In recent years, the number of restaurants — both national chains and local establishments — that have faced wage and hour lawsuits have been on the rise. Therefore, it is imperative that restaurant owners pay attention to the rules that dictate how employees, especially tipped employees, are to be paid under federal and state law.

Like many other cities around the country, Chicago has implemented an increase to the city’s minimum wage, effective July 1, 2016. This increase was part of an ordinance passed by the Chicago City Council in December 2014, an ordinance designed to raise the minimum wage for Chicago workers to $13 per hour by 2019. Effective July 1, the hourly minimum wage for Chicago workers is now $10.50 per hour. Additionally, the ordinance increased the minimum wage for tipped employees to $5.95 per hour.

Business owners who maintain a business facility within the city of Chicago, and/or are required to obtain a business license to operate in the city, are subject to this minimum wage ordinance.   Employees who work two hours in the city within the period of two weeks qualify for the minimum wage required by this ordinance, including domestic employees and home health care workers. Unions may choose to waive its members’ rights to collect the minimum wage as part of a collective bargaining agreement.

It should be noted that this ordinance does not apply to all workers. For example, employees taking part in government-subsidized temporary youth employment programs, transitional employment programs or employees of any governmental entity other than the City of Chicago do not qualify under this ordinance. Additionally, certain employees who are exempt under state law, including employees under the age of 18, adult employees in their first 90 days of employment and employees working at a business with three or fewer employees, not counting the employer’s parents, spouse, children or other members of the employer’s immediate family

Chicago is one of many major cities giving raises to its minimum wage employees. According to the mayor’s office, approximately 270,000 Chicagoans received a pay increase on July 1, 2016. It is estimated that when the final increase to $13 per hour has been reached in 2019, the wage increases will have brought hundreds of thousands out of poverty and added $860 million to the economy of the city of Chicago.

If you have any questions, please contact Ken Kobiernicki or your ORBA advisor at 312.670.7444. Visit ORBA.com to learn more about our Restaurant Group.