Wrong! Like many cities throughout the country, Chicago enacted its very own minimum wage ordinance (the “CMWO”), effective July 1, 2015. While the Federal and Illinois minimum wages are $7.25 and $8.25/hour, respectively, the CMWO provides for a $10.00/hour wage for non-tipped workers and a minimum of $5.45 for tipped employees (and employers need to make up the difference to $10.00/hour if the employee does not receive enough gratuities). As a result, the overtime wage rate (1.5x the regular rate) is a minimum of $15.00/hour for hours worked over 40. Oh, and the minimum rate increases each July 1.
Who is subject to the CMWO? Every employer with a business facility in Chicago or required to obtain a business license to operate in the City. Employees are covered only for work performed within the City, as long as they work at least two (2) hours in the City within a two (2) week period. There are certain exclusions, such as adult workers within their first 90-days of employment, trainees and disabled workers with state approval, and businesses with 4 or fewer workers. Employers must (i) post and (ii) provide employees subject to the CMWO with a notice with their first pay check.
Proper pay is the “cost of doing business” – and the failure to do so could result in substantial liability. Each day of noncompliance with the CMWO is a separate offense with civil penalties of $500 to $1,000. Additionally, failing to properly pay could subject an employer to various other laws (such as the Federal Fair Labor Standards Act and the Illinois Minimum Wage law and Wage Payment Collection Act); providing for statutory damages, interest, and even payment of the employee’s attorney’s (substantial) fees!
What does this all mean for the fashion world?
- All employers from boutiques and nail salons, to graphic and industrial designers should ensure that all employees are paid properly – minimum and overtime wages. This includes temporary labor, interns, and independent contractors, and ensuring that they are all properly classified (subjects of future articles).
- Keep proper records, including time, wage, and tax records.
- Be sure employees sign-off on cash wages (tips).
- Have a complaint/reporting mechanism for workers to report potential errors, and a means of investigating/correcting.
- Seek the advice of counsel to ensure your practices and policies are consistent and compliant with applicable law.