How up-to-date are you on the minimum wage laws in Illinois? As an employer in the state, you are responsible for staying compliant with the minimum wage and tipped wage rate laws. For example, if you’re still using Illinois 2021 minimum wage rates of $11 per hour, you’d be underpaying your employees by $2 an hour as of January 1, 2023, and you could be subjected to penalties and fines for payroll non-compliance. This is because the state of Illinois is on target to have a minimum wage of $15 an hour by January 1, 2025, and the minimum wage rates are set to go up by $1 an hour per year until the year 2025.
Let’s take a look at the minimum wage basics for the state of Illinois and what you need to do in order to ensure payroll compliance.
Understand the Minimum Wage
The minimum wage in Illinois, as of January 1, 2023, is $13 an hour for adults, which are people 18 years of age or older. For individuals who have not yet had their 18th birthdays and are working less than 650 hours a year, the minimum wage is $10.50 an hour. If the youth works more than 650 hours a year, they are entitled to an hourly wage of $13 an hour.
It’s also important to understand that if an eligible employee works more than 40 hours in a week, they should receive time and a half for every hour worked over 40. If you have a new employee that is within their first 90 days, who are 18 years of age or older, they may be paid up to 50 cents per hour less than the applicable minimum wage rate. However, once they reach their 90 days, their rate must be brought up to the standard minimum wage.
Know the Tipped Wage Rate
Tipped employees must make an hourly rate of at least 60 percent of the current minimum wage. For 2023, the tipped rate is $7.80 an hour. This assumes that the tipped employee will make at least $5.20 an hour in tips. It’s important to note that if the tipped employee’s hourly wages plus tips doesn’t meet the minimum wage, the employer must make up the difference. The tipped employee must also make at least $20 a month in tips.
The Illinois law doesn’t specify any differences between employees who keep all of their direct tips and businesses who create a tip pool that is shared between employees.
Keep Up With Changes
It is the responsibility of the employer to keep up with the changes in the minimum wage laws in Illinois. This is especially important over the next few years because Illinois is on target to mandate $15 an hour in 2025. In 2024, the minimum wage will increase to $14 an hour for non-tipped employees and $8.40 an hour for tipped employees. In 2025, the minimum wage will rise to $15 an hour for adult employees and $9 an hour for tipped employees.
Monitor Compliance
Employers should monitor themselves in order to make sure they are compliant with all of Illinois minimum wage laws. For example, if your business hires a lot of workers who are under the age of 18, you need to remain vigilant as they approach their 18th birthdays. This is because if you were paying them $10.50 an hour, their hourly rate should increase to $13 on their 18th birthday.
Likewise, you’d have to increase any new employees’ hourly rates by 50 cents if you chose to pay them 50 cents less per hour for their first 90 days.
There are also legal requirements in the minimum wage laws that address employees with disabilities, trainees, apprentices, learners who are involved in training programs, student learners and student workers.
- Employees With Disabilities – To pay employees with disabilities less than the standard minimum wage, the employer must apply for and receive a license from the Illinois Department of Labor. The license must be renewed yearly.
- Apprentices – Apprentices must be paid at least the standard minimum wage in Illinois.
- Learners – A learner is someone who is either participating in classroom instruction or on-the-job training and is employed in the field in which they are receiving training. These individuals, who are 18 years of age or older, cannot be paid less than 70 percent of the standard minimum wage. There is also a time limit of 6 months where the learner can be paid a reduced rate, and once the individual completes their training, they must be paid at least minimum wage.
- Student Learners – These are students who are participating in work-study programs for credit. These individuals must be paid at least 70 percent of the standard minimum wage.
Stay Compliant With Illinois Minimum Wage Laws With Help From ASAP Payroll
It’s probably no surprise that Illinois minimum wage laws are consistently changing, and it can be difficult for your HR management team to maintain their payroll compliance, especially if they don’t have the right software. Here at ASAP Payroll, we can help make sure that your business is adhering to all of the current legal requirements for payroll with our innovative HR and payroll software.
Our payroll and HR software solution is our HCM platform, and it can be used to track applicants and onboard new employees, provide employees with a self-service portal and help you create and manage your employee benefit plans.
To learn more about how we can help you with your HR processes and payroll, request a quote today.
