Seyfarth Synopsis: Effective July 1, 2025, updates to several key Chicago employment laws go into effect, including (1) updates to the Chicago Fair Workweek employee coverage thresholds; (2) updates to the City’s minimum wage; and (3) new enforcement mechanisms and payout obligations for Chicago Paid Leave. In addition, the City’s employment posters have been updated for their July 1, 2025 effective date.
It’s that time of year again for Chicago employers – with July 1 bringing updates to Chicago’s key employment laws. Below, we break down what employers need to know and do to be ready for these changes.
1. Chicago Fair Workweek Ordinance: Update Employee Eligibility and Postings
- The Chicago Fair Workweek Ordinance requires Covered Employers to provide Covered Employees with advanced notice of their work schedules and additional payment (“predictability pay”) for certain changes to their work schedule after the advance notice period, among other requirements. (For more details on the Chicago Fair Workweek Ordinance generally, see Seyfarth’s prior alerts here and here).
- Covered Employees are individuals working primarily in Chicago in a Covered Industry who earn less than a defined wage threshold, which is adjusted annually – each July 1 – based on the CPI. As of July 1, 2025, the wage threshold for a Covered Employee will increase to $32.60 per hour for hourly employees and $62,561.90 per year for salaried employees. The updated amounts are reflected on the City’s updated Fair Workweek Notice.
- Employers covered by the Fair Workweek Ordinance should review their employee roster to ensure that employees earning at or under these new wage thresholds will receive advance notice of their work schedules and predictability pay for schedule changes. In addition, Covered Employers should make sure to post the updated Fair Workweek Notice, and distribute the updated notice to new hires with their first paycheck.
2. Updates To Chicago Minimum Wage and Phaseout of Tipped Wage Credit
- In accordance with the 2022 amendments to the Chicago Minimum Wage Ordinance, the City’s minimum wage increases on July 1 each year based on the CPI. Effective July 1, 2025, the new minimum wage will be $16.60 per hour for standard employers, and $12.62 for tipped workers.
- Chicago employers should take care to ensure wages are adjusted for employees earning the minimum wage.
3. Chicago Paid Leave: New Pay Out Requirements for Medium Employers and Private Right of Action Begins
- When the Chicago Paid Leave Ordinance went into effect last July, it limited the requirement for “Medium Employers – those with 51-100 Covered Employees – to pay out accrued and unused paid leave upon termination of employment. Beginning July 1, 2025, “Medium Employers” are now required to pay out up to 56 hours of accrued and unused paid leave upon termination of employment, just like “Large Employers.” This payout requirement still does not apply to “Small Employers” (those with 1-50 Covered Employees), except as otherwise required under Illinois state law.
- Many employers already provided for payment of unused paid leave (or vacation/PTO) upon separation from employment pursuant to Illinois law. Now, any Medium Employers that limited payout to 16 hours under the Paid Leave Ordinance’s original terms should ensure to adjust their practices and pay out all unused Paid Leave for separations after July 1.
- Per the Chicago Paid Leave Ordinance’s original terms, as of July 1, 2025, employees may file suit to enforce their rights under the Ordinance.
- However, for one year only – July 1, 2025 – June 30, 2026 – there is a 16 Day Cure Period before an employee can file suit.
- Accordingly, employees can only file suit for violations of Chicago Paid Leave after either (i) the payday for the next regular payroll period; or (ii) 16 days after the alleged violation occurred, whichever is shorter.
4. OLS Required Posting
- Employers with operations in Chicago should ensure that the updated Office of Labor Standards Notices are posted as of July 1.
- In addition, employers must distribute the updated Chicago Labor Laws Poster (Minimum Wage, Paid Leave and Paid Sick Leave, and Wage Theft) to Covered Employees by July 30, 2025. The new notices should also be updated in hiring and onboarding materials, and provided to new hires with their first paycheck. The updated notices can be found here.
