionally barely totally different for tipped employees — workers who frequently earn gratuities, similar to bartenders, waitstaff, or salon employees.
Primarily, companies pays tipped employees lower than minimal wage so long as they make up the distinction in ideas. That is referred to as a tip credit score.
Illinois permits employers pays employees a tip credit score as much as 40% of minimal wage. Meaning they’ll pay tipped workers simply 60% of the present minimal wage, which works out at $7.80 per hour.
On the finish of the pay interval, if the employees member’s ideas plus money wages don’t equal at the least the complete $13 minimal wage per hour, the employer should make up the shortfall.
Native minimal wage in Illinois
On prime of state regulation, some localities in Illinois mandate greater minimal wages.
As of July 1, 2023, Chicago’s present minimal wage is:
- Non-tipped employees —
- $15.80 per hour (if the enterprise has 21+ workers)
- $15 per hour (if the enterprise has 4-20 workers)
- Tipped employees —
- $9.48 per hour (if the enterprise has 21+ workers)
- $9 per hour (if the enterprise has 4-20 workers)
As of 1 July, 2023, the minimal wage in Cook dinner County (excluding Chicago) is:
- Non-tipped employees — $13.70 per hour
- Tipped employees — $8 per hour
You probably have a storefront or different enterprise in Chicago or Cook dinner County, these native minimums apply fairly than the state $13 price.
Upcoming minimal wage adjustments
Illinois’ statewide minimal wage is ready to proceed rising yearly via 2025.
On January 1, 2024, it’s going to rise to $14 per hour for non-tipped employees and $8.40 per hour for tipped workers.
Then, on January 1, 2025, it’s scheduled to extend to $15 hourly for non-tipped workers and $9 for tipped.
Chicago and Cook dinner County even have deliberate will increase developing in July. The precise quantities haven’t been confirmed but, however the rise will likely be primarily based on inflation utilizing the Client Value Index (CPI) — except the CPI is above 2.5%, by which case they’ll apply a 2.5% minimal wage improve cap.
It’s additionally essential to remember that Chicago lately introduced in new laws to section out tip credit by 2028, which means that companies should begin paying tipped employees the identical minimal wage as non-tipped employees sooner or later.
On July 1, 2024, the permitted tip credit score in Chicago will shrink from 40% to 32%: employers should pay tipped employees at the least 68% of the minimal wage. The tip credit score will proceed shrinking every year till 2028, when it is going to be eradicated altogether.
Making ready for minimal wage will increase
Since minimal wage is rising steadily in Illinois, preparation is essential for small enterprise house owners on a good price range.
Listed below are 5 ideas for taking a strategic method to the minimal wage adjustments.
1. Evaluate your worker pay charges earlier than the rise
First, ensure you’re not presently paying any employees beneath the present 2023 minimal wage; in case you are, you’ll want to extend pay instantly and presumably set up again funds.
Staff presently paid the $13 per hour minimal will possible must be paid an hourly price of $14 from January 1, 2024 — extra when you’re primarily based in Chicago or Cook dinner Nation. It’s a good suggestion to test all worker pay charges upfront so you recognize precisely the place will increase are wanted.
2. Create a price range forecast
Map out your labor prices for 2024, and presumably even 2025.
In your forecast, apply Illinois’ scheduled will increase to estimate your general worker prices and see how a lot to anticipate your payroll spending to rise every January.
You’ll be capable to see if it will create a price range shortfall and plan accordingly.
3. Contemplate adjustments to prices or costs
See whether or not you possibly can trim prices elsewhere or increase costs to soak up rising labor bills.
Operational changes for an area pizzeria may embrace:
- Switching to part-time employees to scale back hourly prices
- Tackle pricy worker scheduling points, like having extra employees than you want working throughout non-peak hours
- Growing the supply charge by $1 to cross some prices to clients
- Shopping for cheese in bulk from restaurant provide distributors to avoid wasting on elements
- Providing smaller portion sizes for extra price-conscious clients
4. Deal with hiring and retaining nice folks
Be selective when hiring. Solely contract candidates you’re feeling assured will ship a wonderful return in your funding of their wage and coaching. For service roles particularly, rent for tender expertise in addition to technical expertise to ensure your folks present a terrific buyer expertise.
Worker turnover and attrition include important hiring and coaching prices.
Use confirmed worker retention methods like providing aggressive pay, offering alternatives for skilled growth and promotion, giving perks like early entry to paychecks and versatile scheduling, and creating a terrific work atmosphere.
5. Minimize down any pointless extra time spend
Beneath Illinois regulation, you typically should pay non-exempt workers 1.5 occasions their common hourly price for any hours they work over a 40-hour week.
At $13 per hour, which means the extra time price is $19.50 per hour in most of Illinois (much more in Chicago and Cook dinner County). However it will quickly rise to $21 per hour when the minimal hits $14 subsequent January.
Some extra time is unavoidable, however you will get sensible about scheduling further hours solely after they’re completely obligatory. Possibly a flower store wants all fingers on deck the week earlier than Valentine’s day, however can restrict or get rid of extra time throughout slower intervals.
Homebase’s time clock and monitoring instruments can warn you when an worker is approaching the extra time restrict, so you possibly can resolve whether or not the additional hours are wanted.
Use Homebase to plan for pay adjustments with ease
Homebase empowers small companies to adapt to altering minimal wage legal guidelines.
Our easy-to-use instruments automate payroll primarily based in your state, so that you might be certain you’re complying with minimal wage rules, paying your folks appropriately, and protecting detailed information.
Through the use of our HR and compliance options, you will get notified when labor legal guidelines change in your state (or at a federal stage) and ask an HR professional in case you have doubts about minimal wage or anything.
Homebase also can streamline your hiring course of, so you’re feeling assured you’re hiring the proper folks and saving labor prices in the long term.
With all of this, plus efficient scheduling and communication instruments, Homebase is the right accomplice for small corporations seeking to spend much less time on paperwork and extra time on rising their enterprise.
Get your workforce in sync with our easy-to-use, all-in-one worker app.