Illinois Governor Signs $15 Minimum Wage Bill into Law
The new governor of the State of Illinois, J.B. Pritzker, has recently signed a law that will raise the Illinois minimum wage to $15 an hour by 2025. Business owners across the state are currently questioning the ways that the new law will change how they staff their businesses when the law takes full effect. Read on to learn about the law and the accommodations made for small business owners, and contact an Illinois labor and business law attorney for help with important business legal decisions.
Illinois Joins Select Few States with $15 Minimum Wage Target
Gov. Pritzker signed the new minimum wage law into effect on February 19, 2019, after a long campaign by labor organizations under the “Fight for $15” movement. Illinois is the fifth state to pass a law that eventually increases the minimum wage to $15/hour, along with California, Massachusetts, New Jersey, and New York. The Illinois state minimum wage is currently set at $8.25/hour, a number set in 2010. That said, the minimum wage in Cook County is $11, and within Chicago city limits, the minimum wage is set at $12.
The hike to a $15 minimum wage will not happen abruptly. Instead, the first increase will occur on January 1, 2020, when the minimum wage will rise to $9.25. On July 1, 2020, it will rise again by $1. For the next four years, the minimum wage will rise by $1 until it hits $15 in January 2025. The law preserves the exception for restaurant workers’ wages, allowing restaurant owners to count gratuities toward workers’ wages. The minimum wage will also remain lower for workers under 18 who work less than 650 hours a year. Currently, the under-18 minimum wage is $7.75, and it will eventually rise to $13 by 2025.
The law includes a tax credit to help small business owners afford the increase in employee wages. Businesses with 50 or fewer employees will be able to claim a tax credit that equals 25% of the increased staffing costs in 2020. As time goes on, the credit will diminish until it phases out entirely.
Small Business Concerns
Many small business owners have expressed serious concerns over how they will remain profitable when these changes take effect; some have shared that they will likely need to cut workers’ hours or automate certain roles to stay in business. Republicans had advocated for a minimum wage that varied by region of the state based on the lower costs of living in these areas, but that proposal was ultimately rejected. The president and CEO of the Illinois Retail Merchants Association, Rob Karr, told the Chicago Tribune that retailers “have a limited ability to raise prices, so. . . everything’s going to be on the table,” including reducing worker hours and benefits.
If you’re an Illinois business owner and need skilled legal help with a contract dispute or labor and employment issue, contact the professional and knowledgeable Chicago area business attorneys at MacDonald, Lee & Senechalle for a consultation, in Hoffman Estates at 847-310-0025, or in Des Plaines at 847-298-5030.