As promised in his platform, Governor Pritzker got to work with the General Assembly immediately upon taking office moving forward with his promise to increase the minimum hourly wage in Illinois to $15.00. The Senate passed SB 1 on February 7, 2019
In a 39-18 vote, and the bill now goes over to the House for review. The representatives may amend the bill, but in all likelihood, it is expected to pass as written easily and head on to the Governor’s office within a week.
Initially, it was proposed that the minimum hourly rate be increased immediately to $15.00/hour across all occupations and employers. The anticipated impact of this on Illinois businesses and communities and, in turn, the Illinois economy was predicted by outside observers to be devastating as not only would it stunt business growth in Illinois, but it may have also increased the exodus of Illinois’ population in 2019 and 2020 to more than the 45,000 that left the State in 2018.
In an effort to ease the pain on employers of a sudden jump in payroll, in a late amendment to the bill sponsored by Senator Kimberly Lightfoot (D – IL 4th Dist), the bill instead will create a graduated increase by 2025 as follows with the corresponding tax credit for employers with less than 50 employees:
Calendar Schedule Adult Employees & Adult Employees & ” <18 yr old employees <18 yr old employees ” working > 650 hrs/yr working < 650 hrs/yr
Jan 1 2020 – June 30 2020 $9.25/hour $8.00/hour
July 1 2020 – Dec 31 2020 $10.00/hour $8.00/hour
Jan 1 2021 – Dec 31 2021 $11.00/hour $8.50/hour
Jan 1 2022 – Dec 31 2022 $12.00/hour $9.25/hour
Jan 1 2023 – Dec 31 2023 $13.00/hour $10.50/hour
Jan 1 2024 – Dec 31 2024 $14.00/hour $12.00/hour
Jan 1 2025 – $15.00/hour $13.00/hour
To ease the burden on small employers (50 or fewer employees), the bill includes a somewhat complicated payroll reduction tax credit that we strongly recommend those employers speak with their financial and tax advisors on how that will apply. What is less mentioned in the news reports is that the bill also increased penalties to employers who violate Illinois Minimum Wage Act to now include treble damages (ie. triple the amount of the awarded underpaid compensation) and includes costs, the employee’s attorney’s fees and additional damages now of 5% (rather than the previously 2%) per month for each month of the violation.
We anticipate this will be passed by the House and signed by the Governor within the next two weeks in substantially, if not entirely, its current form. If you’d like to read the full text of the bill (looking for the underlined text as this is the new law), you may do so by following this link.
Inman & Fitzgibbons will continue to follow the happenings of the Illinois General Assembly and reporting to our readers any proposed or passed legislation significantly impacting our clients.