Illinois Minimum Wage Law increases minimum wage and adds penalties for record keeping missteps

David J. TecsonPrincipal, Chuhak & Tecson, P.C.

Illinois has been moving to a minimum wage of $15 per hour and $9 per hour for tipped workers by 2025. Under the Illinois Minimum Wage Law (IMWL), the minimum wage increased statewide on Jan. 1, 2021, to $11 per hour and $6.60 for tipped workers.
The remaining minimum wage changes that are forecast for adult employees in Illinois are projected to continue as follows:

  • From Jan. 1 through Dec. 31, 2021, the minimum wage will be $11.
  • From Jan. 1 through Dec. 31, 2022, the minimum wage will be $12.
  • From Jan. 1 through Dec. 31, 2023, the minimum wage will be $13.
  • From Jan. 1 through Dec. 31, 2024, the minimum wage will be $14.
  • After Jan. 1, 2025, the minimum wage will be $15.

It is important for employers to abide by these changes. “It is against public policy for an employer to pay his employees an amount less than that fixed by this Act [minimum wage]. Payment of any amount less than herein fixed is an unreasonable and oppressive wage, and less than sufficient to meet the minimum cost of living necessary for health.” See 820 Ill. Comp. Stat. Ann. § 105/2. Failing to pay the appropriate wage can result in violations of IMWL and the Fair Labor Standards Act.

Besides satisfying the minimum wage requirement, Illinois employers must comply with proper payroll record-keeping obligations. Illinois record-keeping requirements vary by industry and the age of an employee. In general, employee information (name, address, Social Security number, etc.) along with records of pay rate, payment date, hours worked and other standard payroll information must be maintained for at least three years.

Although Illinois has long required employers to maintain payroll records, including daily and weekly hours worked for all employees, it only recently added steep financial penalties. Starting in 2020, employers that failed to maintain payroll records could be required to pay a penalty of $100 for each infraction. Although Illinois permits employers to pay some employees on a salaried basis, there is no exception to the record-keeping requirement for salaried employees. Even though exempt or salaried employees are paid the same amount each week no matter the hours worked, by law, Illinois employers still must track their hours worked.

Significantly, the IMWL increased the penalties for employer overtime violations to allow employees to recover triple the amount of the underpayment and 5% of the underpayment for each month the underpayment remains unpaid. Since many IMWL cases are prosecuted on a classwide basis on behalf of large employee groups, the financial impact of a violation, even if inadvertent and unintentional, can have significant financial consequences. The Illinois Department of Labor (IDOL) is authorized to conduct random audits to ensure compliance with the law and enforce the new and enhanced penalties. The IDOL may recover $100 per impacted employee and a $1,500 penalty for failure to pay the proper minimum wage on top of the previously authorized penalty of 20% of the total underpayment.

Please contact one of Chuhak & Tecson’s Employment attorneys if you have questions regarding this Illinois minimum wage change.

Client alert authored by Loretto M. Kennedy (312 855 5444), Principal, and Jasmine D. Morton(312 855 4334), Associate.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general in