Key Changes to Chicago’s Labor Ordinances, Effective July 1, 2025

Quick Hits

• Effective July 1, 2025, Chicago’s minimum wage has increased.
• Effective July 1, 2025, the compensation thresholds under the Fair Workweek Ordinance have increased.
• Effective July 1, 2025, medium-sized employers are required to pay out unused, accrued paid leave to separated employees under the Paid Sick and Safe Leave Ordinance.
• A private right of action is available to covered employees when their employers violate the paid leave provisions of the Paid Leave and Paid Sick and Safe Leave Ordinance. (A private right of action previously existed for violations of the Paid Sick Leave provisions.)

Minimum Wage Ordinance

Under the Minimum Wage Ordinance, covered employees must be paid no less than the city’s established minimum wage. Effective July 1, 2025:

• The minimum wage for employees of standard employers (four or more employees) has increased from $16.20 to $16.60 per hour, a 2.5 percent increase.
• The tipped minimum wage for standard employers has increased from $11.02 to $12.62 per hour.

Chicago is continuing its five-year phaseout of the tipped wage credit. This means the gap between the tipped and standard minimum wage will gradually close. The July 1 increase reflects the second phase, where the tipped wage credit is reduced to 24 percent of the Chicago minimum wage. By 2028, tipped workers in Chicago are expected to earn the full Chicago minimum wage, regardless of tips received.

Fair Workweek Ordinance

The Fair Workweek Ordinance requires certain employers in covered industries to provide workers with predictable work schedules and compensation for changes that do not meet its notice requirements. The seven covered industries include building services, healthcare, hotels, manufacturing, restaurants, retail, and warehouse services.

Employers are covered by the Fair Workweek Ordinance if they are in a covered industry and employ 100 or more workers globally (250 employees and 30 locations for a restaurant), and at least 50 of those workers are “covered employees.” Previously, employees were covered if they spent the majority of their time at work for the employer while physically present within the city and earned less than or equal to $61,149.35 per year in salary or $31.85 per hour. Effective July 1, those minimum compensation thresholds have increased to $62,561.90 per year in salary or $32.60 per hour.

Paid Leave and Paid Sick and Safe Leave Ordinance

Two important changes to the Paid Leave and Paid Sick and Safe Leave Ordinance took effect on July 1, 2025.

Medium-sized employers (any employer that employs between 51 and 100 covered employees) are required to pay the monetary equivalent, at the employee’s final rate of pay, of all unused, accrued paid leave as part of that employee’s final compensation. Previously, only large employers (any employer that employs more than 100 covered employees) were required to pay unused, accrued paid leave as part of an employee’s final compensation. Small employers (any employer with 50 or fewer covered employees) still need not pay unused, accrued paid leave upon separation.

Effective July 1, a private right of action has become available to covered employees when their paid leave is lost or denied because of their employer’s violation of the ordinance. Employees can sue in civil court and recover damages equal to three times the value of the paid leave that was lost or denied, interest on that amount, as well as costs and reasonable attorneys’ fees. There is a 16-day cure provision in effect from July 1, 2025, through June 30, 2026, which grants an employer up to 16 days from the date of an alleged violation to correct the violation before a civil action may be brought. Importantly, the cure provision is defined as the time between the alleged violation and either (1) the next pay period or (2) 16 days after the violation, whichever is less. This provision will sunset automatically as of July 1, 2026.