On Nov. 26, 2019, the Chicago City Council voted to increase the city’s minimum wage to $15/hour by 2021 for certain employees. Earlier this year, Illinois amended its minimum wage law to gradually increase the minimum wage for Illinois employees to $15/hour by 2025. But proponents of increasing Chicago’s minimum wage argued that the cost of living in Chicago relative to the rest of the state requires a faster timeline. The city council has now enacted two major goals of Mayor Lightfoot’s one-year plan: the Fair Workweek Ordinance (passed in July) and an increase in the minimum wage.

The amendment to Chicago’s Minimum Wage Ordinance (the Ordinance) increases the city’s minimum wage on the following schedule for employers with over 20 employees:

Date	Minimum Wage
Current	$13.00
July 1, 2020	$14.00
July 1, 2021	$15.00
Every July 1 afterward	Increases in proportion to any increase in the Consumer Price Index (CPI)

And the city’s minimum wage for employers with over three employees, but fewer than 21 employees, increases by 50 cents each year:

Date	Minimum Wage
Current	$13.00
July 1, 2020	$13.50
July 1, 2021	$14.00
July 1, 2022	$14.50
July 1, 2023	$15.00
Every July 1 afterward	Increases in proportion to any increase in the CPI

A different minimum wage schedule applies to specific categories of employees, including employees under the age of 18. Although employees who work for an employer with fewer than four employees are generally not covered by the Ordinance, domestic workers employed by employers with fewer than four employees are covered. Domestic workers are employees that primarily perform household services, such as housekeeping and personal or home health services. The Ordinance also excludes several other categories of employees, such as outside salesmen and members of religious organizations.

The amendment keeps in place a section in the Ordinance related to collective bargaining agreements (CBAs). Employers may include in CBAs: (i) provisions “in excess of the applicable minimum standards” of the Ordinance; and (ii) waiver of the Ordinance’s requirements “in clear and unambiguous terms.” Under certain circumstances, applicable precedents under the National Fair Labor Standards Act may preclude enforcement of the CBA waiver provision of the Ordinance.   

Tipped Employees

For employees that customarily receive gratuities, the amendment allows certain employers to take an “allowance for gratuities” as part of the hourly wage rate. This allowance must not exceed 40% of the applicable minimum wage rate prescribed by the Ordinance. The amendment also includes certain reporting requirements for employers using the allowance. As in the past, the Commissioner of Business Affairs and Consumer Protection will annually announce on the city’s website the minimum hourly wage for workers who receive gratuities.

Employer Takeaways

Employers should determine if their employees are affected by the amendment to the Ordinance, and if so, adjust their budgeting and financial forecasts to account for the anticipated increase in wages. Employers should also audit their pay policies to verify that they are paying the appropriate overtime rates for certain employees affected by these changes in the minimum wage and to ensure that the use of any tip credit complies with local and federal law.

Taft’s Employment and Labor Relations attorneys are ready to help existing and future clients navigate these legal issues and follow best practices. Feel free to call us with any questions about the Ordinance and its recent amendment, or compliance with other specific federal, state or local employment laws, and how they may impact your business.