Illinois — Wage & Hour

Illinois requires employers to pay a minimum wage of $15.00 per hour to workers 18 years of age and older. The state does not mandate automatic annual adjustments tied to inflation; any future increases would require new legislation.

Source: Illinois Department of Labor – Minimum Wage Law; 820 ILCS 105/4

Illinois requires employers to pay overtime at one and one-half times the employee's regular rate of pay for all hours worked over 40 in a workweek. The state does not impose a daily overtime threshold; only the weekly 40-hour standard applies. Illinois follows the federal FLSA framework for overtime exemptions but does not recognize the federal highly compensated employee (HCE) exemption.

Source: 820 ILCS 105/4a; Illinois Department of Labor – Minimum Wage/Overtime FAQ

Illinois requires employers to pay all final compensation to separated employees in full at the time of separation if possible, but no later than the next regularly scheduled payday for that employee. This deadline applies uniformly regardless of whether the separation was an involuntary termination, a voluntary resignation, or a layoff — the statute draws no distinction. The Illinois Wage Payment and Collection Act (IWPCA) governs this timing requirement under 820 ILCS 115/5.

Components of final compensation

Under 820 ILCS 115/2, "final compensation" is defined distinctly from "wages" paid to current employees. Final compensation includes wages, salaries, earned commissions, earned bonuses, and the monetary equivalent of earned vacation and earned holidays, plus any other compensation owed the employee pursuant to an employment contract or agreement between the parties. The critical word is "earned" — employers owe only compensation the employee has actually earned under the terms of the applicable policy or agreement, not amounts that are discretionary or conditioned on continued employment through a future payment date.

Vacation payout rule

Illinois law prohibits forfeiture of earned vacation time at separation. When a contract of employment or employment policy provides for paid vacation, and an employee separates without having taken all vacation time earned, the monetary equivalent of all earned vacation must be paid as part of final compensation at the employee's final rate of pay. No employment contract or policy may provide for forfeiture of earned vacation upon separation, unless the arrangement is governed by a collective bargaining agreement that provides otherwise. This rule is also codified in 820 ILCS 115/5.

Illinois courts and the Illinois Department of Labor have clarified that this payout obligation arises only when the employer maintains a vacation or general paid-time-off (PTO) policy. The state does not mandate that employers offer vacation in the first instance. However, if an employer does maintain such a policy and an employee has earned vacation time under its terms, that time must be paid out on separation. Employers cannot implement "use-it-or-lose-it" provisions that operate at the point of termination to strip the employee of already-earned vacation days.

Paid Leave for All Workers Act (PLAWA) leave

Leave accrued under the Illinois Paid Leave for All Workers Act (820 ILCS 192/) is treated differently. PLAWA leave is not required to be paid out at termination unless the employer has credited that leave to the employee's general PTO bank or vacation account. If the employer maintains separate recordkeeping for PLAWA leave and vacation or PTO, only the vacation or PTO balance is subject to mandatory payout. This distinction turns on the employer's recordkeeping structure and policy design.

Mail-on-request provision

If the separated employee requests in writing that the final compensation be paid by check and mailed, the employer must comply with that request. This provision, also in 820 ILCS 115/5, ensures that employees who do not wish to return to the worksite to retrieve a check can still receive timely payment without friction.

No federal override

The federal Fair Labor Standards Act does not set a specific deadline for final paychecks. Accordingly, Illinois employers must comply with the state standard — next regularly scheduled payday at the latest — and cannot rely on any longer federal window.

Relationship to other obligations

The final-paycheck deadline is independent of other separation obligations, such as providing unemployment-insurance notices or COBRA continuation-of-coverage notices. Employers remain obligated to meet the final-compensation deadline even if disputes exist over equipment return, exit-interview completion, or other administrative matters. The IWPCA expressly prohibits most deductions from final compensation without the employee's express written consent given freely at the time the deduction is made, under 820 ILCS 115/9.

Source: 820 ILCS 115/5; 820 ILCS 115/2; Illinois Department of Labor – Wage Payment and Collection Act FAQ

Illinois permits employers to pay a reduced minimum wage to employees under 18 years of age for a limited number of hours worked during a defined period. The youth wage operates as a statutory exception to the standard adult minimum wage and is governed by 820 ILCS 105/4(a)(3).

Youth minimum wage rate and 650-hour threshold

Employees under 18 may be paid $13.00 per hour for the first 650 hours worked for an employer in a calendar year. Once an employee under 18 works more than 650 hours with the same employer in a calendar year, the employer must pay the full adult minimum wage of $15.00 per hour for all subsequent hours. The 650-hour threshold is employer-specific; hours worked for different employers do not aggregate.

Calculation of the 650-hour window

The Illinois Department of Labor interprets the 650-hour calculation to begin on the date of hire and run through one calendar year from that point. For example, if an employer hires a worker under 18 on April 30, 2020, the window to calculate the 650-hour limit runs through April 30, 2021. If the worker reaches 650 hours on April 15, 2021, the employer must pay the worker the full minimum wage ($15.00 per hour) from that date forward. If the employer continues to employ the worker after April 30, 2021, the worker continues to receive at least the full minimum wage; the youth rate does not reset. Once a worker reaches the 650-hour threshold with an employer in a calendar year, the employer must pay the worker at least the regular minimum wage paid to those over 18 years of age, absent any other applicable exemption.

Statutory differential limit

Under 820 ILCS 105/4(a)(3), the wage paid to an employee under 18 may not be more than $0.50 less than the wage required for employees 18 and older. Because the current adult minimum wage is $15.00 per hour, the statutory floor for youth workers is $14.50 per hour. The $13.00 youth rate is permitted only for the first 650 hours worked in the applicable calendar year with a single employer and falls within the $0.50 differential allowed by the statute.

Tipped youth workers

Youth workers under 18 employed in occupations where they customarily receive tips may be subject to the same tip-credit provisions as adult tipped employees. Illinois law allows employers to take a tip credit not to exceed 40% of the applicable minimum wage (whether the youth rate or the adult rate, depending on the worker's total hours). The employer must pay a direct cash wage of at least 60% of the applicable minimum wage. If the combination of the direct cash wage and tips does not equal or exceed the applicable minimum wage in a given pay period, the employer must make up the difference.

Cook County and Chicago local minimum wage rules

The Cook County minimum-wage ordinance explicitly excludes employees under the age of 18 from its coverage. Youth workers in unincorporated Cook County are therefore subject only to the Illinois state youth-wage rules described above. The City of Chicago maintains its own minimum-wage ordinance with separate youth-wage provisions that may set a higher rate and different rules; employers in Chicago should consult the Chicago municipal code and Department of Business Affairs and Consumer Protection guidance for the applicable youth rate and requirements within city limits.

Relationship to other sub-minimum wage provisions

The youth wage is a separate statutory provision and does not alter the applicability of other minimum-wage exceptions. For instance, 820 ILCS 105/6 permits employers to pay a learner wage (no less than 70% of the adult minimum wage) during a defined learning period, and 820 ILCS 105/4(a)(2) permits a training wage (adult minimum minus $0.50) for workers 18 and older during their first 90 days. An employer may not combine or stack these exemptions to pay less than the most favorable rate that applies to the employee under any single provision. A worker under 18 classified as a learner would be entitled to whichever rate is higher—the youth rate or the learner rate—unless the Director of Labor's regulations specify otherwise.

Source: 820 ILCS 105/4; Illinois Department of Labor – Minimum Wage/Overtime FAQ; Cook County Minimum Wage Ordinance

Illinois permits employers to pay a reduced direct cash wage to tipped employees and take a tip credit toward the minimum wage obligation, provided the combination of the direct cash wage and the employee's tips equals or exceeds the full minimum wage. As of January 1, 2025, the state minimum wage for employees 18 and older is $15.00 per hour. The tipped-employee rules are codified in 820 ILCS 105/4 and 56 Ill. Adm. Code 210.

Minimum cash wage and maximum tip credit

Employers may pay tipped employees a direct cash wage of at least 60% of the applicable minimum wage. For adult employees (18 and older), this means a minimum cash wage of $9.00 per hour. The employer may take a tip credit of up to 40% of the minimum wage—$6.00 per hour when the minimum wage is $15.00. The tip credit is the amount by which the employer may reduce the direct cash wage below the full minimum wage; it is not a deduction from the employee's tips. The employee retains all tips received.

If the employee's direct cash wage plus tips received in a pay period do not together equal or exceed the full minimum wage of $15.00 per hour for all hours worked, the employer must pay an additional amount to bring the employee's total compensation up to the minimum wage. This "make-whole" rule ensures that every tipped employee receives at least the full minimum wage for every hour worked, regardless of tip income.

Who qualifies as a tipped employee

Under 56 Ill. Adm. Code 210, a "tipped employee" is an employee engaged in an occupation in which gratuities are customarily recognized as part of the employee's remuneration and who receives at least $20 per month in gratuities. An employee who does not meet both criteria must be paid the full minimum wage without application of any tip credit. "Gratuities" under 820 ILCS 105/3 are voluntary monetary contributions received by an employee from a guest, patron, or customer.

Training wage for tipped employees

Employers may pay a training wage to tipped employees who are 18 years of age or older during the first 90 days of employment. According to the Illinois Department of Labor FAQ, when applying the 40% tip credit during the training period, the training-wage direct cash wage is $9.00 per hour (the same as the regular tipped minimum cash wage, because the training-wage reduction under 820 ILCS 105/4(a)(2) applies to non-tipped employees but the tipped-employee wage is already set at 60% of the minimum wage under the tip-credit provision). After 90 days, the standard tipped-wage rule applies—$9.00 per hour direct cash wage if the employer continues to take the tip credit, or $15.00 per hour if not utilizing the tip credit.

Tip ownership and employer retention

All gratuities are the property of the employee. Under 820 ILCS 105/3, gratuities are voluntary monetary contributions received by an employee from a guest, patron, or customer. Employers may not retain, divert, or claim any portion of an employee's tips, except as permitted under a valid tip-pooling arrangement (discussed below).

Tip pooling

Illinois permits tip pooling, under which employees contribute a portion of their tips for redistribution among a group of employees. The Illinois Department of Labor FAQ states that the amount contributed to the pool must be customary and reasonable, and participation in the pool cannot reduce any employee's total compensation below the full minimum wage. The regulation at 56 Ill. Adm. Code 210 defines a tipped employee as one in an occupation in which gratuities are customarily recognized; by implication, only such employees should participate in a tip pool, but the Illinois statute and regulations do not provide an exhaustive list of which job titles may or may not participate. Employers and managers are prohibited from retaining any portion of employee tips under the general gratuity-ownership rule in 820 ILCS 105/3.

Credit card tips and timing of payment

When a customer pays a gratuity by credit card, the Illinois Department of Labor guidance states that the gratuity must be paid to the employee no later than 13 days after the end of the pay period in which the tip was authorized by the customer. Illinois law does not expressly restrict employers from deducting credit card processing fees from tips, but any such deduction must not reduce the employee's total compensation below the full minimum wage for the pay period.

Service charges distinguished from tips

A mandatory service charge—such as an automatic percentage added to a bill for large parties or banquet events—is not a gratuity under Illinois law unless the employer designates it as such and pays it in full to the employees who provided service. Service charges are the property of the employer and may be retained, used to cover operational costs, or distributed to employees at the employer's discretion. An employer may not count a service charge retained by the employer toward the tip credit. Only voluntary gratuities paid directly by the customer count as tips for purposes of the tip-credit calculation. This distinction is rooted in the statutory definition of "gratuities" as voluntary contributions in 820 ILCS 105/3.

Dual jobs and related duties

An employer may take the tip credit only for hours worked by the employee in a tipped occupation. The Illinois Administrative Code at 56 Ill. Adm. Code 210 provides that the Illinois Department of Labor may look to federal Department of Labor regulations and interpretations of the Fair Labor Standards Act when interpreting the Illinois Minimum Wage Law. Federal guidance under 29 C.F.R. § 531.56(e) permits the tip credit for related preparatory or cleanup duties performed contemporaneously with or immediately before or after tipped duties, but not for time spent in an entirely separate, non-tipped occupation. Illinois employers should follow this federal framework in the absence of contrary state guidance, but the specific application of dual-jobs rules under Illinois law is not exhaustively detailed in the statute or regulations.

Youth tipped employees

Employees under 18 years of age are subject to the youth minimum wage of $13.00 per hour for their first 650 hours worked with an employer in a calendar year, as described in 820 ILCS 105/4(a)(3). Employers may apply the 40% tip credit to the youth minimum wage, resulting in a minimum cash wage of $7.80 per hour (60% of $13.00) for youth tipped employees during the 650-hour window. Once the employee under 18 works more than 650 hours with the same employer in a calendar year, the employer must pay the full adult minimum wage of $15.00 per hour (or $9.00 per hour if taking the tip credit). The same $20-per-month gratuity threshold and make-whole obligations apply to youth tipped employees.

Chicago One Fair Wage ordinance

The City of Chicago is phasing out the tip credit under its One Fair Wage ordinance. For employers with four or more employees operating within Chicago city limits, the tip credit is being reduced in stages and will be eliminated entirely by July 1, 2028. As of July 1, 2025, the Chicago minimum wage is $16.60 per hour, and the maximum tip credit is 24%, requiring a minimum cash wage of $12.62 per hour for tipped employees. Effective July 1, 2026, the tip credit drops to 16%. Chicago employers must comply with whichever standard is more favorable to the employee—the state rule or the Chicago ordinance.

Source: 820 ILCS 105/4; 820 ILCS 105/3; 56 Ill. Adm. Code 210; Illinois Department of Labor – Minimum Wage/Overtime FAQ; Illinois Department of Labor – Minimum Wage Law

Illinois incorporates the federal Fair Labor Standards Act (FLSA) salary threshold for the executive, administrative, and professional (EAP) overtime exemptions. Under 820 ILCS 105/4a(E), employees in bona fide executive, administrative, or professional positions are exempt from Illinois overtime requirements if they are "compensated at the amount of salary specified in subsections (a) and (b) of Section 541.600 of Title 29 of the Code of Federal Regulations as proposed in the Federal Register on March 31, 2003 or a greater amount of salary as may be adopted by the United States Department of Labor." Illinois thus follows whatever federal salary standard is in effect under 29 C.F.R. § 541.600(a).

Current federal salary threshold

As of June 2026, the federal minimum salary threshold under 29 C.F.R. § 541.600(a) is $684 per week ($35,568 per year). This threshold applies uniformly to executive, administrative, and professional exemptions under the FLSA. Because Illinois law adopts the federal DOL salary standard by reference, Illinois employers must pay exempt employees at least $684 per week on a salary basis to satisfy the salary-level test for the EAP exemptions under Illinois law.

Three-part test for overtime exemption

Meeting the salary threshold alone does not exempt an employee from overtime. Illinois follows the federal three-part test for each EAP exemption:

1. Salary-basis test — The employee must be paid a predetermined, fixed salary each pay period that does not fluctuate based on hours worked or quality or quantity of work performed, as defined in 29 C.F.R. § 541.602. An employee is paid on a salary basis if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee's compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.

1. Salary-level test — The employee must earn at least $684 per week ($35,568 per year), exclusive of board, lodging, or other facilities. Under 29 C.F.R. § 541.602(a)(3), up to 10 percent of the salary amount required by § 541.600(a) may be satisfied by the payment of nondiscretionary bonuses, incentives, and commissions that are paid annually or more frequently. If by the last pay period of the 52-week period the sum of the employee's weekly salary plus nondiscretionary bonus, incentive, and commission payments received is less than 52 times the weekly salary amount required, the employer may make one final payment sufficient to achieve the required level no later than the next pay period after the end of the year.

1. Duties test — The employee's primary duties must meet the specific criteria for the executive, administrative, or professional exemption, as defined in 29 C.F.R. Part 541, Subparts B, C, and D. For the executive exemption under 29 C.F.R. § 541.100, the employee's primary duty must be management of the enterprise or a customarily recognized department or subdivision thereof; the employee must customarily and regularly direct the work of at least two or more other full-time employees (or their equivalent); and the employee must have the authority to hire or fire other employees, or the employee's suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight. For the administrative exemption under 29 C.F.R. § 541.200, the employee's primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers, and the employee's primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. For the professional exemption under 29 C.F.R. § 541.300, the employee's primary duty must be the performance of work requiring advanced knowledge (defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment) in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction, or the employee's primary duty must be the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.

An employee who does not meet all three tests is non-exempt and entitled to Illinois overtime pay (one and one-half times the regular rate) for all hours worked over 40 in a workweek under 820 ILCS 105/4a.

No highly compensated employee (HCE) exemption in Illinois

Illinois does not recognize the federal FLSA highly compensated employee exemption. Under 29 C.F.R. § 541.601, the FLSA permits employers to treat employees earning total annual compensation of at least a specified amount (currently $107,432 per year under the federal regulation, though this amount is subject to periodic updates) as exempt under a streamlined duties test if the employee customarily and regularly performs at least one of the exempt duties or responsibilities of an executive, administrative, or professional employee. Illinois has not adopted this provision in 820 ILCS 105/4a. Therefore, high-earning employees in Illinois must satisfy the full three-part test, including the complete duties test for the applicable exemption, to be exempt from Illinois overtime requirements. This is a significant difference from federal law and means that Illinois employers cannot rely on the HCE exemption even for employees earning well above the standard salary threshold.

Exceptions to salary requirement

Certain EAP categories are exempt from the minimum salary requirement under both federal and Illinois law:

• Teachers — Teachers in educational establishments are exempt if their primary duty is teaching, tutoring, instructing, or lecturing in the activity of imparting knowledge, regardless of salary level (29 C.F.R. § 541.303(d)).

• Licensed physicians and lawyers — Employees who hold a valid license or certificate permitting the practice of law or medicine or any of their branches and are actually engaged in the practice thereof are exempt without regard to the salary requirement (29 C.F.R. § 541.304). This exception also applies to employees who hold the requisite academic degree for the general practice of medicine and are engaged in an internship or resident program pursuant to the practice of the profession. The exception does not apply to other medical occupations such as pharmacists, nurses, therapists, technologists, sanitarians, dietitians, social workers, psychologists, or psychometrists.

• Outside sales employees — Outside sales employees are exempt from both the salary-basis and salary-level requirements under 29 C.F.R. § 541.500. To qualify, the employee's primary duty must be making sales or obtaining orders or contracts for services or for the use of facilities, and the employee must be customarily and regularly engaged away from the employer's place or places of business.

• Computer employees — Computer employees may satisfy the compensation requirement either by earning at least $684 per week on a salary basis or by being paid at least $27.63 per hour, under 29 C.F.R. § 541.400(b). To qualify for the computer employee exemption, the employee must be employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field, and the employee's primary duty must consist of the application of systems analysis techniques and procedures or the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs.

Not-for-profit employees

Under 820 ILCS 105/4a(E), the Illinois Director of Labor has authority to adopt by regulation a weekly wage rate standard lower than the federal standard for bona fide executive, administrative, and professional employees of not-for-profit corporations. The Illinois Department of Labor's Overtime Exemption page states that Illinois follows federal FLSA definitions and refers employers to federal guidance for exemption determinations, but does not identify a separate lower threshold for not-for-profit employees. Employers of not-for-profit employees should therefore apply the same $684 per week federal threshold unless the Department publishes a specific regulation to the contrary.

Relationship to minimum wage

The $684 weekly salary threshold ($35,568 annually) is independent of Illinois's $15.00 per hour minimum wage. An exempt employee must earn at least $684 per week even though that amount equals only approximately 45.6 hours at the state minimum wage (less than the full 40-hour workweek plus typical overtime hours). Conversely, paying an employee $684 per week on a salary basis does not automatically confer exempt status; the employee must also meet the salary-basis test and the duties test.

Source: 820 ILCS 105/4a; 29 C.F.R. § 541.600; 29 C.F.R. § 541.602; 29 C.F.R. §§ 541.100–541.500; Illinois Department of Labor – Overtime Exemption