Illinois HR Compliance Guide for Employers
Complete Illinois HR compliance guide: BIPA, paid leave (PLAWA), minimum wage, hiring rules, Chicago requirements, and state labor laws for employers.
Illinois HR Compliance
BIPA, PLAWA, mandatory training, and Chicago's own employment rules
In my view, Illinois sits with California and New York among the most heavily regulated states for employers. Below, I cover the state rules a small Illinois employer has to get right, from the first hire to the final paycheck, plus the Chicago ordinances layered on top. If you are expanding from Texas or Florida, the compliance gap is significant. If you are moving from California, you will find familiar territory with different specifics.
Either way, several Illinois requirements catch employers off guard, and five matter most. The Biometric Information Privacy Act (BIPA) gives every person whose biometric data is misused a private right of action, with statutory damages up to $5,000 per violation. The Paid Leave for All Workers Act (PLAWA) requires every employer not covered by the Chicago or Cook County paid leave ordinances (including those with one employee) to provide 40 paid hours of leave annually for any purpose.
Every employer with even one employee must also conduct annual sexual harassment training. Secure Choice auto-enrolls employees into a Roth IRA once you have at least five Illinois employees and no retirement plan. And Chicago operates as a separate compliance jurisdiction with its own minimum wage, leave rules, scheduling ordinance, and harassment training requirements. FirstHR was built to handle exactly this complexity for small business teams without a dedicated HR department.
Illinois Employment Law Fundamentals
At-Will Employment and Its Exceptions
Illinois is an at-will employment state. Either party may end the employment relationship at any time, for any or no reason. Illinois courts recognize three exceptions. The public policy exception (established in Palmateer v. International Harvester) prohibits firing employees for refusing to commit an illegal act or for exercising a legal right.
The implied contract exception applies when handbook language or verbal statements create a reasonable expectation of continued employment. The third exception is statutory: the anti-discrimination protections of the Illinois Human Rights Act (IHRA). The implied covenant of good faith and fair dealing works narrowly here: Illinois courts use it to police how a party exercises discretion a contract grants, and it cannot override a contract's express terms (Leak v. Board of Education, 2015 IL App (1st) 143202).
Illinois is not a right-to-work state, which is a separate question from at-will status. The Workers' Rights Amendment, approved by Illinois voters on November 8, 2022, made collective bargaining a constitutional right and bars any law that prohibits union-security agreements, which rules out right-to-work legislation in Illinois. Employers may enter union security agreements requiring employees to pay dues as a condition of employment. In public sector employment, mandatory fees are prohibited following Janus v. AFSCME (2018).
Illinois WARN Act: 75 Employees, Not 100
Illinois has its own WARN Act (820 ILCS 65/, effective January 1, 2005) that applies at a lower threshold than the federal law. Illinois WARN covers employers with 75 or more full-time employees working 20 or more hours per week for 6 or more months. It requires 60 days' advance notice before a plant closing or mass layoff.
The mass layoff trigger is lower than the federal one too: 33 percent of the workforce plus at least 25 employees, or 250 or more employees at a single location. Notify affected employees, the Department of Commerce and Economic Opportunity (DCEO), local elected officials, and the Illinois Department of Labor (IDOL). Penalties include back pay and benefits for up to 60 days plus a civil penalty of up to $500 for each day of the notice violation.
Worker Classification: The ABC Test
For unemployment insurance purposes, Illinois uses the ABC test (820 ILCS 405/212), which is stricter than the federal IRS right-to-control test. All three conditions must be satisfied: the worker is free from control and direction in performing the work; the service is performed outside the usual course of business or outside all places of business; and the worker is engaged in an independently established trade, occupation, profession, or business.
For the construction industry specifically, the Employee Classification Act (820 ILCS 185) presumes that anyone performing services for a contractor is an employee. The contractor rebuts it by showing the worker passes a three-part test like the unemployment one, or qualifies as a legitimate sole proprietor or partnership under a 12-part test.
The 12-part test looks at how the worker's business actually operates. Among its factors: the business has a substantial capital investment beyond ordinary tools and a personal vehicle, owns the capital goods and bears the losses, and furnishes its own tools and equipment.
Hiring and Onboarding Requirements
E-Verify: Voluntary for Illinois Private Employers
Illinois imposes no E-Verify mandate on private employers. The state is absent from the list of E-Verify mandate states, so enrollment here is a choice rather than a condition of doing business, and the federal mandate reaches only federal contractors. Employers that do enroll keep the ordinary Form I-9 duties on top of it.
The Right to Privacy in the Workplace Act (820 ILCS 55) then sets the guardrails. It bars an employer from taking adverse action against an employee based solely on a no-match letter from the Social Security Administration or the IRS, and it requires the employer to give the employee notice when such a notification arrives (Illinois Department of Labor). Build that notice into your process before you enroll, not after the first mismatch lands.
Background Checks: Ban-the-Box at Two Levels
Illinois has two overlapping ban-the-box frameworks. The Job Opportunities for Qualified Applicants Act (JOQAA, 820 ILCS 75, effective January 1, 2015) applies to employers with 15 or more employees and prohibits asking about criminal history until the applicant has been determined qualified and notified of selection for an interview, or, where there is no interview, until after a conditional offer.
The second layer comes from the Human Rights Act. SB 1480 (effective March 23, 2021) amended the IHRA to make it a civil rights violation to use a conviction record as a disqualifying factor without conducting a mandatory individualized assessment of the relationship between the conviction and the specific job duties.
Drug Testing and Cannabis
Cannabis has been a lawful product under Illinois law since the Cannabis Regulation and Tax Act (CRTA, 410 ILCS 705/10-50, effective January 1, 2020). Employers may maintain reasonable and non-discriminatory drug-free workplace policies and may test applicants and employees for cannabis. A positive drug test alone is not proof of impairment.
The CRTA impairment standard requires a good faith belief based on articulable symptoms of impairment such as speech, coordination, or behavioral indicators. Employers must give employees a reasonable opportunity to contest a finding of impairment before taking adverse action. Carve-outs exist for DOT-regulated positions and federal Drug Free Workplace Act contractors.
Pay Transparency: Two Overlapping Layers
Illinois has two pay-related restrictions on hiring. The salary history ban (820 ILCS 112, effective September 29, 2019) applies to all employers and prohibits asking about a candidate's current or prior compensation. Since January 1, 2025, employers with 15 or more employees must also include the pay scale or salary range in every job posting (internal and external), along with a general description of benefits and other compensation.
Promotional opportunities must be posted and current employees notified within 14 days. Keep the related records for 5 years. If a noncompliant posting is still active when IDOL rules on it, the civil penalty ladder runs up to $500 for a first offense, up to $2,500 for a second, and up to $10,000 for a third, with 14 days to cure the first and 7 days to cure the second.
Larger employers carry one more pay obligation. Employers with 100 or more employees must obtain an Equal Pay Registration Certificate (EPRC) from the IDOL, renewable every two years.
Child Labor: Certificates and Hour Limits for Minors
Illinois child labor law was rewritten by the Child Labor Law of 2024 (820 ILCS 206, P.A. 103-721), effective January 1, 2025, and it governs the employment of minors under 16. Before the minor starts, you provide a letter of intent to hire describing the duties and the schedule, and the minor obtains an employment certificate from the school district issuing officer.
The hour limits are firm. A minor under 16 may work no more than 3 hours on a school day, no more than 8 hours in any 24-hour period, no more than 18 hours in a week when school is in session, and no more than 40 hours in a week when it is not (Illinois Department of Labor).
Work is permitted only between 7 a.m. and 7 p.m. from Labor Day until June 1, and between 7 a.m. and 9 p.m. from June 1 until Labor Day. A meal period of at least 30 minutes must begin no later than the fifth consecutive hour of work. Hazardous occupations are prohibited, and federal rules govern workers who are 16 and 17.
Wages, Hours, and Pay Rules
Minimum Wage Rates
| Category | Illinois State | Chicago | Cook County |
|---|---|---|---|
| Standard (18+) | $15.00/hour | $17.05/hour (4+ employees) | $15.40/hour |
| Tipped employees | $9.00/hour (40% tip credit) | $12.96/hour | $9.25/hour |
| Youth (under 18, <650 hours) | $13.00/hour | $17.05/hour (full city rate) | State rate applies |
| Training wage (first 90 days) | $14.50/hour | N/A (Chicago uses its own rate) | $14.90/hour (up to $0.50 below county rate) |
The $15.00 statewide rate is the final step in a phased increase enacted by Public Act 101-0001 (2019), and no further automatic increases are scheduled at the state level.
Chicago moves separately. The city rate rises every July 1 by the change in the Consumer Price Index (CPI) or 2.5 percent, whichever is lower, and stands at $17.05 for employers with four or more employees. Domestic workers there are covered whatever the size of the household that employs them, and since July 1, 2026 workers under 18 get the full city rate too.
Cook County runs a third rate. Its ordinance pays the greatest of the federal rate, the Illinois rate, or the county CPI calculation, which produced $15.40 an hour and $9.25 for tipped employees from July 1, 2026. A number of municipalities inside the county have opted out of the ordinance, so confirm the village or city before you set a rate.
Rates move, and local ordinances move separately from the state figure. The Illinois minimum wage page carries the current rate, the next scheduled increase, the tipped and youth rates, and any city or county rate that applies.
Overtime: Illinois Differences from the FLSA
Illinois overtime law tracks the federal Fair Labor Standards Act: it follows the weekly FLSA trigger of 1.5x for hours over 40 per week. There is no daily overtime.
The main difference sits at the top of the pay scale. Illinois's Minimum Wage Law (820 ILCS 105/4a) does not recognize the FLSA's Highly Compensated Employee exemption. An employee who earns more than $107,432 per year may be exempt from federal overtime but is still entitled to overtime under Illinois law. Preliminary and post-shift activities that are compensable under FLSA are similarly compensable under Illinois law.
Illinois does not cap the hours an adult employee may be required to work. Mandatory overtime is lawful as long as hours over 40 in a workweek are paid at 1.5x. The constraint is the One Day Rest in Seven Act, covered below: 24 consecutive hours of rest in each 7-day period, with seventh-day work requiring an IDOL permit and the employee's voluntary agreement.
One Day Rest in Seven Act (ODRISA)
The ODRISA (820 ILCS 140), updated by SB 3146 effective January 1, 2023, requires employers to provide 24 consecutive hours of rest in every 7-day work period. For shifts of 7.5 hours or more, a 20-minute meal break must begin no later than 5 hours into the shift, and the Illinois Department of Labor requires one further 20-minute meal period for every additional 4.5 continuous hours worked.
Reasonable toilet breaks are required separately from the meal break. Penalties are up to $250 per violation for employers with fewer than 25 employees and up to $500 for larger employers.
Illinois has no 15-minute break law, which is the most common misconception about Illinois break rules. ODRISA requires a 20-minute meal period, not a paid rest break, plus reasonable restroom breaks. If you do offer short rest breaks, federal rules treat any break of 20 minutes or less as hours worked that must be paid (US Department of Labor).
Wage Payment and Collection Act (IWPCA)
The IWPCA (820 ILCS 115) governs wage payment timing and deductions. Non-exempt employees must be paid at least semi-monthly (twice per month), no later than 13 days after the close of the pay period. Executives, administrators, and professionals may be paid monthly. Final wages for any separation are due no later than the next regular payday.
All deductions except legally required withholdings require written employee authorization. Vacation is treated as earned wages, so accrued vacation must be paid out at termination. A use-it-or-lose-it policy is allowed only if employees get a reasonable opportunity to take the time and had notice of the policy (Illinois Department of Labor).
Pay stub rules tightened on January 1, 2025. Employers must keep a copy of each pay stub for at least 3 years and provide copies within 21 calendar days of an employee's request, though they need not grant more than two requests in a 12-month period.
Leave Requirements: PLAWA and More
Paid Leave for All Workers Act (PLAWA): The Most Important Illinois Leave Law
The PLAWA (820 ILCS 192, effective January 1, 2024) is one of the most expansive paid leave laws in the country. It applies to Illinois employers of every size, nonprofits and religious organizations included, and to all workers including part-time, temporary, and seasonal employees.
The exception turns on local law, not geography. PLAWA does not apply to an employer covered by a municipal or county paid leave ordinance in effect on January 1, 2024, such as Chicago's or Cook County's. An employer that such an ordinance does not require to give paid leave is covered by PLAWA instead (820 ILCS 192/15(p)).
Every employee accrues 1 hour of paid leave for every 40 hours worked, up to 40 hours per year. Alternatively, employers may frontload 40 hours at the start of the year or benefit period. Employees may begin using the leave after 90 days of employment. Unused accrued hours carry over to the next year (frontloaded hours do not). Payout at termination is not required unless the employer classifies the leave as vacation.
Most important, the leave can be used for any purpose. You cannot require documentation, ask for a reason, or deny a request on the basis that you disagree with the purpose. The accrual rate, the 40-hour cap, and the no-questions-asked rule all come straight from the Illinois Department of Labor.
VESSA: Domestic and Sexual Violence Leave
The Victims' Economic Security and Safety Act (VESSA, 820 ILCS 180) applies to all employers with one or more employees and provides job-protected leave for victims of domestic violence, sexual violence, gender violence, or any violent crime. The leave is unpaid and the amount scales with employer size: 4 weeks for employers with 1 to 14 employees, 8 weeks for 15 to 49, and 12 weeks for 50 or more.
VESSA also covers up to 2 workweeks of bereavement leave when a family or household member is killed in a crime of violence. Those weeks come out of the VESSA allotment unless the employee also qualifies under the Family Bereavement Leave Act. Strict confidentiality of all VESSA-related information is mandatory, and reasonable accommodations for ongoing safety concerns are required.
| Leave Type | Law | Threshold | Amount and Type |
|---|---|---|---|
| PLAWA: Paid Leave for All Workers | 820 ILCS 192 | All employers not covered by the Chicago or Cook County paid leave ordinances; all workers | 40 paid hours/year, any purpose, no documentation |
| VESSA: Domestic and Sexual Violence | 820 ILCS 180 | 1+ employees | 4-12 weeks unpaid depending on employer size |
| Family Military Leave | 820 ILCS 151 | 15-50 (15 days); 51+ (30 days) | Unpaid |
| Blood Donation | 820 ILCS 149 | 51+ employees | 1 hour every 56 days (paid) |
| Organ Donation | 820 ILCS 149 | 51+ employees | Up to 10 days in any 12 months (paid) |
| School Visitation | 820 ILCS 147 | 50+ employees | 8 hours/school year (unpaid) |
| Voting Leave | 10 ILCS 5/17-15 | All employers | 2 hours (paid) |
| Jury Duty | 705 ILCS 305/4.1 | All employers | Cannot discharge; unpaid (except FLSA-exempt) |
| Family Bereavement | 820 ILCS 154 | 50+ employees (FMLA-covered) | 10 workdays unpaid |
| Child Extended Bereavement | 820 ILCS 156 | 50-249 (6 weeks); 250+ (12 weeks) | Unpaid, for loss of a child to suicide or homicide |
| Federal FMLA | 29 U.S.C. §2601 | 50+ employees (75-mile radius) | 12 weeks unpaid |
| Civil Air Patrol | 820 ILCS 148 | 15-50 (15 days); 51+ (30 days) | Unpaid |
Illinois FMLA: There Is No State Equivalent
Illinois has no state family and medical leave act. Job-protected leave for a serious health condition, a new child, or the care of a family member comes from the federal FMLA, which reaches employers with 50 or more employees within a 75-mile radius and provides 12 unpaid weeks. Below that headcount, no general medical leave entitlement applies in Illinois.
What the state adds instead is a set of narrower leaves that a small employer reaches long before FMLA coverage: VESSA from the first employee, PLAWA's 40 paid hours for any purpose, voting and jury duty leave for all employers, and family military, bereavement, and school visitation leave at higher thresholds. The table above lists each one with its statute and threshold.
Anti-Discrimination: IHRA and Mandatory Training
Illinois Human Rights Act (IHRA): 20+ Protected Classes
The IHRA (775 ILCS 5/) is a far broader anti-discrimination law than its federal counterparts. Since January 1, 2025, it covers 20 or more protected classes, two of which were added that year: family responsibilities (the status of being a parent, caregiver, or guardian of a minor child or adult with a disability) and reproductive health decisions. The list the Illinois Department of Human Rights (IDHR) publishes also reaches language, arrest record, and order of protection status, none of which appear in federal law.
The coverage threshold is the part employers get wrong. IDHR states that for most discrimination claims the employer must have had at least 1 employee for each working day in 20 or more calendar weeks in the current or preceding year, and that where the claim involves sexual harassment, disability, pregnancy, childbirth, or a related condition, one employee is enough and every employer is covered. There is no 15-employee floor in Illinois.
A charge is filed with IDHR, and the window is long. The agency instructs workers to file within 2 years of when the discrimination happened, an extension of the old 300-day deadline that took effect on January 1, 2025 under Public Act 103-0973. Practically, that means personnel records and manager notes stay relevant far longer than most small employers keep them.
| Protected Class | Employer Threshold | Notes |
|---|---|---|
| Race (includes CROWN Act protections) | 1+ employees, 20+ calendar weeks | Hair texture, protective hairstyles covered |
| Color, religion, national origin, ancestry | 1+ employees, 20+ calendar weeks | Standard IHRA coverage |
| Age (40+) | 1+ employees, 20+ calendar weeks | Reaches employers far below the federal ADEA threshold of 20 |
| Sex | 1+ employees, 20+ calendar weeks (no 20-week test for sexual harassment or pregnancy) | Includes pregnancy, childbirth, and sexual harassment |
| Sexual orientation | 1+ employees, 20+ calendar weeks | All sexual orientations |
| Gender identity | 1+ employees, 20+ calendar weeks | Gender expression included |
| Marital status | 1+ employees, 20+ calendar weeks | Illinois-specific protection |
| Order of protection status | 1+ employees, 20+ calendar weeks | Illinois-specific protection |
| Disability | 1+ employees, no 20-week test | Every employer is covered, unlike the federal ADA threshold of 15 |
| Military status / unfavorable discharge | 1+ employees, 20+ calendar weeks | Broader than federal protections |
| Pregnancy, childbirth, and related conditions | 1+ employees, no 20-week test | Accommodations required |
| Citizenship / work authorization status | 1+ employees, 20+ calendar weeks | Illinois-specific protection |
| Conviction record | 1+ employees, 20+ calendar weeks | SB 1480 (2021): must do individualized assessment |
| Family responsibilities | 1+ employees, 20+ calendar weeks | Added January 1, 2025 |
| Reproductive health decisions | 1+ employees, 20+ calendar weeks | Added January 1, 2025 |
Annual Sexual Harassment Training: Required for All Employers
SB 75 (775 ILCS 5/2-109, effective January 1, 2020) requires all Illinois employers with one or more employees to provide annual sexual harassment prevention training to every employee, including part-time, seasonal, and intern workers. The training deadline is December 31 of each calendar year. Content must include a definition of sexual harassment, examples of unlawful conduct, a review of applicable Illinois and federal law, the remedies available to victims, and the employer's responsibilities.
IDHR publishes a free model training program that satisfies the requirement. Restaurants and bars must conduct an additional specialized training and provide a written harassment policy in both English and Spanish. Employers must disclose adverse judgments and administrative rulings on sexual harassment or discrimination to IDHR each year by July 1.
Pregnancy Accommodations and Genetic Information
Illinois requires reasonable pregnancy accommodations for all employers with one or more employees (775 ILCS 5/2-102(I)-(K)). This includes schedule modifications, additional bathroom breaks, light duty assignments, temporary transfer, and private space for expressing breast milk. An interactive accommodation process is mandatory, and employers cannot force employees onto leave when a reasonable accommodation is available.
The Nursing Mothers in the Workplace Act (820 ILCS 260) adds a pay rule: reasonable break time to express milk for one year after the child's birth, with no reduction in compensation for that time, unless the breaks would cause undue hardship. The pregnancy accommodation duty also extends to menopause-related conditions on January 1, 2027 (Public Act 104-0793).
Genetic information gets its own protection. The Illinois Genetic Information Privacy Act (410 ILCS 513) prohibits conditioning employment or its terms on genetic information, with a private right of action and liquidated damages that exceed even BIPA levels. Treat family medical history as off limits everywhere it tends to surface: pre-employment physicals, wellness questionnaires, and return-to-work paperwork.
BIPA: Illinois Biometric Data Law
The Biometric Information Privacy Act (740 ILCS 14/) backs its rules with a private right of action: any person aggrieved by a violation can sue for statutory damages. Before collecting any biometric identifier (fingerprint, retinal scan, iris scan, face geometry, hand geometry, voiceprint), you must do two things. First, publish a written retention and destruction policy and make it publicly available. Second, obtain a written or electronic consent from each individual specifying the purpose for collection and the duration for which it will be retained.
Once you hold the data, the limits are strict. You cannot sell, lease, trade, or otherwise profit from biometric data at all, and you cannot disclose it without the person's consent unless a narrow exception such as a warrant or a legal requirement applies. You must protect biometric data using a reasonable standard of care.
| BIPA Requirement | Details |
|---|---|
| Written retention policy | Must be publicly available BEFORE any collection. Include how long data is retained and when it is destroyed. |
| Written consent per person | Must be obtained BEFORE collecting from each individual. Electronic signatures accepted since SB 2979 (2024). |
| No sale or profit | Cannot sell, lease, trade, or profit from biometric data under any circumstances. |
| No disclosure without consent | Cannot share with third parties (including vendors) without the person's consent, outside narrow exceptions such as a warrant or a legal requirement. |
| Reasonable care standard | Protect biometric data to the same standard as other confidential employee information. |
| Statute of limitations | 5 years (Tims v. Black Horse Carriers, 2023) |
| Damages per person (SB 2979) | $1,000 negligent / $5,000 intentional per person (not per scan) + attorney's fees |
Workers' Compensation
Workers' compensation is mandatory for all Illinois private employers with one or more employees (820 ILCS 305/), beginning on the first day of hire. Coverage requirements and forms come from the Illinois Workers' Compensation Commission (IWCC). Illinois has no state workers' comp fund, so coverage is available only through private insurers or, with the Commission's permission, through self-insurance.
Accident reports go to the Commission electronically, filed by the employer or its insurer. Reports of a death are due within two work days, and nonfatal injuries involving more than three lost workdays are reported within the month, according to the IWCC accident reporting rules.
The Illinois workers compensation page has the detail: the headcount at which coverage becomes mandatory, who is excluded, where to buy the policy, the injury reporting deadlines, and what going without coverage costs.
Penalties for operating without required coverage are severe. The Commission may fine an employer that knowingly and willfully fails to insure up to $500 for every day of noncompliance, with a minimum fine of $10,000. Corporate officers who negligently fail to obtain insurance commit a Class A misdemeanor, and a knowing failure is a Class 4 felony. The IWCC can also issue a work-stop order that halts business operations until coverage is in place.
The civil exposure is the part owners underestimate. An employer that knowingly goes uninsured loses the protection of the Workers' Compensation Act, so an injured worker may sue in civil court, where benefits are not capped by the Act and the burden shifts to the employer to prove it was not negligent.
Workplace safety runs on a separate track. Illinois has no state-run safety plan for private sector workers, so the federal Occupational Safety and Health Administration (OSHA) has full, direct jurisdiction over every private employer in the state. Illinois OSHA covers only state and municipal government employees.
Employee Privacy and Data Protection
Right to Privacy in the Workplace Act
The Right to Privacy in the Workplace Act (820 ILCS 55) protects employees' lawful off-duty activities. Employers cannot discharge or discipline employees for using legal products outside of work. Section 10(b) prohibits employers from requiring passwords or access to employees' personal social media accounts. Section 10(a) prohibits asking about workers' compensation claims made at previous employers. E-Verify remains voluntary under Section 12.
Personal Information Protection Act (PIPA)
The Illinois PIPA (815 ILCS 530) requires data breach notification. Private companies must notify affected individuals within a reasonable time without undue delay. There is no specific day limit for private companies (a 45-day deadline exists only for state agencies). If a single breach affects more than 500 Illinois residents, you must also notify the Attorney General, no later than when you notify the residents.
Personal information covered includes Social Security numbers, driver's license numbers, financial account credentials, medical information, biometric data, and usernames with passwords. An encryption safe harbor applies: if data was encrypted and the encryption key was not compromised, notification is not required. Penalties include up to $50,000 per violation when the failure was with intent to defraud.
Two more Illinois laws limit what you can require of employees. The Worker Freedom of Speech Act (820 ILCS 57), effective January 1, 2025, bars employers from disciplining or firing an employee who declines to attend an employer-sponsored meeting held to communicate the employer's opinion on religious or political matters (captive audience meetings). The Workplace Transparency Act (820 ILCS 96) limits mandatory nondisclosure agreements in settlements involving harassment and discrimination, and restricts waivers of jurisdiction and of the statute of limitations.
Termination, Non-Competes, and Separation
Final Paycheck and Termination
Under the IWPCA (820 ILCS 115/5), the final paycheck is due at the time of separation where that is possible, and in no case later than the next regularly scheduled payday, for voluntary and involuntary separations alike. Illinois has no hard same-day rule of the kind California enforces.
The final paycheck must include all earned wages, commissions, bonuses, and the monetary equivalent of accrued vacation. You cannot withhold a final paycheck because an employee failed to return equipment, and officers and agents of the company face personal liability for IWPCA violations.
Vacation earned under your policy and still unused at separation must be paid out. A use-it-or-lose-it rule can forfeit time only at the end of a period in which the employee had notice and a fair chance to take it. Sick pay is not required to be paid out unless your policy says otherwise.
Freedom to Work Act: Non-Compete Reform
| Agreement Type | Income Threshold (Cannot Use Below) | Future Threshold |
|---|---|---|
| Non-compete (full prohibition of competition) | $75,000/year (until Jan 1, 2027) | $80,000/year (Jan 1, 2027+) |
| Non-solicitation (prohibition of soliciting customers/employees) | $45,000/year (until Jan 1, 2027) | $47,500/year (Jan 1, 2027+) |
Beyond income thresholds, Illinois non-compete requirements include a 14-day review period before signing and written advice to consult an attorney. Every covenant also needs adequate consideration under 820 ILCS 90/5: either the employee works for the employer for at least 2 years after signing, or the employer provides additional professional or financial benefits. Courts apply these requirements strictly.
The Attorney General may seek civil penalties of up to $5,000 per violation, and up to $10,000 for each repeat violation within 5 years. If an employer sues to enforce a non-compete or non-solicit and the employee prevails, the employer pays the employee's costs and reasonable attorney's fees. The Act is not retroactive and applies only to agreements entered after January 1, 2022.
Payroll, Taxes, and Illinois Secure Choice
Illinois Payroll Taxes
| Tax | Rate | Notes |
|---|---|---|
| IL Income Tax (PIT) | 4.95% flat rate | Withheld via Form IL-W-4, which is separate from the federal W-4. |
| UI (SUTA) new employer | 3.350% (2026) | $14,250 taxable wage base; the rate includes the 0.550% Fund Building Rate |
| UI experienced range | 0.750%-7.050% (2026) | Experience-rated after the initial period; 2026 State Experience Factor 102% |
| Social Security (employer) | 6.2% | $184,500 wage base (2026) |
| Medicare (employer) | 1.45% | No limit |
| FUTA | 0.6% effective | $7,000 wage base |
Illinois income tax is a flat 4.95 percent, withheld using Form IL-W-4 in addition to the federal W-4. Register for Illinois business taxes, withholding included, through MyTax Illinois, where the online Form REG-1 is processed in about one to two business days. For unemployment insurance (UI) registration and quarterly wage reports, use IDES, which publishes the current contribution rates and the annual EA-50 report on its employer rates page.
Illinois Secure Choice: Mandatory Retirement Program
Illinois Secure Choice, now branded My Illinois Savings, is mandatory under 820 ILCS 80 for an employer that had at least 5 Illinois employees in every quarter of the previous calendar year, has been in business for 2 or more years, and does not offer a qualified retirement plan (Illinois State Treasurer). Plans that exempt you include 401(k), 403(b), SEP-IRA, SIMPLE IRA, and pension plans.
Participating workers are auto-enrolled in a target-date Roth IRA at a default 5 percent payroll contribution. They can change the amount, choose a different investment, or opt out at any time, and the account follows them from job to job. You pay no program fees, make no contributions, and take on no fiduciary or investment role; your job is to register, supply employee information, and run the deduction.
Skipping registration is expensive. The Illinois Department of Revenue enforces the penalties, and its enforcement bulletin sets them at $250 per employee for the first calendar year of noncompliance and $500 per employee for each later year, and those later years need not be consecutive.
All enrollment phases are complete, so there is no deadline left to wait for. An employer that already sponsors its own plan still has to register, this time to record the exemption, and that step is what most owners miss.
Required Workplace Postings
Every required Illinois poster is free from the Illinois Department of Labor, which keeps the current versions in one place. Re-download the set after each January 1, because minimum wage, pay transparency, and IHRA changes have all pushed new poster text in recent cycles.
| Poster | Agency | Who Must Post |
|---|---|---|
| Your Rights Under Illinois Employment Laws | IDOL | All employers |
| PLAWA Notice | IDOL | Employers covered by PLAWA |
| VESSA Notice | IDOL | All employers |
| Equal Pay / Pay Transparency Notice | IDOL | 15+ employees |
| IHRA Notice | IDHR | All employers |
| Workers' Compensation Notice | IWCC | All employers |
| Unemployment Insurance Notice | IDES | All employers |
| Smoke Free Illinois | IDPH | All enclosed workplaces |
| ISERRA (Service Member Rights) | IL AG | All employers |
| Employee Classification Act (ECA) Notice | IDOL | Construction contractors only |
Employee Handbook Requirements
Illinois does not legally require a written employee handbook. Several written policies become mandatory under Illinois statute once a condition applies, though, for example when you collect biometrics, run a restaurant or bar, or require employees to give notice of unforeseeable PLAWA leave. A handbook is the most practical place to keep all of them.
| Policy | Required? | Notes |
|---|---|---|
| Sexual harassment prevention policy | Required for restaurants and bars (775 ILCS 5/2-110) and public contractors; IDHR tells every employer to keep one | Explain what harassment is, how to report it, and how you respond. Restaurants and bars: give it to each employee in the first calendar week, in English and Spanish. |
| PLAWA leave policy | Required IF you require notice of unforeseeable leave (820 ILCS 192/15(h)) | The written policy must set out how employees give that notice. If you have a handbook, 820 ILCS 192/20(d) also requires it to include the IDOL PLAWA notice. Describe accrual method, usage rules, carryover, and that no reason or documentation is required. |
| BIPA written policy | Required IF collecting biometrics (740 ILCS 14/15(a)) | Must be publicly available. Include retention schedule and destruction timeline. |
| VESSA policy | Required posting + written policy recommended | Define leave amounts, confidentiality obligations, and retaliation prohibition. |
| At-will disclaimer | Required (practical) | Clear, conspicuous language. Must not create implied contract through progressive discipline language. |
| IHRA anti-discrimination | Required (practical) | List all 20+ protected classes including new 2025 additions: family responsibilities, reproductive health decisions. |
| Cannabis and drug use policy | Required (practical) | Update for CRTA. Distinguish on-duty from off-duty. Define impairment standard. |
| Pay transparency policy | Required (practical, 15+ employees) | State salary range policy and how promotional opportunities are communicated. |
| Pregnancy accommodation policy | Required (practical) | Interactive process, light duty, modified schedule options. |
| ODRISA breaks and rest policy | Required (practical) | 20-minute break per 7.5 hours; 24-hour rest day in every 7-day period. |
| Electronic monitoring notice | Recommended if monitoring | 820 ILCS 55 lets employers monitor use of their own equipment; a written notice of computer, phone, and internet monitoring sets expectations. |
Chicago: A City Within a State
Chicago adds a full layer of employment ordinances of its own on top of state law. Employers with any employees working in Chicago must comply with both Illinois state law and Chicago's local ordinances simultaneously. On most major topics covered in this guide, Chicago either sets a higher standard or adds a requirement that the state does not have.
| Area | Illinois State | Chicago |
|---|---|---|
| Minimum wage | $15.00/hr (4+ ee) | $17.05/hr (4+ ee; domestic workers at any size) |
| Tipped rate | $9.00 (40% tip credit) | $12.96, with the employer making up any shortfall |
| Paid leave | 40 hrs/year (any purpose) | 40 hrs paid leave + 40 hrs paid sick (separate banks) |
| Leave accrual rate | 1 hr per 40 hrs worked | 1 hr per 35 hrs worked (each bank) |
| Predictive scheduling | No | Fair Workweek (14-day advance, 100+ global employees) |
| Harassment training | Annual (no set length) | 1+1 hrs (all); 2+1 hrs (supervisors) |
| Ban-the-box and criminal history | 15+ employees (JOQAA) | Conviction-record assessment and written notices, 1+ employees |
| Protected classes | 20+ | 17 (also: credit history, bodily autonomy) |
| Discrimination penalties | Varies | $5,000-$10,000 per violation |
| Complaint deadline | 2 years (IDHR) | 365 days (CCHR) |
Chicago Fair Workweek Ordinance
The Chicago Fair Workweek Ordinance (MCC § 6-110) applies in 7 industries: building services, healthcare, hotels, manufacturing, retail, restaurants, and warehouse services. Within them, it reaches an employer with 100 or more employees globally (250 or more for a not-for-profit corporation) that also has at least 50 covered employees.
A covered employee is one who earns $33.85 an hour or less, or $64,945.55 a year or less, and performs the work in Chicago. A restaurant is covered only at 30 or more locations and 250 or more employees globally.
The scheduling duties themselves are mechanical. Employers post the schedule 14 days in advance, and a change inside that window costs 1 hour of predictability pay. Hours canceled with less than 24 hours' notice are paid at no less than 50 percent.
A covered employee also has the right to decline work hours that begin fewer than 10 hours after the end of the previous day's shift. If the employee agrees in writing to work those hours anyway, the whole shift is paid at 1.25 times the base rate. Complaints go to the city's Office of Labor Standards.
Chicago Human Rights Ordinance
Chicago's anti-discrimination ordinance, enforced by the Chicago Commission on Human Relations (CCHR), applies to all employers with one or more employees. The Commission lists 17 protected classes plus retaliation, including several unique to Chicago: credit history (which you cannot use in most hiring decisions), criminal history (subject to the conviction-record assessment and notice rules above), and bodily autonomy (including reproductive health care decisions and gender-affirming care).
Parental status and source of income are also on the Commission's list. Penalties range from $5,000 to $10,000 per violation, and the Commission must receive a complaint within 365 days of the incident.
Recent Legislative Changes
The volume of change in Illinois employment law over this period is substantial. Four changes carry the most operational weight for small employers: PLAWA (every employer outside the Chicago and Cook County ordinances must track and provide 40 paid hours), BIPA SB 2979 (reduced but did not eliminate class action risk), pay transparency (new 2025 job posting requirements for 15+ employers), and the IHRA 2-year complaint window (extended litigation exposure).
Illinois vs. Federal Law vs. California
Side by side, Illinois looks far more like California than like the federal baseline. Paid leave, harassment training, a state retirement program, and pay transparency are all mandatory in Illinois, while federal law requires none of them.
| Category | Federal | Illinois | California |
|---|---|---|---|
| Minimum wage | $7.25 | $15.00 | $16.90 |
| Paid leave (state) | None | 40 hrs/year (any purpose) | Sick leave: 40 hrs or 5 days/year |
| Mandatory harassment training | No | Yes (all employers, 1+) | Yes (5+ employers) |
| Biometric privacy | No | BIPA: $1K-$5K/violation + class action | Limited (CCPA) |
| Non-compete restrictions | No federal ban (FTC rule vacated and removed from the CFR) | $75K income threshold + 14 days | Virtually banned |
| Mandatory retirement program | No | Secure Choice (5+ ee) | CalSavers |
| Pay transparency | No | Yes (15+ ee, salary range in postings) | Yes (15+ ee in postings; any size on request) |
| Salary history ban | No | Yes (all employers) | Yes (all employers) |
| WARN Act threshold | 100+ employees, 60 days | 75+ employees, 60 days | 75+ employees, 60 days |
| Workers' comp | Varies | Mandatory (1+) | Mandatory (1+) |
| Cannabis protections | No | Off-duty use protected | Off-duty use protected (2024) |
| E-Verify | Voluntary for most | Voluntary, no state mandate | Prohibited to require |
| Protected classes | ~11 | 20+ | 20+ |
If you are expanding into Illinois from a state that sticks close to federal law, set up paid leave, harassment training, retirement enrollment, and pay transparency first, because that is where the gap is widest. Then layer on the Chicago rules if anyone on your team works in the city.
Frequently Asked Questions
Does my business with 3 employees need to provide paid leave in Illinois?
Yes. The Paid Leave for All Workers Act (PLAWA, 820 ILCS 192) reaches Illinois employers of every size, so a three-person team is covered, and it has been in force since January 1, 2024. Staff earn 1 hour of paid leave for each 40 hours they work, capped at 40 hours a year, or you can hand out all 40 hours at the start of the year and skip accrual tracking altogether. New hires can start using it after 90 days of employment. Workers can take the time for any reason at all, and you are not allowed to ask why or to demand documentation of any kind. The one exception turns on local law: an employer covered by the Chicago or Cook County paid leave ordinance follows that ordinance instead, while an employer those ordinances do not require to give paid leave stays under PLAWA. Chicago’s ordinance (MCC § 6-130) splits leave into two banks worth 80 hours combined.
My business uses fingerprint time clocks. What are our BIPA obligations?
Fingerprint time clocks put you squarely under the Biometric Information Privacy Act (740 ILCS 14), and the exposure is significant. Two steps have to happen before the first scan. First, post a written policy, open to the public, that says how long you keep biometric data and when you destroy it. Second, get each employee's written or electronic consent, stating why you collect the scan and how long you will hold it. Each violation lets any affected worker sue you directly: $1,000 for each negligent violation and $5,000 for each intentional or reckless one, plus attorney's fees. The 2024 amendment (SB 2979) now counts repeated scans of one person as a single violation, yet the class action risk has not gone away, and Tims v. Black Horse Carriers gives plaintiffs five years to file. Audit any time clock, door reader, or camera system that identifies people by a body measurement, including ones your vendor operates for you.
Does Illinois require annual sexual harassment training?
Yes. SB 75 (775 ILCS 5/2-109) makes the training annual and universal: if you employ even one person in Illinois, every worker gets it each calendar year, part-time and seasonal staff included, with December 31 as the deadline. You do not have to build a course yourself, because the state offers a free model program at dhr.illinois.gov that you can use as is. Restaurants and bars carry extra duties on top of that: a specialized training beyond the standard one, and a written policy provided in English and in Spanish. There is also a reporting step. Each year, employers must tell the Illinois Department of Human Rights how many adverse judgments and administrative decisions on sexual harassment they received.
What are the income thresholds for non-compete agreements in Illinois?
Under the Freedom to Work Act (820 ILCS 90, effective January 1, 2022), non-compete agreements are prohibited for employees earning less than $75,000 per year. Non-solicitation agreements, which bar employees from soliciting customers or coworkers, are prohibited for employees earning less than $45,000 per year. Both thresholds will increase: $80,000 and $47,500 respectively on January 1, 2027. The employer must give the employee at least 14 calendar days to review the agreement and advise in writing to consult an attorney. Consideration must also be adequate, meaning at least 2 years of work after signing or extra professional or financial benefits.
Must I participate in Illinois Secure Choice?
Yes, once three conditions all hold: you have been in business for 2 or more years, you had 5 or more Illinois employees in each quarter of the prior calendar year, and you offer no qualified retirement plan (a 401k, SEP-IRA, or SIMPLE IRA would count). The state program, renamed My Illinois Savings, then enrolls your workers automatically in a Roth IRA invested in a target-date fund, taking 5 percent of pay by default, and they may change the rate, switch investments, or opt out at any time. Your role is administrative. You contribute nothing, owe no program fees, and simply pass the employee's own deduction through payroll. Ignoring the mandate costs $250 per employee for the first year and $500 per employee for every year after that. If you already sponsor a plan, you are not off the hook: you still have to register to record the exemption.
Do Illinois employers need to include salary ranges in job postings?
Yes, if you have 15 or more employees. Since January 1, 2025, every posting you publish, whether it targets outside applicants or internal candidates, has to show the pay scale or salary range you reasonably expect to offer, plus a general summary of benefits and any other pay. When a promotion opportunity is also advertised externally, let your current staff know about it within 14 days of that posting. Hold on to the supporting records for 5 years. Fines climb with each repeat: a first violation can cost up to $500 and comes with 14 days to fix it, a second can reach $2,500, and a third or any later one can reach $10,000.
What are the key differences between Chicago and Illinois state employment law?
Chicago has significantly stricter requirements in several areas. The minimum wage is $17.05 per hour in Chicago, effective July 1, 2026, versus $15.00 statewide. Chicago requires two separate leave banks totaling 80 paid hours (40 general paid leave plus 40 paid sick and safe leave), while the state requires 40 paid hours total. Harassment training in Chicago requires two hours for all employees and three hours for supervisors, while the state sets an annual requirement with no minimum length. Chicago's criminal history rules reach employers with one or more employees, while the state's ban-the-box law starts at 15. Chicago's Fair Workweek Ordinance requires 14-day advance scheduling for covered industries. Chicago lists 17 protected classes including credit history and bodily autonomy, while the state has 20-plus protected classes. The Chicago Commission on Human Relations administers local discrimination complaints with a 365-day filing deadline.