Illinois Attorney Sean Darke Summarizes Illinois’ New Minimum Wage Law
Background
On February 19, 2019, Illinois Governor J.B. Pritzker signed the Illinois General Assembly SB0001 increasing the Illinois minimum wage to $15 by the year 2025, joining California, Massachusetts, New York and New Jersey as the only States to increase the minimum wage to $15.00/hour. The Illinois General Assembly also included a small tax incentive for businesses that have fewer than 50 employees that will be phased out over time. The first of two incremental changes will be implemented January 1, 2020.
Chicago attorney Sean F. Darke’s Litchfield Alert, “Illinois’ New Minimum Wage Law” summarizes these changes and the stiff penalties associated with violation of these new laws, including other anticipated laws that were previously vetoed in Illinois and may likely resurface throughout 2019.
Details
The Illinois General Assembly passed a New Minimum Wage starting January 1, 2020. The Bill increases the state’s minimum wage to $15 an hour by 2025 and places harsh damages on those Illinois employers who violate the law. Illinois business owners will want to make sure that a company plan is in place to properly implement this employee wage increase and perform a pay practice audit to ensure that the business is paying each employee correctly under the law. Otherwise, the business may run the risk of violating the New Minimum Wage Law and be hit with the harsh penalties and fines.
The New Minimum Wage increase starts in the year 2020, wherein Illinois businesses will face two tiers of increases. The first increase will be $1.00 and be implemented January 1, 2020. The second increase will be an additional $.75, just in time for July 4, 2020.
The New Minimum Wage Law also drastically increases the penalties and fines for violation of the Minimum Wage Act. Under the New Minimum Wage Law, an employee may recover triple the amount of unpaid wages, attorney’s fees, costs and damages of 5% (currently 2%) per month of the amount of each underpayment following the date that such as underpayments remain unpaid. Further, the New Act includes a $1,500 fine paid to the Illinois Department of Labor, if the employer’s actions were “willful, repeated, or with reckless disregard of the Act” and an additional $100 fine per employee if the business fails to maintain proper payroll records for that employee.
Considered an attempt to help the small business community, the General Assembly included a tax credit for those businesses who have less than 50 employees. This tax credit is based on the difference between the employees increased wages that occur every January 1, but is reduced 4% annually and will be phased out by 2026.¹
Summary
Illinois employers will be best prepared by creating a process to implement the new Illinois wage rates by the fall in order to properly implement the change the January 2020. Moreover, there is tremendous value to conducting an entire pay practice audit prior to the New Minimum Wage Law to ensure proper compliance of all other Illinois wage and hour laws. Diligent employers would also benefit from an overall review of their company policies and handbooks with an eye toward these changes.
¹ – Tax credit entirely phase out by 2027 for businesses with fewer than six employees.
To learn more about how employment and labor laws affect your business, please contact Sean Darke. Sean focuses his practice on defending businesses in complex employment and business litigation in federal and state courts and advises businesses on the navigation of numerous employment and labor laws across the country.