Tag Archives: Chicago Minimum Wage Ordinance

The Impact of Local Minimum Wage and Paid Sick Leave Ordinances on the Transportation Industry

Contributed by Michael Wong, January 5, 2018

Over the past few years, cities, counties and local municipalities have been enacting laws and ordinances increasing the minimum wage and requiring paid sick leave for employees. While there have been growing pains with how these apply to normal hourly non-exempt employees and tipped servers, do these apply to motor carriers and employees who are truck drivers?  This can be the most frustrating legal response of all, “it depends.”

In most cases, minimum wage laws enacted by states follow the Fair Labor Standard Act (“FLSA”) and provide exemptions for motor carriers.  Indeed, under Section 12(b)(1) of the FLSA, employees whose duties, wholly or in part, affect the safety of operation of a motor vehicle and are involved in interstate commerce are exempt from being paid overtime. Whether a municipality’s minimum wage ordinance applies, depends on the language and rules of the ordinance. For example, the rules of the Cook County, Illinois minimum wage specifically state that a regulated motor carrier subject to subsection 3(d)(7) of the Illinois Minimum Wage Law is not a “Covered Employer” that would be required to pay covered employees the Chicago or Cook County minimum wage. Similarly, the rules of the City of Chicago minimum wage states that individuals employed for a motor carrier who are subject to the Department of Transportation regulation are not subject to the Chicago minimum wage.

However, paid sick leave laws and ordinances are different.  Neither the Cook County, Illinois earned sick leave ordinance or City of Chicago earned sick leave ordinance have the same exclusion for motor carriers or truck drivers.  While neither expressly states that motor carriers are required to provide paid sick leave to employees who are truck drivers, they also do not state that motor carriers or truck drivers are exempt.  Due to the plain language exempting motor carriers and truck drivers from the minimum wage ordinances, there is a very strong argument that motor carriers are required to provide their employees who are truck drivers with paid sick leave.

Indeed, this interpretation is not unusual within the growing trend of states, cities and local municipalities expanding employee rights – including those of truck drivers. Currently there are 8 states and 30 cities and municipalities that have paid sick leave laws which include:  Illinois (local), Washington (state and local), California (state and local), Arizona (state and local), Oregon (state and local), Minnesota (local), Vermont (state), Massachusetts (state and local), Pennsylvania (local), New Jersey (local), New York (local), Connecticut (state) and Washington, D.C. (local).

Bottom line, the different paid sick leave laws do not address or expressly exempt motor carriers or truck drivers from being subject to the law or ordinance. By not addressing or expressly exempting motor carriers and their employees, these laws are creating significant exposure for motor carriers that fail to make changes by providing employees who are truck drivers with the ability to earn paid sick leave or considering how those employees are being compensated. Certainly, with the patchwork of laws and nuances in each jurisdiction, it can be extremely frustrating and difficult to try and implement a globally compliant policy.  Thus, special attention must be taken when crafting such policies and review by experienced counsel should be part of the process.  Moreover, motor carriers utilizing truck drivers who are independent contractors or owner/operators should take particular pause to consider the increased liability from misclassification claims and the potential damages under the paid sick leave laws, in addition to any applicable minimum wage law or ordinance.

REMINDER – Chicago Minimum Wage Increases Again and Cook County Minimum Wage Begins Starting July 1st 2017

Contributed by James F. Hendricks, Jr., June 23, 2017

On July 1, 2017, Chicago’s Minimum Wage increases to $11.00 per hour for non-tipped employees and $6.10 for tipped employees (Chicago Municipal Code §1-24). Cook County’s new minimum wage is $10.00 per hour for non-tipped and $4.95 for tipped employees.

Minimum Wage

Street sign that says “Minimum Wage Increase Ahead”

IMPORTANT NOTICE REQUIREMENTS: All employers that maintain a business facility within the geographic boundaries of  Chicago AND/OR are subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago are covered by Chicago’s Minimum Wage Ordinance and MUST do the following starting July 1st:

  1. Display applicable poster(s) by July 1st
  2. Include a copy of Chicago’s Minimum Wage Poster with the first paycheck issued after July 1st to each employee that is subject to the Ordinance (i.e. works at least 2 hours in Chicago, or at some point may work at least 2 hours in Chicago)

From our prior Chicago Minimum Wage Ordinance post, here are points that you need to know about the Chicago Minimum Wage Ordinance:

  1. Covered Employers: Any individual, partnership, association, corporation, limited liability company, business trust, or any person or group of persons that has at least one employee and (1) maintains a business facility within the geographic boundaries of Chicago AND/OR (2) is subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago. Cook County: Work in the county, including compensated (sales, delivery, etc.)
  2. Covered Employees: Any employee who works for at least 2 hours in any two-week period within Chicago’s geographic boundaries, including driving through Chicago during work (e.g., that delivery driver that takes Route 94 from Evanston to Gary and gets stuck in rush hour traffic is covered).
  3. Hours subject to Chicago’s Minimum Wage: Chicago’s Minimum Wage only has to be paid for hours worked by the employee when he or she is physically present within the geographic boundaries of Chicago. This includes time spent driving during working hours, but does not include time commuting between home and work.
  4. Non-Tipped Employees’ Hourly Rate: Chicago’s Minimum Wage for non-tipped employees starting July 1, 2017 will be $11.00/hour; and increasing on July 1, 2018 to $12.00/hour; July 1, 2019 to $13.00/hour; and each July 1st thereafter, Chicago’s Minimum Wage will increase by an amount announced by the Commissioner of Business Affairs and Consumer Protection (and, of course, if the CCMW is less than the Illinois or Federal minimum wage, then the highest wage rate applies).
  5. Penalties & Damages: A fine of $500.00 to $1,000.00 per day for each offense that is not corrected. Potential license suspension or revocations and an order to pay restitution to underpaid employees. Additionally, employees can pursue a private cause of action to recover THREE times the underpayment, attorney fees and costs.
  6. Union/CBA Issues: There is no grandfathering for current “in-force” collective bargaining agreements. This means that, depending on the provisions of a current CBA, there could be an automatic increase in all employees’ wages (i.e., if only the lowest paid employee’s rates are defined and each other level is based a percentage higher), or the union could even demand to re-open bargaining mid-contract.

City of Chicago Approves Paid Sick Time and Reminder… Chicago Minimum Wage Increases to $10.50 on July 1, 2016

Contributed by Sara Zorich and Mike Wong, June 28, 2016

City of Chicago Approves Paid Sick Time

On June 21, 2016, we posted a blog on the City of Chicago’s proposed ordinance mandating paid sick leave, including details about who it covers and how it could impact business owners.

On Wednesday, June 22nd, the full City council passed the ordinance. Effective July 1, 2017, part time and full time employees in Chicago will accrue 1 hour of sick leave for every 40 hours they work – with a cap of 5 days paid leave per 12 month period.

Employers can utilize their existing paid time off policies if they are more generous than the Chicago ordinance; however, the ordinance REQUIRES mandatory carry-over of accrued but unused sick time, which is something many paid time off policies do not allow. Chicago employers should begin reviewing their current sick time or paid time off policies to ensure compliance with the ordinance.  If Chicago employers do not have any policies in place, they will want to do so by July 2017.

Reminder… Chicago Minimum Wage Increases to $10.50 on July 1, 2016

Minimum WageLast year, the Chicago Minimum Wage Ordinance went into effect. This ordinance requires a mandatory yearly increase to the Chicago minimum wage. As of July 1, 2016, the Chicago Minimum Wage increases to $10.50/hr and the minimum wage for tipped employees increases to $5.95/hr with an applicable tip credit of $4.55 (i.e., $10.50 minus $5.95).

Unless an employee is exempt from overtime under the Illinois Minimum Wage Law (IMWL), employers subject to the Chicago Ordinance must pay employees overtime of 1.5 times the City’s minimum wage. This means that on July 1st, 2016, the Chicago’s minimum overtime wage will be $15.75 per hour (i.e. $10.50 times 1.5) and the overtime rate for tipped employees is $11.20 (i.e. $15.75 – $4.55).

Employers should check their record keeping and payroll systems to ensure this change is implemented as of July 1, 2016.

Update: New Rules Clarify the Minimum Wages for Tipped Employees, Overtime and Complaints Under the Chicago Minimum Wage Ordinance Going Into Effect July 1, 2015

Contributed by Sara Zorich and Michael Wong

The City of Chicago just issued new rules clarifying the Chicago Minimum Wage Ordinance with respect to the minimum wage for tipped employees, overtime calculations for tipped and non-tipped employees, and complaints against employers.

The Minimum Wage and Tip Credit for Tipped Employees
The Rules clarify that the minimum wage for tipped employees is $10.00 and that Section 1-24-030(a)(1) sets forth the minimum wage minus tip credit that tipped employees may be paid.Wage

As of July 1, 2015, the minimum wage minus tip credit is $5.45, or the state minimum wage of $8.25, minus the state tip credit of $3.30 (40% of $8.25), plus $.50 provided by the Ordinance. Thus, under the Ordinance’s current minimum wage of $10.00, the current tip credit for employers under the Ordinance is $4.55 (i.e. $10.00 minus $5.45).

Chicago’s minimum wage for tipped employees is calculated based on the State and/or Federal minimum wage and tip credits. So, if either the State or Federal minimum wage is increased or the tip credits are decreased, it will impact the Chicago minimum wage for tipped employees. For example, if Illinois increases the state minimum wage to $9.00 and decreased the state tip credit to 30%, the new Chicago minimum wage for tipped employees would be $6.80, or the state minimum wage of $9.00, minus the state tip credit of $2.70 (30% of $9.00), plus the $.50 provided by the Ordinance.

Overtime
Unless an employee is exempt from overtime under the Illinois Minimum Wage Law (IMWL), employers subject to the Chicago Ordinance must pay employees overtime of 1.5 times the City’s minimum wage. This means that on July 1st, the Chicago’s minimum overtime wage will be $15.00 per hour (i.e. $10.00 times 1.5).

Under the Ordinance, tipped employees must be paid an overtime hourly wage of 1.5 times the City’s minimum wage, minus the City’s tip credit. Under Chicago’s current minimum wage of $10.00, the minimum overtime wage for tipped employees will be $10.45 per hour (i.e. $10.00 times 1.5, minus Chicago’s tip credit of $4.55 [$10.00 minus $5.45]).

Again, it is important to remember that the Chicago minimum wage for tipped employees is tied to the State and/or Federal minimum wage and tip credit. Thus, if Illinois increased the minimum wage to $9.00 and decreased the tip credit to 30%, the new Chicago minimum wage for tipped employees would be $6.80 and the overtime hourly wage for tipped employees change to $11.80 per hour (i.e. $10.00 times 1.5, minus the City’s tip credit of $3.20 [$10.00 minus $6.80]).

More importantly, much like state law, under the Ordinance employers must be able to show that the employee’s wages plus tips equal Chicago’s minimum wage (which is currently $10.00 and $15.00 for overtime), or else the employer is required to pay the shortfall so that the employee’s wages plus tips equals the minimum wage.

For example, if a tipped employee works 50 hours in a particular week and makes $200 in tips, the employer would be required to pay the employee an additional $27.50 on the employee’s paycheck:

(40 hours of straight-time at $5.45 = $218.00) + (10 hours of overtime at $10.45 = $104.50) + (Tips Received = $200.00) = (Sub-Total = $522.50)

  • Under the Ordinance, the minimum wage owed for 50 hours would equal 40 hours times the minimum straight-time wage of $10 ($400) and 10 hours times the minimum overtime wage of $15 ($150), for a total of $550.
  • Under this scenario, the employer would be required to pay the employee an additional $27.50 on the tipped employee’s paycheck, since the amount received in wages and tips by the employee of $522.50 is $27.50 less than the $550 required to be paid.

Record Keeping for Tipped Employees
The Rules specifically state that employers must keep records of wages and tips for all tipped employees for at least three (3) years and that the records must include the following:

  1. An identifying symbol on payroll records indicating if an employee’s wages include tips;
  2. A report received from and signed by each tipped employee that state the tips received during each work day;
  3. A report that shows the amount by which the wage of each tipped employee was increased by his or her tips, as calculated by the employer;
  4. A record of the hours worked each work day in which each tipped employee received tips and the total daily or weekly straight-time and overtime earnings for such hours; and
  5. A record of the hours worked each work day in which each tipped employee receives no tips, and the total daily or weekly straight-time and overtime payment made by the employer.

Complaints and Investigations
Employers should note that there is no set time period in the Ordinance that employees must file a complaint with the City’s Department of Business Affairs and Consumer Protection (BACP) or a civil action. The Rules do provide that the BACP may choose not to accept a complaint filed more than one (1) year after the disputed wages were due. However, the ability or inability of an employee to file a complaint with the BACP, does not limit their ability to file a civil action.

It is important for employers to keep good records and be aware of the potential for complaints, as once a complaint is filed with the BACP and a copy of the complaint is sent to the employer, you will have 14 days to respond. Additionally, the BACP may request specific documents or records from employers, including copies of any checks or payments made to the employee. Indeed, under the Rules failing to respond to a complaint or provide requested documents could result in the BACP issuing administrative notices of violations seeking fines of $500-$1,000, license suspension or revocation and/or restitution for employees and/or former employees.

Copies of the new rules and FAQs issued by the City may be found here:

As previously noted, Chicago’s Ordinance goes into effect July 1st. While the rules and guidance from the City of Chicago continue to develop, employers will be required to comply with the Ordinance. As such, it is important to contact your legal counsel with any questions to make sure you are in compliance due to the penalties allowed under the Ordinance.

REMINDER – Chicago Minimum Wage Ordinance Requires Notices and Wage Increases Starting July 1st!

Contributed by Michael Wong and Sara Zorich

This Wednesday, July 1, 2015, Chicago’s Minimum Wage Ordinance (Chicago Municipal Code §1-24) goes into effect, increasing the minimum wage to $10.00 per hour for non-tipped employees and $5.45 for tipped employees.

IMPORTANT NOTICE REQUIREMENTS: All employers that maintain a business facility within the geographic boundaries of  Chicago AND/OR are subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago are covered by Chicago’s Minimum Wage Ordinance and MUST do the following starting July 1st:

  1. Post Chicago’s Minimum Wage Poster by July 1st! (Click here for a Copy of the Poster)
  2. Include a copy of Chicago’s Minimum Wage Poster with the first paycheck issued after July 1st to each employee that is subject to the Ordinance (i.e. works at least 2 hours in Chicago, or at some point may work at least 2 hours in Chicago)!
  3. Include a copy of Chicago’s Minimum Wage Poster with the first paycheck of any employee hired after July 1st!

From our prior Chicago Minimum Wage Ordinance Post, here are points that you need to know about the Chicago Minimum Wage Ordinance:

  1. Covered Employers: Any individual, partnership, association, corporation, limited liability company, business trust, or any person or group of persons that has at least one employee and (1) maintains a business facility within the geographic boundaries of Chicago AND/OR (2) is subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago.
  2. Covered Employees: Any employee who works for at least 2 hours in any two-week period within Chicago’s geographic boundaries, including driving through Chicago during work (e.g., that delivery driver that takes Route 94 from Evanston to Gary and gets stuck in rush hour traffic is covered!).
  3. Hours subject to Chicago’s Minimum Wage: Chicago’s Minimum Wage only has to be paid for hours worked by the employee when he or she is physically present within the geographic boundaries of Chicago. This includes time spent driving during working hours, but does not include time commuting between home and work.
  4. Non-Tipped Employees’ Hourly Rate: Chicago’s Minimum Wage for non-tipped employees starting July 1, 2015 will be $10.00/hour, and increase as follows: July 1, 2016 to $10.50/hour; July 1, 2017 to $11.00/hour; July 1, 2018 to $12.00/hour; July 1, 2019 to $13.00/hour; and each July 1st thereafter, Chicago’s Minimum Wage will increase by an amount announced by the Commissioner of Business Affairs and Consumer Protection (and, of course, if the CCMW is less than the Illinois or Federal minimum wage, then the highest wage rate applies).
  5. Tipped Employees’ Hourly Rate: Chicago’s Minimum Wage for tipped employees starting July 1, 2015 will be the greater of the Federal or Illinois minimum wage for tipped employees plus $0.50/hour, and increase as follows: July 1, 2016 by an additional $0.50 ($1.00 total); and each July 1st thereafter, Chicago’s Minimum Wage will increase by an amount announced by the Commissioner.
  6. Penalties & Damages: A fine of $500.00 to $1,000.00 per day for each offense that is not corrected. Potential license suspension or revocations and an order to pay restitution to underpaid employees. Additionally, employees can pursue a private cause of action to recover THREE times the underpayment, attorney fees and costs.
  7. Union/CBA Issues: There is no grandfathering for current “in-force” collective bargaining agreements! This means that, depending on the provisions of a current CBA, there could be an automatic increase in all employees’ wages (i.e., if only the lowest paid employee’s rates are defined and each other level is based a percentage higher), or the union could even demand to re-open bargaining mid-contract.  We anticipate that there will be substantial controversies over this.

Newsflash: Chicago Minimum Wage Increasing to $13.00/hour

Contributed by Noah A. Frank

On December 2, 2014, the Chicago City Council approved The Chicago Minimum Wage Ordinance (Chicago Municipal Code §1-24), increasing the minimum wage to $13.00 per hour.  Here are nine points you need to know now:

  1. Covered employees are those who work for at least two hours in any two-week period within Chicago’s geographic boundaries, including driving through the city (e.g., that delivery driver that takes Route 94 from Evanston to Gary and gets stuck in rush hour traffic is covered!).  Time commuting between home and work does not count.Wage
  2. Employers with at least one covered employee are subject to the Ordinance (excluding various City entities, local, state, and federal government, and employees during certain stages of employment and in certain subsidized programs).
  3. The City of Chicago Minimum Wage (“CCMW”) only needs to be paid for work while the employee is physically present within the geographic boundaries of Chicago (you may need to determine how long your driver was stuck in traffic).
  4. CCMW for non-tipped employees will increase: on July 1, 2015 to $10.00/hour, on July 1, 2016 to $10.50/hour, on July 1, 2017 to $11.00/hour, on July 1, 2018 to $12.00/hour, and on July 1, 2019 to $13.00/hour.  Each July 1 thereafter, the CCMW will increase by an amount announced by the Commissioner of Business Affairs and Consumer Protection (and, of course, if the CCMW is less than the Illinois or Federal minimum wage, then the highest wage rate applies).
  5. For tipped employees, the CCMW will increase: on July 1, 2015 to the greater of the Federal or Illinois minimum wage for tipped employees plus $0.50/hour, and on July 1, 2016 by an additional $0.50 ($1.00 total).  Each July 1 thereafter, the CCMW will increase by an amount announced by the Commissioner.
  6. There is no grandfathering for current “in-force” collective bargaining agreements!  Unlike other municipalities’ similar recent laws, there is no exemption or safe harbor for currently in-force CBAs.  This means that, depending on the provisions of a current CBA, there could be an automatic increase in all employees’ wages (i.e., if only the lowest paid employee’s rates are defined and each other level is based a percentage higher), or the union could even demand to re-open bargaining mid-contract.  We anticipate that there will be substantial controversies over this.
  7. Notice: Employers with a physical location within Chicago must post a notice; notice must also be provided with the first paycheck subject to the Ordinance.
  8. Penalties include daily fines of $500 to $1000.
  9. Damages:  Through a private cause of action, covered employees may recover three-times the underpayment, attorney fees, and costs.

The bottom line: Employers with employees working in or traveling through Chicago should start planning for wage increases now, and review CBAs as well.

Readers are encouraged to reach out to experienced LE counsel for advice and direction.