Protect Illinois Hospitality

Protecting the tip credit in Illinois was our goal for this legislation session in Springfield and we are happy to report that we were successful! We want to thank all our 26 Protect Illinois Hospitality Coalition partners, along with the thousands of servers, operators, and people throughout the entire state, who stepped up and voiced their concerns about the elimination of the tip credit.

We also want to thank all the legislators who made the time to talk with our advocates and hear first-hand what the tip credit and working in the hospitality industry means to them. And while the spring session was a success, we know that there is more work to do, and we expect the conversations around this legislation to continue.

We know that eliminating the tip credit would fundamentally alter the earning potential of tipped workers in restaurants, bars, breweries, hotels, and other businesses. It would also mean higher prices for customers, job loss for workers, and have a devastating impact on local business owners.

The IRA will continue to monitor this issue and advocate for the success of the hospitality industry. We will continue to oppose any and all attempts to eliminate the tip credit because:

Current Illinois law provides that every tipped employee must earn at least the minimum wage, relying on a blend of base wages and tips to secure a living wage. The notion that tipped employees make less than minimum wage is not true.
Strong penalties are already in place for anyone who is not complying with the law. We need to turn our attention to enforcing those penalties.
Removing the tip credit would thrust the entire burden onto operators, substantially escalating their payroll costs and potentially leading to lower wages for workers.
Currently, the median tipped restaurant worker earns over $28.00 per hour in Illinois.

According to a recent CorCom statewide study:

86% of tipped employees are concerned customers will stop tipping if restaurants impose a surcharge to offset expenses.
87% of those surveyed believe the current system works and should not be changed.

Research from cities that have eliminated the tipped minimum wage like Washington, DC, San Francisco, and Seattle found:

Eliminating the tipped minimum wage will lead to job cuts in the restaurant business.
Since May 2023 when Washington, DC became the first jurisdiction in the nation in over 20 years to eliminate the tip credit, more than 1,900 full-service restaurant jobs have been lost.
Restaurant workers in cities with higher tipped minimum wages often have statistically lower average tip percentages and ultimately do not make more in total hourly wages.
For every $1 the minimum wage went up in San Francisco, the likelihood of a median-rated restaurant closing increased by 14%.
In San Francisco, after it was mandated that the minimum wage be $15 for both tipped and un-tipped workers, restaurant closures reached an all-time high.
Eliminating the tipped minimum wage will lead to widespread use of service charges in restaurants.

Chicago

Last year, the Chicago City Council enacted an ordinance that phases out the tipped minimum wage over a five-year period. This fundamentally changes the business model of every restaurant in the city.

On July 1, the tip credit will drop from 40% to 32% of the applicable minimum wage rate. The new minimum wage will be $11.02 for tipped employees and $16.20 for standard employees.

Click here for guidance from the Chicago Department of Business Affairs and Consumer Protection.

A 2023 survey of Chicago restaurant operators found that if the tip credit was eliminated and the tipped minimum wage was increased:

92% said menu prices will increase.
Three-fourths thought tipped employees will decrease their overall pay, with 40% predicting a significant decrease.
77% believed it will have a “very negative” impact on their operations.
76% said they will have to decrease the number of tipped workers they employ, with 46% saying they will have to make “significant decreases”.
66% said they will have to reduce staff or consolidate positions and 58% said they will have to reduce employee hours.
A majority said their new average profit margin will be 1.6%.

Cook County

Cook County still maintains the tip credit. Operators in Cook County who are outside Chicago can still pay their employees a tipped wage.

On July 1, Cook County's minimum wage increase will go into effect. The new minimum wage will be $14.05 per hour. The tipped wage remains the same at $8.40 per hour.

Click here for the Cook County Minimum Wage Guidelines.

Illinois - Outside of Cook County and Chicago

The State of Illinois still maintains the tip credit. As of January 1, 2024, the statewide minimum wage is set at $14, and the tipped wage is $8.40. Youths under 18 who work less than 650 hours per calendar year earn a rate of $12/hour.

Click here for guidance from the Illinois Department of Labor.

Latest News:

Chicago Sun-Times: Once tipped workers reach city’s standard minimum wage, gratuities will be a thing of the past (7.15.24)

Chicago Tribune: Legislation to end subminimum wage for tipped workers stalls, but advocates plan to keep pushing (5.21.24)

Chicago Sun-Times: Getting rid of tipped wages in Illinois would be the final blow to many restaurants (4.9.24)

Chicago Sun-Times: Take a wait-and-see approach before eliminating subminimum wage for tipped workers in Illinois (4.7.24)

State Journal-Register: 'Solution to a problem that does not exist': Restaurants oppose bill ending tipped wage (4.4.24)

Washington Examiner: Opposition grows over proposal to eliminate tipped wages in Illinois (4.4.24)

WJBC: State bill to eliminate sub-minimum wage for tipped workers is advancing (4.4.24)

CBS 2: Illinois lawmakers, restaurant owners push back at bill to eliminate tip credit for workers (4.3.24)

The Center Square: Opposition grows over proposal to eliminate tipped wages in Illinois (4.3.24)

Herald & Review: Restaurant owners, servers urge Illinois lawmakers to reject change to wages for tipped workers (4.3.24)