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Illinois Minimum Wage Increase

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Illinois Minimum Wage Increases Starting in January

 

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 first increase will take effect in just a few short months on January 1, 2020.

In January, the minimum wage will increase to $9.25 per hour. That is a dollar more than the current state minimum wage of $8.25. Shortly thereafter, on July 1st, the minimum will increase another $0.75 to $10.00 hour.

A few other changes that take effect under this law is 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 to try to offset some of the burden on small employers. Businesses with 50 employees or less will be able to claim a tax credit for 25 percent of the cost in 2020. As the minimum wage continues to go up however, the credit will decrease and eventually be phased out completely.

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 tend 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.

Effects on small businesses – oftentimes wage increases force small business owners to raise prices on their goods and services or reduce the cost of doing business. This can lead to operating your business with leaner staff or cheaper products.

Passing on the cost to consumers – for obvious reasons, this could mean passing on these additional costs to your consumer. There are obviously pros and cons to this. Consumers will likely be making more money and can afford to pay a little more for goods and services. On the other hand, some businesses aren’t able to pass on increases to their consumers to remain competitive or due to the national standard for some of these goods and services.

As stated earlier, there are several things that need to be considered when the Illinois minimum wage increase takes effect. If you are curious about the minimum wage increases for the state of Illinois over the next several years, check out this link: https://www2.illinois.gov/idol/Laws-Rules/FLS/Pages/minimum-wage-rates-by-year.aspx.

This article (“Article”) is a service made available Priority Staffing Group, Ltd, its partners, affiliates or subsidiaries (“Provider”). This Article provides general information related to the law and is designed to help users safely cope with their own legal needs. This Article does not provide legal advice and Provider is not a law firm. None of our content writers are lawyers and they also do not provide legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want legal advice. No attorney-client or confidential relationship exists or will be formed between you and Provider or any of our representatives.

IL Equal Pay Act

Illinois Equal Pay Act – September 2019

A few weeks ago, Governor, J.B. Pritzker signed House Bill 834 into law. This bill amends the Illinois Equal Pay Act (IEPA) of 2003 and takes effect rather quickly on September 29, 2019!

 

What makes this law different than it was in 2003? A few things:

  1. The law previously included language that stated that employees be compensated equally for “substantially equal work” without regard to sex or race. It has now revised “equal work” to state “substantially equal skill, effort, and responsibility.”
  2. The Act previously stated the pay discrepancies could be explained by several different factors such as seniority, merit, etc. However, there was a catch-all qualification that stated “any factor other than sex or race.” It is now clarified to state that any compensation discrepancy is tied to the job in question.
  3. Most of us that have been in a Human Resources or Office Manager role for a while have come across employees discussing their wages amongst one another and the issues that this can cause. As most of you likely know, we cannot require that employees do not discuss their wages with others, including their co-workers. The Act now states that you may also not force an employee to sign an agreement or contract stating that employees are not able to do this.
  4. Currently, the law permits employees to recover only amounts of an underpayment if they are on the winning side of a suit whereas the new law will allow an employee to succeed in being awarded compensatory and punitive damages as well as injunctive relief. Employers may also be subject to a civil penalty not to exceed $5,000 per violation.
  5. And last but not least. The IEPA now bans employers from inquiring about an applicant’s wages at a previous or current place of employment. Specifically stating that Illinois employers are prohibited from:
    1. Requesting or requiring wage or salary history from an applicant as a condition of being interviewed, considered for a job, or hired;
    2. Requesting or requiring that an applicant disclose their wage or salary history as a condition of employment;
    3. Screening job applicants based on their current or prior wages or salary histories by requiring that the history satisfy a minimum or maximum level; and
    4. Seeking a job applicant’s wage or salary history from any current or former employer. However, this subsection does not apply if the applicant is a current employee seeking another position within the same organization, or if their salary history is available as a matter of public record.

The good news? You CAN engage in the interactive process with applicants. Ask them what their salary requirements or desired compensation is! Nothing prohibits an applicant from voluntarily sharing current or prior wage history with you, we are just not able to rely on this information when making decisions to make the applicant an offer of employment or when determining their salary.

What steps do you need to take to be in compliance? My typical answer…training! Make sure your interviewing managers are well trained on things they are and are NOT allowed to ask in the interview process. It also appears that an update to your application process might be in the near future if you still have a spot that asks for the current salary.

This article (“Article”) is a service made available Priority Staffing Group, Ltd, its partners, affiliates or subsidiaries (“Provider”). This Article provides general information related to the law and is designed to help users safely cope with their own legal needs. This Article does not provide legal advice and Provider is not a law firm. None of our content writers are lawyers and they also do not provide legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want legal advice. No attorney-client or confidential relationship exists or will be formed between you and Provider or any of our representatives.

 

Megan Jones | HR Director