Higher Chicago Minimum Wage Takes Effect July 1, 2015

HIGHLIGHTS:

• Chicago's minimum wage will increase to $10.00 per hour beginning July 1, 2015.
• This is the first of a series of annual tiered minimum wage increases that will extend through 2019.
• Any employer who (1) maintains a business facility in Chicago or (2) is subject to Chicago licensing requirements is subject to Chicago's minimum wage ordinance.

Beginning July 1, 2015, Chicago's minimum wage will increase to $10.00 per hour.¹ This is the first of a series of tiered minimum wage increases. The new minimum wage rate is $1.75 higher than the current Illinois minimum wage of $8.25. Subsequent increases in Chicago's minimum wage are as follows:

$10.50 per hour beginning July 1, 2016
$11.00 per hour beginning July 1, 2017
$12.00 per hour beginning July 1, 2018
$13.00 per hour beginning July 1, 2019

The minimum wage for tipped employees (currently $4.95 per hour) will increase to $5.45 per hour beginning July 1, 2015, and $5.95 per hour beginning July 1, 2015.

Who Must Be Paid the Chicago Minimum Wage

Any employer who (1) maintains a business facility in Chicago or (2) is subject to Chicago licensing requirements must comply with Chicago's minimum wage ordinance.

Any employee of a covered employer who works in Chicago for at least two hours in any two-week period must be paid at least the minimum wage provided by the minimum wage ordinance. Covered employees must be paid the new minimum wage rates for “each hour of work performed while physically present within the geographic boundaries of [Chicago].” For example, employees who make regular deliveries and sales calls in the city will need to be paid the Chicago minimum wage for those tasks if they spend more than two hours within the city performing work in a two-week period. Non-compensable commuting time is not counted for purposes of determining whether an employee is covered by the ordinance.

Enforcement/Penalties

The Chicago Department of Business Affairs & Consumer Protection enforces the new minimum wage rates, with a minimum fine of $500.00 per violation. The ordinance also provides for a private cause of action with treble damages and attorneys' fees.

Employer Plan of Action

All employers covered by the Chicago minimum wage ordinance should implement controls to ensure covered employees are paid at least the minimum wage provided by the ordinance. This should not prove challenging for employers based within Chicago, particularly with respect to employees who work within Chicago. But covered employers based outside of Chicago will need to adopt protocols to identify covered employees, track the amount of time those employees spend working in Chicago and ensure that those employees are paid at least the minimum wage provided by the ordinance for the time they spend working in Chicago. With less than two months to go before the ordinance takes effect, covered employers should start this process now. 
   

Notes

¹ Chicago, Ill., Ordinance O2014-9680 (Dec. 2, 2014).

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.