Employers in Illinois face a nuanced landscape, notably when it comes to overtime and worker classification.
State requirements can interact with federal standards, and in some areas, local rules may layer on additional obligations for employers.
Illinois maintains one of the more worker-friendly labor standards frameworks in the country, balancing statewide rules with strong local ordinances in areas like Chicago and Cook County.
Employers in Illinois must navigate overlapping state and municipal wage, sick leave, and reimbursement laws.
Understanding these rules—and documenting clear, compliant policies—is critical for avoiding penalties and maintaining trust with employees.
This blog is based on information available to HireArt as of October, 2025. HireArt does not provide tax, accounting or legal advice. This material has been prepared for informational purposes only, and should not be relied on for, tax, legal or accounting advice. Consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.
Illinois employers must follow both state and local minimum wage laws, applying whichever rate is higher.
As of 2025, the statewide minimum wage is $15.00 per hour.
In Chicago and Cook County, local ordinances set higher rates that exceed the state minimum, and those rates typically adjust each year based on inflation.
Employers must follow the higher applicable rate between state and local law.
Illinois requires paid leave for most employees under the Paid Leave for All Workers Act.
This statewide law guarantees employees up to 40 hours of paid leave per year, which can be used for any reason—not just illness. Employers must clearly communicate accrual and usage rules, and local ordinances like Chicago’s Paid Leave and Paid Sick Leave Ordinance may impose additional requirements.
Employers operating in Chicago or Cook County must pay special attention to local labor laws.
Both jurisdictions have their own ordinances governing minimum wage, paid leave, and fair scheduling. When local and state rules differ, the employer must apply whichever law provides greater benefits to the employee.
Illinois law requires employers to provide meal breaks for longer work periods.
Employees working 7.5 hours or more in a shift must receive at least a 20-minute unpaid meal period, scheduled no later than five hours after the start of the workday. While rest breaks are not mandated, many employers offer short breaks to support health and productivity.
Vacation time in Illinois is considered earned wages once accrued.
If an employee has earned vacation time at the time of termination, the employer must pay out the full balance with the final paycheck. “Use-it-or-lose-it” vacation policies are not permitted under state law.
Illinois law requires employers to reimburse employees for necessary business expenses.
Covered expenses can include tools, equipment, mileage, and work-related technology costs. Employers must establish a clear reimbursement policy that outlines eligible expenses, required documentation, and timelines for repayment.
Employers in Illinois must provide detailed wage statements and ensure prompt payment at separation.
Maintaining accurate payroll documentation is essential for compliance and transparency.
Illinois uses multiple tests to determine whether a worker is an employee or an independent contractor.
For unemployment insurance purposes, the state applies an ABC test, while other laws rely on economic-realities and control-based analyses. Misclassification can result in back wages, penalties, and tax liabilities—making it essential to review work arrangements regularly.
HireArt serves as an Employer of Record (EOR) to help companies manage compliance with Illinois’s intricate employment laws. Through HireArt, employers can:
With HireArt, employers reduce administrative risk and maintain consistent, lawful employment practices across all Illinois locations.
