Guide to Illinois Minimum Wage Laws & Regulations

Starting in 2025, Illinois workers and employers face updates to minimum wage laws that directly influence paychecks and payroll practices. These changes aren't optional—every business operating in the state must stay compliant to avoid penalties and ensure workers are paid fairly.

Statewide rules set the foundation, but local ordinances in places like Chicago and Cook County may impose higher rates. Employers need to understand how the layers of regulations interact, especially if they operate in multiple jurisdictions.

This guide breaks down Illinois' minimum wage requirements for 2025, covering statewide updates, city-specific rates, overtime rules, and special provisions for certain workers.

Illinois Minimum Wage Fundamentals

• Key 2025 Updates: As of January 1, 2025, the statewide minimum wage in Illinois is $15.00 per hour for employees aged 18 and older. Workers under 18 who work fewer than 650 hours per year are entitled to $13.00 per hour. Tipped workers earn a base rate of $9.00 per hour, with employers required to ensure total earnings (base pay plus tips) meet or exceed $15.00 per hour.

• State Wage vs. Local Ordinances: Illinois law sets a statewide minimum, but cities and counties can enact higher rates. For example, Chicago’s minimum wage is $16.20 per hour as of July 2024, applying to employers with four or more workers. Cook County aligns with the state at $15.00 per hour but adjusts annually based on inflation, provided the unemployment rate remains below 8.5%. Employers must meet the highest applicable rate where they operate.

Overtime Rules

• Illinois requires overtime pay at 1.5 times the regular hourly rate for employees who work more than 40 hours in a workweek. This rule applies to employers with four or more workers, ensuring broad coverage.

• Employers may pay sub-minimum wages to learners or workers with physical or mental disabilities, but only with an approved license from the Illinois Department of Labor. These exceptions are tightly regulated to maintain fairness.

Wage Variations for Tipped and Youth Employees

Tipped Workers

Illinois law permits employers to pay tipped employees a reduced hourly rate equal to 60% of the standard minimum wage. For 2025, this means tipped workers earn a base rate of $9.00 per hour. However, employers are legally required to ensure that the combination of base pay and tips equals or exceeds $15.00 per hour. If tips fall short of this amount, the employer must pay the difference to meet the required minimum.

For example, a server earning $9.00 per hour in base wages who only collects $5.00 per hour in tips must receive an additional $1.00 per hour from the employer to bridge the gap. Employers cannot rely on tips alone to meet the minimum wage threshold. Regular tracking of tipped earnings is necessary to comply with wage laws and avoid underpayment.

Youth Workers

Workers under the age of 18, who are employed for fewer than 650 hours in a calendar year, have a distinct wage requirement. In 2025, the minimum hourly wage for youth workers is set at $13.00. This applies to roles such as part-time retail associates, seasonal camp counselors, or students working limited hours during the school year.

Employers must closely monitor the total hours worked by youth employees. Once a worker under 18 exceeds 650 hours in a calendar year, the minimum wage increases to $15.00 per hour for all future hours worked. Failing to adjust the pay rate after hitting the hour limit could result in wage violations. Accurate record-keeping is key to ensuring payroll compliance and avoiding penalties.

Local Regulations: Chicago & Cook County

Chicago Minimum Wage

Chicago's minimum wage operates on a separate schedule from the rest of Illinois and increases every July 1. The adjustment is based on the Consumer Price Index (CPI) or 2.5%, whichever is lower. Employers with four or more employees must comply with the city's higher wage requirements. As of July 1, 2024, the minimum wage for non-tipped workers in the city was $16.20 per hour. Employers must monitor this annual adjustment to ensure compliance.

For tipped employees, the base wage in Chicago was $11.02 per hour as of July 1, 2024. The law requires employers to track total earnings, including tips, to confirm that tipped workers receive at least $16.20 per hour. When tips do not cover the difference, employers must make up the shortfall. Businesses must also provide written notice of the current minimum wage to employees annually and post updated rates at all job sites in visible locations.

Cook County Minimum Wage

Cook County's minimum wage rules require employers to pay the highest applicable rate, whether it is federal, state, or county. For non-tipped workers, the minimum wage in the county was set at $15.00 per hour as of January 1, 2025. Tipped employees in Cook County earn a base wage of $9.00 per hour. Employers are responsible for ensuring the total hourly compensation for tipped workers meets or exceeds $15.00 per hour by supplementing wages when necessary.

Cook County adjusts its minimum wage based on CPI changes but only when the unemployment rate remains below 8.5%. Employers need to review annual announcements from Cook County to confirm whether wage adjustments are in effect.

Local Opting-Out Clauses

Some municipalities within Cook County have opted out of the county's minimum wage ordinance. These municipalities either set their own wage standards or default to the Illinois state minimum wage. Employers operating in cities, villages, or townships within Cook County must verify the wage requirements for each specific location.

Businesses with operations in multiple areas of Cook County face unique challenges. Municipal opt-outs mean that wage requirements can vary significantly between locations. Employers must confirm compliance with the correct wage rate in each municipality to avoid penalties or employee complaints.

Mandatory Compliance Steps for Employers

Employers in Illinois must follow clear, specific actions to comply with minimum wage laws and updates in Illinois for 2025. The updated laws require close attention to wage postings, accurate paychecks, and precise record-keeping. Failing to meet these obligations can lead to costly penalties and employee disputes.

• Posting Requirements: Minimum wage notices must be displayed in an area that all employees can easily access, such as breakrooms or near time clocks. In Chicago, additional notices are required, including information about city-specific wage rates, paid sick leave, and Fair Workweek rules. Employers in Cook County must also post details about the county's minimum wage ordinance unless operating in a municipality that has opted out. Skipping this step can result in compliance violations during inspections.

• Pay Stub Accuracy: Each paycheck must include clear details that reflect the correct hourly rate, overtime pay, and any adjustments for tipped employees. For tipped workers, the pay stub needs to show the base wage, total tips earned, and any supplemental pay added by the employer to meet the required $15.00 per hour. Mistakes in pay stub information can lead to formal employee complaints and audits by the Illinois Department of Labor.

• Record-Keeping: Employers must maintain accurate and detailed records of employee hours worked, wages paid, and tips reported. This includes documentation of overtime hours and adjustments made for tipped employees. State law requires these records to be stored for at least three years, and they must be readily available for audits. Incomplete or missing records can result in fines and additional scrutiny.

• Penalties for Non-Compliance: Non-compliance can result in fines, back pay owed to employees, and potential legal claims. Wage violations can also harm a business's reputation, making it harder to attract or retain employees. Employers must prioritize compliance efforts to avoid these risks.

Leveraging Automated Payroll and Time Tracking

Manually managing minimum wage changes and compliance requirements increases the risk of errors. Employers can reduce compliance risks by using payroll systems and time tracking software with built-in updates for Illinois minimum wage laws.

• Real-Time Wage Updates: Payroll software with Illinois-specific settings ensures hourly rates automatically adjust to reflect state, Chicago, or Cook County requirements. This prevents underpayment errors when wage rates change.

• Integrated Time Tracking: Time tracking systems record exact work hours, including overtime, and ensure accurate wage calculations. Features like geofencing prevent clock-ins from unauthorized locations, helping employers maintain precise records.

• Tipped Wage Monitoring: Payroll systems designed for tipped employees track base pay, tips earned, and supplemental pay to ensure total compensation meets the $15.00 per hour requirement. Alerts notify employers when adjustments are needed, reducing manual oversight.

• Compliance Reporting: Automated reporting tools generate detailed records for audits, including hourly wages, overtime, and tip adjustments. These reports reduce preparation time and ensure accuracy when responding to wage-related inquiries.

Automating payroll and time tracking simplifies compliance, reduces wage calculation errors, and ensures records meet Illinois requirements. Employers benefit from consistent accuracy and fewer administrative burdens.

Employers can simplify compliance by using automated payroll systems that account for local minimum wage laws, track hours accurately, and calculate tipped or overtime pay. These systems reduce manual errors and ensure payroll reflects up-to-date rates for all employee types and locations.

Navigating Illinois' minimum wage landscape requires a keen eye for detail and a commitment to compliance. We understand the challenges small businesses face in managing these complexities, which is why our team is dedicated to simplifying HR and payroll processes. If you're looking for a comprehensive solution to streamline wage compliance and reduce administrative burdens, book a demo with us today and discover how our platform can support your business.