On November 26, 2019 the Chicago City Council amended its Minimum Wage Ordinance to accelerate its $15/hour minimum wage hike four years ahead of schedule. Instead of tying the increases to CPI in 2020, the amendment will increase the minimum wage to $14/ hour on July 1, 2020 and to $15/hour July 1, 2021.
The update also increases the minimum wage for tipped workers to $8.40 an hour on July 1, 2020 and requires that it be set to 60% of the City of Chicago minimum wage going forward. On July 1, 2021 it will increase to $9 per hour. Employers can still use a tip credit to make up the difference, but employers will be required to true up any payments if the tip credit is not enough to cover for all hours worked, including overtime pay.
These changes will not immediately impact small businesses with less than 20 employees. Small businesses will only be required to increase the minimum wage to $13.50/hour on July 1, 2020 and $0.50 per year until it reaches $15 per hour in 2023. Employers will less than four employees are not covered by the minimum wage ordinance.
Finally, the City of Chicago’s changes will also eliminate the youth minimum wage exemption by 2025 and will increase the youth minimum wage to $10 per hour on July 1, 2020 until it reaches $15 per hour by 2024.
A breakdown of the relevant wage rates is below:
These changes are in addition to the update to the Illinois Minimum Wage Law that was enacted early this year in February. We provided a comprehensive updated on those changes in April, and you can read more about that here. Please contact us if you need any assistance complying with the Illinois or Federal Minimum wage and overtime laws at 312-368-0100 or Walker R. Lawrence at email@example.com
The current I-9 form that is approved for use by the U.S. Citizenship and Immigration Services (USCIS) is set to expire on August 31, 2019. USCIS has not finalized the next version and in previous years, USCIS has directed employers to continue using the expired form (available at its website) until an updated version is approved. However, once it is approved, employers must start using the updated form with respect to all employees it hires on or after the date such form becomes available.
If you have any questions regarding employment issues, please contact Walker R. Lawrence, or any of our lawyers in our employment law practice at Levin Ginsburg at 312-368-0100. You may reach Walker directly via email at firstname.lastname@example.org
On February 19, 2019, newly elected Governor J.B. Pritzker fulfilled a campaign promise and signed legislation that will raise the Illinois Minimum Wage. The law made two major changes:
- Raised the minimum wage to $15.00 per hour by 2025
- Significantly increased the penalties for violations of the act – including misclassifying independent contractors
Under the new law, the minimum wage will increase annually for all employees over 18. For those employees that are under 18 and work no more than 650 hours in a calendar year, they will be subject to a lower minimum wage.
Businesses that have employees in Chicago or certain Cook County municipalities will need to continue to follow the local minimum wage ordinances which are higher than the Illinois state law. Both the local ordinances update on July 1 and the state law is tied to a Calendar year.
A breakdown of the relevant wage rates is below.
Significant Increase in Penalties for Violations
In addition to the increase in minimum wages across the state, the changes that went into effect on February 19, 2019, significantly increased the penalties for employers that fail to properly pay minimum wage or overtime. This is particularly important for employers that misclassify their workers as independent contractors and may be subject to significant liability as a result of that misclassification.
Under the new law, if an employee is underpaid, they can recover “treble” (three times) the amount of the underpayment. In addition to the treble damages, the statutory monthly damages penalty increases from 2 percent to 5 percent. Finally, there is now an additional penalty of $1,500.00 payable to the Department of Labor’s Wage Theft Enforcement Fund.
Example. If an employee is underpaid $7,500.00 and the employee receives a judgment two years later, the employer will have to pay $33,000 to the employee. The damages are broken down as follows:
- $22,500 in treble damages for the $7,500.00 of unpaid wages
- $9,000.00 (at least) in the 5 percent damage penalty
- $1,500.00 to the Department of Labor
These damages do not include attorneys’ fees, as well as other potential damages under the Federal minimum wage law (FLSA) and the local ordinances.
What does this mean for employers?
Given the significant risk if you are underpaying employees you should evaluate your pay policies and ensure that your company is in compliance. It is important to annually conduct a wage and hour audit to proactively mitigate risk.
Please contact us if you need any assistance complying with the Illinois or Federal Minimum wage and overtime laws at 312-368-0100 or Walker R. Lawrence at email@example.com
Minimum wages are rising across the country, with well over a dozen states, plus many cities increasing minimum wages over the past few years. As those changes are implemented, restaurant owners are finding that they must make significant adjustments to how they run their businesses in order to stay in business.
The Bay Area of California was one of the first regions to begin increasing minimum wages, and as of January 1, 2018, the minimum wage increased by 37 cents to $13.23 in Oakland, and in San Francisco it rose from $13.00 to $15.00 effective July 1, 2018.
One impact on the restaurant industry is the change from full service restaurants – with hosts and full waiter service – to counter service. Some restaurants have actually seen such changes result in significant sales increases – by as much as 20% – after the change from full service to counter service. And at the same time, being able to reduce menu prices due to the ability to cut staff due to the change to a counter service format. The downside here is that there are fewer jobs available to restaurant workers with owners focused on a lean labor paradigm. At some restaurants, cooks serve dual roles – both preparing food and delivering it to customers. Customers are also finding themselves taking on new ‘responsibilities’ such as being able to text additional orders rather than going back in line it they want more food than they originally ordered at the counter.
Thus, the increase in minimum wage has resulted in more satisfied employees (albeit fewer) earning a better living, increased restaurant industry innovation, and restaurants becoming more accessible to the population as whole as a result of lower menu prices.
Seattle became the first major city in the country to pass a $15.00 minimum wage law in 2014. Large restaurant groups and franchises were particularly concerned about the increase because employers with more than 501 workers were required to increase wages on a set schedule reaching $15.00 per hour this year. As a result, large Seattle restaurant groups and chains were forced to look for ways to adjust and innovate. Many felt that increasing menu prices was not an option because of concerns that such increases would result in lower revenue. So these restaurants did away with discretionary tipping and, instead, implemented set service charges of fifteen or twenty percent.
To offset rising labor costs, some restaurants add a surcharge of three to five percent to customers’ checks. In March of last year, the Wall Street Journal even ran an article entitled “New on Your Dinner Tab: A Labor Surcharge.” Restaurant owners found that raising menu prices lead customers to choose less expensive items than they normally would, and that the surcharge helped mitigate the increased costs of doing business.
In addition to raising prices, in order to deal with increased wages in the restaurant industry, some businesses often cope with minimum wage increases by firing staff. Earlier this year, Red Robin Gourmet Burgers announced it would eliminate busboy positions at 570 restaurant locations. Many single location restaurants have also had to eliminate busboys and other staff positions. Others have not been able to adapt and have had to close their doors. Some have turned to technology to compensate for the loss of labor and to reduce expenses. Large chains such as Chili’s, Applebee’s, and Olive Garden have replaced some servers with table-side tablets for placing orders and paying bills.
Technology has also helped other businesses expand. For example, popular online service, GrubHub, has reduced the number of customers dining out, as consumers can enjoy a restaurant style meal without getting up off their couch.
The takeaway for restaurants facing increasing minimum wages and labor costs? Scrutinize your budget and personnel and determine how to satisfy ever-changing employee and customer demands, and be willing to change.
For further information regarding this topic, please contact:
Jonathan M. Weis at firstname.lastname@example.org or 312-368-0100.
Amendments to Illinois Right to Privacy in the Workplace Act Expand Privacy Protections for Employees
On Jan. 1, 2017, amendments to the Illinois Right to Privacy in the Workplace Act (IRPWA) took effect expanding the protections of IRPWA to prevent employers from insisting on access to any employee’s “personal online accounts.” The broadened definition of “personal online accounts” now includes all “online accounts” “used by a person primarily for their personal purposes.” The IRPWA previously contained a narrower definition of the type of protected accounts and only prevented employers from seeking access to “social networking websites,” such as Facebook.
The amendments to IRPWA prohibit an employer or prospective employer from attempting to access employee social media accounts. The amendments state that employers cannot “request, require or coerce” an employee to: provide a username or password to any personal online account; authenticate or access a personal account in the presence of the employer; invite the employer to join a group affiliated with any personal account; or join an online account established by the employer. The amendments also widened the parameters of what constitutes a “personal online account,” which IRPWA now defines as any online account primarily used for personal purposes. Employers may still inquire about business and professional online accounts.
The IRPWA amendments do not prohibit employers from making inquiries regarding personal online accounts in certain limited circumstances, including to assure compliance with federal and Illinois law and to investigate an allegation based on specific information that alleges a violation of law.
Employers who violate IRPWA are subject to civil damages, including up to $500 per affected employee plus costs, attorneys’ fees, and actual damages, for willful and knowing violations. Further, any employer or prospective employer or its agent who violates IRPWA is guilty of a petty offense.
If you have any questions regarding this or any other employment related matter, please contact:
email@example.com or 312-368-0100.