Beginning July 1, 2015, employers that maintain a business facility within the city of Chicago, and/or are required to obtain a business license to operate in the city, will be required to comply with the city’s Minimum Wage Ordinance and its notice posting requirements. The ordinance raises the minimum wage for Chicago workers.

Scheduled Minimum Wage Increases

The ordinance sets forth a schedule of increases to the city’s minimum wage rate, which will occur on an annual basis every July 1 from 2015 to 2019. Beginning in 2020 and thereafter, minimum wage increases will be tied to the rate of inflation but will not exceed 2.5 percent, and there will be no increase to the minimum wage in years when the unemployment rate in Chicago in the previous year was equal to or greater than 8.5 percent. The chart below sets forth the increases scheduled to occur under the new ordinance.

Click here to view table.

Employers and Employees Covered by Minimum Wage Increases

Covered Employers

The Minimum Wage Ordinance applies to all employers that employ at least one covered employee and maintain a business facility within the city of Chicago and/or are required to obtain a business license to operate in the city.

Covered Employees

With some limited exceptions, the ordinance applies to employees who work at least two hours in Chicago for a covered employer within a two-week period. This includes domestic employees, day laborers and home health care workers. Compensated time spent traveling in the city, such as deliveries, sales calls and travel related to business activities, constitutes work performed within the geographic boundaries of the city. However, uncompensated commuting time does not constitute work performed within the geographic boundaries of the city. Employees are entitled to the increased Chicago minimum wage rate only for “each hour of work performed for [the] Employer while physically present within the geographic boundaries of the City.”

Unionized Employees

A union may waive its members’ rights to receive the minimum wage as part of a collective bargaining agreement if the waiver is set forth explicitly in the agreement in clear and unambiguous terms.

Posting and Employee Notice Requirements

Employers are required to post a notice advising employees of the current minimum wage and their rights in a conspicuous place at each facility located in the city of Chicago where any covered employee works. Employers that do not maintain a business within the geographic boundaries of the city and households employing domestic workers are exempt from this requirement. A copy of the required notice may be obtained from the Business Affairs and Consumer Protection’s website, or by clicking here. Additionally, all employers must have on file and readily accessible current copies of the ordinance and the Department of Business Affairs and Consumer Protection regulations, which are located here.

Every employer must also include a copy of the notice with existing employees’ first paycheck issued on or after July 1, 2015 and with the first paychecks for all new employees hired after the increase goes into effect.

Prohibitions and Enforcement of the Ordinance

Employers are prohibited from discriminating or taking any adverse action against employees in retaliation for exercising their rights under the ordinance. Failure to abide by the ordinance can result in fines of $500 to $1,000 per offense, in addition to license suspension or revocation and orders to pay restitution to underpaid employees. Employees also have a private right of action for violations of the ordinance, and successful litigants can potentially recover three times the amount of any underpayment plus costs and attorney’s fees.

Recordkeeping Requirements

Employers must maintain detailed records as set forth in the ordinance’s regulations that support all wages paid to covered employees and make such records available to the Commissioner of the Department of Business Affairs and Consumer Protection upon request. Records must be kept for a minimum of three years.  

Bottom Line

By July 1, employers that maintain a business facility in the city of Chicago, and/or are required to obtain a business license to operate in the city, must take steps to ensure compliance with the Minimum Wage Ordinance’s notice and posting requirements and should budget for and calendar increases for covered employees to avoid surprises. Additionally, employers that operate under a business license in the city, but do not necessarily have a facility located in the city, must also take steps to comply with the ordinance for all employees who perform at least two hours of work every two weeks within the city’s geographic limits.