Illinois is one of the most active states in the country when it comes to employment law. New obligations take effect almost every year, and 2026 brings a significant wave of updates spanning paid leave, pay transparency enforcement, AI in hiring, workplace transparency agreements, and a brand-new NICU leave law effective June 1.
At Lift HCM, we work with small and mid-sized businesses across Illinois to manage payroll compliance, HR obligations, and workforce administration. We understand these laws from the inside, as an Illinois employer ourselves, and as the payroll and HR partner for hundreds of Illinois businesses in restaurants, hospitality, auto repair, and professional services.
This guide consolidates everything Illinois employers need to know in 2026 in one place: minimum wage, overtime, paid leave, pay stubs, pay transparency, background checks, and the new laws that took effect this year.
Table of Contents
Illinois's statewide minimum wage holds at $15.00 per hour for 2026. The state completed its scheduled annual increases that ran from 2020 through January 2025, reaching the $15.00 target. No additional statutory increases are scheduled unless new legislation is enacted.
| Jurisdiction | Minimum Wage (2026) | Notes |
|---|---|---|
| Illinois (statewide) | $15.00/hour | No increase scheduled for 2026 |
| Illinois (youth workers under 18, <650 hrs/year) | $13.00/hour | After 650 hours, full $15.00 rate applies |
| Illinois (tipped employees) | $9.00/hour cash wage | Tip credit of $6.00/hr; tips must bring total to $15.00+ |
| Chicago (employers with 4+ employees) | $16.60/hour (effective July 1, 2025) | Adjusts annually on July 1 based on CPI; next adjustment July 1, 2026 (rate TBD) |
| Chicago tipped employees (4+ employees) | $12.62/hour cash wage | One Fair Wage phase-out: tip credit reduces to 16% effective July 1, 2026 (approx. $13.94 cash wage). Full elimination by 2028. |
| Cook County (unincorporated) | $15.00/hour | Matches statewide rate; no tip credit elimination schedule — check your specific municipality |
⚠️ Restaurant and Hospitality Employers-Chicago: Chicago is actively phasing out the tip credit under its One Fair Wage Ordinance. As of July 1, 2026, the maximum tip credit drops to 16%, raising the minimum cash wage for tipped employees to approximately $13.94/hour. This is separate from and higher than the Illinois state tip credit model. If you operate in Chicago, plan your 2026 labor budgets around the July 1 change now.
Important-Final Paychecks: Final paychecks must be issued by the next regularly scheduled payday after separation. Late final wages incur a 5% penalty per month on the unpaid amount.
Illinois follows the federal FLSA framework for overtime. Non-exempt employees must be paid at 1.5 times their regular rate of pay for all hours worked over 40 in a workweek. Illinois does not impose daily overtime thresholds, unlike California, overtime is calculated on a weekly basis only.
Two areas where Illinois employers most commonly run into trouble:
⚠️ Restaurant and Hospitality Employers-Overtime on Tipped Wages: Overtime is calculated on the full minimum wage rate, not the tipped minimum wage. If a tipped employee works overtime, you owe 1.5 × $15.00 per hour for overtime hours, then subtract the applicable tip credit. Calculating overtime on $9.00/hour is a common and costly mistake.
The Illinois Paid Leave for All Workers Act (PLAWA), which took effect January 1, 2024, requires employers to provide employees with paid leave that can be used for any reason, no documentation or explanation required.
📋 Chicago and Cook County Have Additional Requirements: Chicago's Paid Leave Ordinance requires up to 40 hours paid leave plus up to 40 hours paid sick leave annually (80 hours total), with different accrual rules than PLAWA. Cook County has its own paid sick leave ordinance. If you have employees working in Chicago, verify your policy against the Chicago ordinance, state minimums are not sufficient.
Illinois's Equal Pay Act (820 ILCS 112) requires employers with 15 or more employees to include salary and benefit information in all job postings, both internal and external, for positions that will be performed at least in part in Illinois. For a deeper dive into best practices and multi-state trends, see our pay transparency guide.
Employers must retain payroll records and job postings for at least five years. The Illinois Department of Labor may investigate anonymous complaints under an IDOL policy effective January 1, 2026-meaning a single anonymous complaint can trigger a compliance review.
🆕 New for 2026-Anonymous Complaint Enforcement: Effective January 1, 2026, the Illinois Department of Labor may treat anonymous pay transparency complaints as reportable incidents and investigate them. A first complaint results in monitoring; a second complaint against the same employer may trigger a formal investigation. Review every active job posting now, every posting must include a salary range.
Under Public Act 103-0953, effective January 1, 2025, Illinois employers must provide a pay stub for every pay period. Every Illinois pay stub must include:
Employers must also retain a copy of every pay stub for three years from the date of payment, even after an employee leaves. Current and former employees may request copies up to two times per 12-month period.
Several significant changes took effect on January 1, 2026, and one major new law becomes effective June 1, 2026.
House Bill 3638 (Public Act 104-0320) significantly expanded the Illinois Workplace Transparency Act. Employers must review and update any employment agreements, settlement agreements, and separation agreements entered into on or after January 1, 2026. For step-by-step implementation guidance including sample agreement language, see our Illinois Employment Law Changes 2026 article and the 2026 Implementation Guide.
Key changes:
💡 Drafting Note: Some legal commentators note that confidentiality provisions in settlement agreements may be interpreted to expire within five years of the alleged conduct. Consult employment counsel when drafting or updating your agreement templates.
House Bill 3773 amends the Illinois Human Rights Act to prohibit employers from using artificial intelligence in employment decisions if such use results in discrimination based on a protected class. Illinois defines AI broadly. If a tool uses any automated logic to screen, score, rank, or recommend decisions about people, it will likely be treated as AI under the law—even relatively simple tools like ATS resume parsers and interview scheduling software.
Key requirements:
Employee and applicant disclosure: Employers must notify employees at least annually and within 30 days of adopting or substantially updating an AI system. Applicants must receive disclosure before AI is used.
What notices must include: Which employment decisions the AI influences, what data it uses, which positions are affected, a named contact for questions, and how to request an alternative evaluation.
Zip code prohibition: Using zip codes as a proxy for a protected class is explicitly prohibited.
Employers using AI-powered hiring tools, applicant tracking systems with scoring algorithms, or performance management software with automated decision-making should audit their technology for potential discriminatory bias and update employee-facing disclosures. For a deeper dive into how to implement this for your organization, check our implementation guide.
Senate Bill 212 significantly expanded Illinois's lactation accommodation requirements beyond federal law, effective January 1, 2026. This is a distinct new obligation-not just an extension of prior law.
⚠️ Action Required: Update your payroll and timekeeping system to code lactation breaks as paid time, not unpaid breaks or PTO deductions. If your system auto-deducts breaks over a certain length, add an exception. Also confirm your physical lactation space meets the legal requirements before an employee requests it. For a full implementation checklist, see our 2026 Implementation Guide.
House Bill 2978 (Public Act 104-0259) creates new protected leave rights for employees whose newborn requires care in a neonatal intensive care unit (NICU).
🆕 Action Required by June 1, 2026: Update your employee handbook and leave policies, train HR and supervisors on the new leave rights and anti-retaliation provisions, and develop documentation procedures to confirm eligibility and track leave usage.
If your business filed for an EPRC in 2024, your recertification is due in 2026. This applies to private employers with 100 or more employees in Illinois who file EEO-1 reports. Recertification is required every two years from the date your original certificate was issued.
For 2026, new mandatory data fields have been added to the recertification submission:
Illinois has several laws restricting how employers can use criminal history and personal information in hiring decisions when it comes to background checks:
If your business operates in the City of Chicago, you face additional obligations beyond state law. Chicago's ordinances frequently exceed Illinois state minimums:
| Chicago Ordinance | Key Requirement |
|---|---|
| Minimum Wage | $16.60/hour for employers with 4+ employees (effective July 1, 2025). Next annual CPI adjustment July 1, 2026-monitor Chicago.gov for updated rate. Employers with 1–3 employees follow Illinois state rate ($15.00). |
| Tipped Employee Wage | $12.62/hour cash wage (effective July 1, 2025). Tip credit drops to 16% on July 1, 2026 ($13.94 cash wage). Full elimination by 2028 under One Fair Wage Ordinance. |
| Paid Leave & Paid Sick Leave | Chicago's combined ordinance requires up to 40 hours paid leave + up to 40 hours paid sick leave annually (80 hours total), with different accrual rules than PLAWA. |
| Fair Workweek Ordinance | Covered employers (hospitality, food service, building services, healthcare, hotels, manufacturing, retail, and warehouses with 100+ employees) must provide predictive scheduling with at least 10 days' advance notice. |
| Sexual Harassment Prevention | All Illinois employers must conduct annual sexual harassment training; Chicago requires additional bystander intervention training and extra hours for managers. |
| Cook County Sick Leave | Unincorporated Cook County has its own paid sick leave ordinance-check your specific municipality. |
Q: Is the Illinois minimum wage going up in 2026? No. The Illinois statewide minimum wage remains at $15.00 per hour for 2026, this was the final step in the multi-year increase schedule that ran from 2020 through January 2025. No future automatic increases are built into the current law; any future raise would require new legislation. Chicago's minimum wage does adjust annually on July 1 based on the Consumer Price Index.
Q: What is the Chicago minimum wage in 2026? As of July 1, 2025, Chicago's minimum wage is $16.60 per hour for employers with 4 or more employees. Chicago's rate adjusts each July 1, the next adjustment takes effect July 1, 2026, with the new rate announced by the City of Chicago in spring 2026. Monitor Chicago.gov for the updated figure. Employers with 1–3 employees in Chicago must follow the Illinois state rate of $15.00.
Q: Does Illinois require employees to give a reason for taking paid leave? No. Under the Illinois Paid Leave for All Workers Act, employees may take their accrued paid leave for any reason without providing documentation or explanation. Employers may not require employees to find a replacement worker as a condition of taking leave.
Q: What changed about the Illinois Workplace Transparency Act in 2026? The WTA amendments (effective January 1, 2026) expand employee protections in several key ways: they broaden the definition of "unlawful employment practices" to include wage and safety violations (not just discrimination and harassment); require that confidentiality clauses in settlement agreements be supported by separate, distinct consideration; void clauses that shorten statutes of limitations or require out-of-state venues; and add consequential damages as a new remedy. All employment, settlement, and separation agreements entered into or modified on or after January 1, 2026 must comply.
Q: When does the NICU leave law take effect and who does it cover? The Family Neonatal Intensive Care Leave Act (NICLA) takes effect June 1, 2026. It applies to all Illinois employers with 16 or more employees. Employers with 16–50 employees must provide up to 10 days of unpaid, job-protected leave; employers with 51 or more employees must provide up to 20 days. The leave is in addition to FMLA, but FMLA-eligible employees must exhaust their FMLA entitlement first, after which NICU leave applies.
Q: What do Illinois employers need to know about AI in hiring in 2026? Effective January 1, 2026, Illinois employers may not use AI in employment decisions, including recruiting, hiring, promotion, or discipline, if that use results in discrimination based on a protected class. Employers must also notify employees when AI is being used to make employment-related decisions. Employers should audit their hiring technology, review vendor agreements for bias mitigation documentation, and update any employee-facing disclosures.
Q: Do I need to include pay ranges in job postings if I only have a few employees in Illinois? Pay transparency requirements apply to employers with 15 or more employees. If you have fewer than 15 employees, you are not currently covered by the Illinois Equal Pay Act's posting requirement, but including pay ranges is still a best practice for attracting candidates and staying ahead of potential future requirements.
Q: What are Illinois's new paid lactation break requirements in 2026? Effective January 1, 2026, Illinois employers with 5 or more employees must provide paid break time, up to 30 minutes per session, for employees to express breast milk for up to one year after childbirth. Breaks cannot be deducted from PTO, vacation, or sick leave. You must also provide a private, non-bathroom space with seating and an electrical outlet. The key change from prior law is that breaks are now required to be paid at the employee's regular rate.
Q: Do I need to recertify my Equal Pay Registration Certificate in 2026? If you're a private Illinois employer with 100 or more employees who files EEO-1 reports, and you received your EPRC in 2024, your recertification is due in 2026, exactly two years from your certificate issue date. New data fields are required for 2026 submissions, including hourly/salary designation, county of work, and collective bargaining status. Penalties for missing the deadline or non-compliance range from $10,000 to $70,000 for repeat violations.
Q: How long do I have to keep pay stubs in Illinois? llinois requires employers to retain pay stubs for three years from the date of payment, even after an employee leaves the company. Current and former employees may request copies of their pay stubs up to two times per 12-month period, and you must be able to provide them.
For years, Illinois employers have navigated a growing stack of labor law obligations, and 2026 is no exception. Between WTA amendments, AI hiring restrictions, the upcoming NICU leave law, pay stub mandates, paid leave accrual tracking, and Chicago's evolving wage and scheduling requirements, staying fully compliant requires active attention, not just annual check-ins.
Now you have a complete view of what's required in 2026, from minimum wage and overtime to new leave rights and agreement drafting rules. Whether you need to update your handbook, audit your hiring tools, or ensure payroll is calculating tipped overtime correctly, you can take action from a place of clarity.
With solutions like those we offer at Lift HCM, Illinois businesses can stay ahead of compliance automatically, with payroll that calculates correctly across all employment types, HR tools that update with regulatory changes, and a local team that knows Illinois law from the ground up. We're a Lisle, IL-based HCM solutions provider, and we serve employers across the state in restaurants, hospitality, auto repair, professional services, and much more.
Not sure if your payroll and HR are fully compliant for 2026? Contact Lift HCM for a compliance review, we'll identify your gaps and show you how the isolved platform makes staying current much simpler.