Illinois employers should prepare to increase their minimum wages where necessary, and adjust applicable overtime rates, now that Illinois has become one of five states (joining California, Massachusetts, New Jersey and New York) to mandate a minimum hourly wage of $15 by January 1, 2025.

Amendments to the Illinois Minimum Wage Law and Illinois Income Tax Act allowing for gradual minimum wage hikes over the course of several years were signed into law by Illinois Gov. J.B. Pritzker on February 19, 2019.

The amendments provide for the possibility of treble damages for employers that don’t comply as well as for tax credits to certain employers to help offset increased costs.

Minimum Wage Will Increase Gradually

With certain exceptions, the new wage minimums begin on January 1, 2020 and increase according to the schedule below:

• January 1, 2020 – $9.25
• July 1, 2020 – $10
• January 1, 2021 – $11
• January 1, 2022 – $12
• January 1, 2023 – $13
• January 1, 2024 – $14
• January 1, 2025 – $15

Penalties for Noncompliance Will Also Increase

Significantly, the amendments also increase the penalties for violating the Illinois Minimum Wage Law. Prevailing employees may be entitled to triple damages for underpayment, in addition to court costs and attorneys’ fees.

The law also imposes a $1,500 fine for each violation for employers that recklessly, willfully or repeatedly disregard the wage requirements and a $100 per employee fine against any employer that did not keep proper payroll records.

Tax Credits Available for Certain Employers

Due to the more significant effect of the wage hikes on smaller businesses, the amendments provide a tax credit to qualifying employers against the increased compensation (compared to the prior year) paid to employees due to the higher minimum wage.

The tax credit is available to employers with 50 or fewer full-time employees whose total average wages for employees earning less than $55,000 per year increased from the prior year. The tax credit is also limited to wages for employees who worked 90 or more consecutive days during the year. The available credit decreases as the minimum wage increases.