May 19, 2017   //   Tax   //   By Ann Behrens


Last October the Cook County Board passed an ordinance that gradually raises the minimum wage to $13 an hour by 2020.  The first increase becomes effective July 1, 2017 and raises the minimum wage to $10 per hour.  Beginning on each July 1 thereafter, the minimum wage is scheduled to increase by $1 per hour until July 1, 2020 when it reaches $13 per hour.  After July 1, 2020, future annual increases will be based on the Consumer Price Index, not to exceed 2.5%.  Special rules apply to tipped workers as defined in the Fair Labors Standards Act.  The minimum wage for such employees ($4.95 per hour currently) will not increase until July 1, 2018.  The increase will be based upon inflation.

The new ordinance generally applies to any business or individual that employs at least one employee who performs at least two hours of work in any two–week period within the geographical boundaries of Cook County.  Cook County employers are required to comply with certain notice provisions including posting in a conspicuous place a notice advising employees of their rights under the ordinance and providing a written notice stating the same with the first paycheck issued after July 1, 2017

In addition to the new minimum wage, a new ordinance provides for paid sick leave.  Employees will accrue one hour of paid sick leave for every 40 hours worked.  If an employee’s work week is less than 40 hours, sick leave will accrue based on the number of hours in their normal work week.  Accrual and usage of paid sick leave is capped at 40 hours for each 12-month period.  Employees may carry over half of their unused sick leave, up to 20 hours, to the next 12-month period.  The ordinance further provides for additional carryover and usage for employers covered by the Family and Medical Leave Act that can be used exclusively for FMLA-eligible purposes.

Failure to comply with the new ordinance can be very costly to employers.  In addition to a minimum fine of $500 per offense, the ordinance provides that an affected employee may recover damages in an amount equal to three times any underpayment plus costs and attorneys’ fees.  Each day that a violation continues is considered a separate offense to which a separate fine will apply. Thus, the cost of non- compliance can add up quickly.

The new law applies to all of Cook County, including unincorporated areas.    However, home–rule municipalities can opt out of the increase and some towns have elected to do so.  Employers should check with their municipality to determine whether their town has opted out of the new ordinance.  If not, the new minimum wage of $10 will be effective July 1, 2017.

If you have any questions on any of the above, please contact Ann Behrens, Tax Partner, or 847-649-8178.