Minimum Wage Increase as of January 1st 2021

As most everyone is aware, Illinois Governor J.B. Pritzker signed a law to progressively increase the minimum wage in our state. Illinois is among one of the first states in the nation to pass an increase this large. The third increase will take effect in just a few short months on January 1, 2021.

In January, the minimum wage will increase to $11.00 per hour. That is a dollar more than the current state minimum wage of $10.00. The wage will consistently increase by one dollar until 2025 when it reaches $15 per hour.

A few other changes that take affect under this law are that minors (18 years of age and under) may be paid a lower wage per hour as long as they don’t work more than 650 hours per year. Damages to employers for violating the new Illinois Minimum Wage Act have increased drastically.

The state has implemented a tax credit, Public Act 101-0001, to try to offset some of the burden for small employers. Businesses with 50 employees or less employees during the reporting period may claim a credit due for each qualified employee, in an amount equal to the maximum credit available through December 21, 2027.

What does all of this mean for you as an employer? There are several things that need to be considered when the minimum wage is increased.

Wage Compression – the definition of wage compression is the regularity that wages for low-skilled workers and wages for high-skilled workers trend toward one another. Not only does the minimum wage have to go up, but most likely the wage that you are paying your skilled workers as well.