Chicago Minimum Wage Ordinance Goes Into Effect July 1, 2015

On July 1, 2015, Chicago's Minimum Wage Ordinance goes into effect for all covered employers and employees.  The Ordinance, which will raise the minimum wage for Chicago workers to $13 per hour by 2019, was passed on December 2, 2014, and contains gradual increases for covered employees.

The Ordinance applies to all employers that maintain a business facility within the City of Chicago and/or are required to obtain a business license to operate in the City.  The Ordinance will apply to all employees of covered employers who work at least two hours in the City during any particular two-week period.  Notably, this will include domestic employees and home health care workers.  The increased wage applies only while the employee is physically present within the geographic boundaries of the City, but includes all "compensable" time spent traveling in the City.  Commuting time is not considered compensable time under the Ordinance, but time spent doing deliveries, sales calls and travel within the City other than commuting time is covered by the Ordinance.  A union may waive its members' rights to collect the minimum wage as part of a collective bargaining agreement.

Under the Ordinance, beginning on July 1, 2015, non-tipped employees must receive a minimum wage of $10.00 per hour, with overtime calculated at one and a half times the regular rate.  Tipped employees must receive a cash wage of at least $5.45 per hour, which, along with the maximum tip credit of $3.30 per hour provided under the Illinois Minimum Wage Law, means that tipped employees must receive at least $8.75 per hour in cash wages and tips, with no more than $3.30 of that amount comprising tips.

These rates will increase annually. Wage increases for non-tipped employees will be tied to the Consumer Price Index (CPI) after 2019. Increases for tipped employees will be tied to the CPI after 2016, as follows:

There are exceptions to the Ordinance for certain employees, such as those taking part in government-subsidized temporary youth employment programs.  Notably, the Ordinance does not exclude exempt employees under the white-collar exemptions of the federal Fair Labor Standards Act.  Although those individuals remain exempt from overtime under the Ordinance, they must still receive a minimum hourly wage as set forth in the Ordinance.

In addition to ensuring that all covered employees receive the proper minimum wage under the Ordinance, covered employers also have posting and notice obligations. Covered employers with a business facility in the City at which a covered employee works must post at the facility a notice of the City minimum wage and the employee's rights under the ordinance. This notice is available online from the City's Commissioner of Business Affairs and Consumer Protection.

Employers that do not maintain a business facility within the geographic boundaries of the City and households that serve as the worksite for domestic workers and home healthcare workers are exempt from the notice requirement.

In addition to the posting requirement, covered employers must also provide with the first paycheck issued to any covered employee after July 1, 2015 the form notice advising the employee of the City minimum wage and the employee's rights under the Ordinance, which may be the same notice used for the posting requirement.  New employees must also be provided with a copy of this notice prior to the issuance of the first paycheck to that employee.

If an employer does not comply with the Ordinance, it may be fined $500 to $1,000 for each offense, and each day that a violation continues constitutes a separate and distinct offense to which a separate fine shall apply.

As can be seen, the consequences for non-compliance can be severe. 

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