The Chicago Paid Leave and Paid Sick and Safe Leave Ordinance isn’t the only new legislation coming to Chicago employers. That Ordinance comes on the heels of another new ordinance that shook up employers of tipped workers. The passage of the One Fair Wage ordinance making Chicago the first major city to independently abolish the sub-minimum wage for tipped workers. The One Fair Wage Ordinance phases out the City’s subminimum wage for tipped workers over a five-year period. Chicago’s “tip credit” will be completely eliminated by July 1, 2028, at which time all tipped employees working in the City of Chicago will earn the same hourly minimum wage rate as non-tipped employees and Chicago employers will no longer be able to credit an employee’s earned tips and gratuities towards their hourly wage rate.
The Plan to phase out Chicago’s tip credit under the Ordinance works like this:
- Employers must pay tipped employees 40% of the applicable minimum wage rate until July 1, 2024.
- Employers must pay tipped employees 32% of the applicable minimum wage rate on and after July 1, 2024.
- Employers must pay tipped employees 24% of the applicable minimum wage rate on and after July 1, 2025.
- Employers must pay tipped employees 16% of the applicable minimum wage rate on and after July 1, 2026.
- Employers must pay tipped employees 8% of the applicable minimum wage rate on and after July 1, 2027, until and including June 30, 2028.
- Starting July 1, 2028, Employers must pay tipped employees the same hourly minimum wage rate as non-tipped employees.
This blog is intended to be merely a high-level review of some key aspects of the new Ordinance. The Ordinance goes into more detail and a full understanding is important for any employers of Chicago based employees.
If you have questions about the new Chicago One Fair Wage or other employment law needs, contact Navigant Law Group, LLC at (847) 253-8800 or email us at hello@navigantlaw.com.
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