Chicago labor ordinances/upgrades take effect

Notices

Chicago businesses are required to post public notices related to minimum wage, paid leave and paid sick and safe leave, and the Fair Workweek ordinance, in a conspicuous place at the place of employment. Chicago businesses must also provide the notices to employees with their first paycheck.

Leave

To recap under the Paid Leave and Paid Sick and Safe Leave ordinance, Chicago-based workers receive up to five days of paid leave and five days of paid sick leave each 12-month period for any employee working more than 80 hours within any 120-day period. “Employers” under the ordinance includes any person who gainfully employs at least one employee within the geographical boundaries of Chicago (including remote workers). Employers have flexibility in defining the 12-month period during which leave will be assessed.

Paid Leave requirements include:

• Employees accrue at a rate of one hour of paid leave for every 35 hours worked (up to 40 hours in a 12-month benefit period)
• Employees must be allowed to use accrued paid leave no later than on the 90th day following the commitment of employment
• Employees can carry over up to 16 hours between 12-month periods (if paid leave is not front loaded)
• Employees can use paid leave for any reason

Paid Sick and Safe Leave requirements include:

• Employees accrue at a rate of one hour of sick leave for every 35 hours worked (up to 40 hours in a 12-month period)
• Employees must be allowed to use accrued sick leave no later than on the 30th day following the commitment of employment
• Employees can carry over up to 80 hours between 12-month benefit periods
• Employees can use paid sick leave for medical and safety reasons

As of July 1, 2025, payouts for Paid Leave upon termination increased for employers based on their size:

• Small employers (1-50 covered employees) are not required to pay out Paid Leave upon termination
• Mid-size employers (51-100 covered employees) are required to, upon termination of employment, pay out up to 16 hours of unused Paid leave through June 30, 2025, and all Paid Leave as of July 1, 2025 ( (up to 56 hours) 
• Large employers (100+ covered employees) are required to, upon termination of employment, pay out all unused Paid Leave (up to 56 hours) 

Additionally, as of July 1, 2025, employees now have a private right of action against their employers for violations of the City’s Paid Leave laws. However, there is a 16-day cure period in effect for the next year (from July 1, 2025 through June 30, 2026) that allows an employer in violation of the Paid Leave laws to correct the issue.

The Ordinance also clarifies that employee sick leave requests may be denied if it prevents continuity of business operations, and lists certain factors to consider when making that determination.

Minimum Wage

Chicago’s Minimum Wage Ordinance includes annual minimum wage increases based on the lower of changes to the Consumer Price Index or 2.5%. This year, the following increases took effect under the City’s Minimum Wage Ordinance on July 1, 2025, as scheduled:

• The minimum wage will be $16.60
• The minimum wage for subsidized youth employment programs and subsidized transitional employment programs will be $16.50
• Under the One Fair Wage Ordinance, the wages of tipped workers such as restaurant servers, bartenders, bussers and runners who earn a subminimum wage of $12.62 per hour will increase by eight percent per year until it reaches parity with Chicago’s standard hourly minimum wage on July 1, 2028.

Other compensation and work schedule changes

In addition to the new updates to minimum wage and paid leave, Chicago’s Fair Workweek Ordinance contains upgrades for Chicago-based workers. Specifically, the Fair Workweek Ordinance requires certain employers to provide workers with predictable work schedules and compensation for changes. Employees are covered by the ordinance if they work in one of seven “covered” industries (Building Services, Healthcare, Hotels, Manufacturing, Restaurants, Retail, and Warehouse Services), earn less than or equal to $32.60/hour or earn less than or equal to $62,561.90/year, and the employer has at least 100 employees globally (or 250 employees and 30 locations for a restaurant). Covered employees are entitled to:

• Advance notice of work schedule
• Right to decline previously unscheduled hours
• One hour of Predictability Pay for any shift change within 14 days
• Right to rest by declining work hours less than 10 hours after the end of previous day’s shift

Next steps for employers

Employers with operations in Chicago should take this opportunity to review internal practices, notices, recordkeeping practices, and other workplace policies to ensure that existing documents and practices reflect the current state of the rules. You should also note that the Ordinance contains provisions for unlimited leave in lieu of compliance with the above requirements, and consider training HR personnel and relevant managers on compliance issues. 

A particular challenge of the Chicago Ordinance is the interplay with the Cook County Paid Leave Ordinance and the Illinois Paid Leave for all Workers Act. Employers with a few employees in Chicago and others just outside Chicago or other parts of Illinois may find themselves facing a patchwork of regulations within the same state. Importantly, employers must take stock of the employee list to identify work locations.