Illinois Set to Join $15 Minimum Wage Club

Author: Michael Cardman, XpertHR Legal Editor

UPDATE - February 19, 2019: Illinois Governor J.B. Pritzker signed the Lifting Up Illinois Working Families Act into law. It is assigned as Public Act 101-0001.

February 19, 2019

Illinois lawmakers have passed a bill that would raise the state minimum wage to $15 per hour by 2025 and significantly increase penalties for employers that violate the law.

Governor J.B. Pritzker has said he will sign the bill soon.

Once the bill is signed into law, Illinois would join California, Massachusetts, New Jersey, New York and about three dozen cities, towns and counties that have, or will eventually have, a $15 minimum wage.

Under SB 0001, known as the Lifting Up Illinois Working Families Act, the minimum hourly wage in Illinois would increase from its current level of $8.25 to:

  • $9.25 on January 1, 2020;
  • $10.00 on July 1, 2020;
  • $11.00 on January 1, 2021;
  • $12.00 on January 1, 2022;
  • $13.00 on January 1, 2023;
  • $14.00 on January 1, 2024; and
  • $15.00 on January 1, 2025.

Increased Penalties

Currently, employees who are paid less than they are owed under the Illinois minimum wage law may recover:

  • The amount of any underpayments;
  • Costs and reasonable attorney fees; and
  • Damages of 2% of the amount of any underpayments for each month following the date of payment during which such underpayments remain unpaid.

The bill would amend the law's penalty provisions to:

  • Provide for employees to recover triple the amount of any underpayments;
  • Increase the amount of damages that may be collected from 2% to 5% of any underpayments;
  • Subject employers whose conduct is willful, repeated or reckless to a $1,500 penalty, payable to the Wage Theft Enforcement Fund of the Illinois Department of Labor (IDOL);
  • Subject employers that fail to keep required records to a penalty of $100 per impacted employee, also payable to the Wage Theft Enforcement Fund.

Tax Credit

To cushion the blow of an increased minimum wage on smaller employers, the bill also would amend Illinois' tax-witholding law to allow employers with 50 or fewer full-time equivalent employees to claim a credit against the payments due for qualified employees. The tax credit amounts to 25% of the difference between the employee's wages the previous year and his or her wages after the minimum wage increases take effect, starting with the 2020 reporting period.

The percentage of the wage differential used to calculate the tax credit would decrease to:

  • 21% for the 2021 reporting period;
  • 17% for the 2022 reporting period;
  • 13% for the 2023 reporting period;
  • 9% for the 2024 reporting period; and
  • 5% for the 2025 and 2026 reporting periods.

Starting with the 2027 reporting period, employers with five or more employees would no longer be able to claim the tax credit; however, those with four or fewer employees may continue to claim the 5% tax credit.

Other Changes

The bill also would:

  • Authorize the IDOL to conduct random compliance audits;
  • Limit the subminimum wage for minors to only those minors who work 650 or fewer hours during a calendar year starting in 2020, and gradually increase that subminimum wage to $13.00 by 2025; and
  • Authorize the IDOL to adopt emergency rules without the usual notice and comment periods required by the Illinois Administrative Procedure Act.