Nobody ever said running a business was a walk in the park. As an employer, you have a lot of balls in the air, and compliance is just one of them. One really, really important one that, if dropped, could cost you a whole lot of money.
In addition to federal regulations, each state has their own share of employment related laws that business owners need to be aware of. Here, we’re highlighting some of these key state-specific requirements and laws, and offering guidance to help you keep up.
Bear in mind, this list is not comprehensive, and there may be local or industry-specific employment requirements that your business needs to comply with. It’s best to consult with counsel to ensure compliance with all applicable laws, as Justworks does not provide legal advice.
Payroll Tax Accounts
Because Justworks reports state unemployment taxes on behalf of customers who utilize Justworks’ PEO services, employers will need to close their Illinois unemployment and withholding accounts prior to joining the Justworks platform. Linked here are the steps you’ll need to take: Illinois - State Unemployment Insurance.
Recruiting and Hiring Practices
Subject to limited exceptions, Illinois law prohibits employers with 15 or more employees from inquiring into or considering an applicant’s criminal history until an interview is scheduled or, if there is no interview, a conditional offer is extended. Criminal history recorded as expunged, sealed, or impounded may not be used as a basis for employment decisions.
Illinois Department of Labor (DOL): Job Opportunities for Qualified Applicants Act
Employers in Chicago, including those with fewer than 15 employees, are also subject to Chicago’s ban-the-box provisions.
Salary History Ban
Illinois Equal Pay Act prohibits all employers from requiring an applicant to disclose salary history information or otherwise seeking such information. Employers may not consider salary history information when determining hiring and compensation decisions.
Illinois DOL: Employer Equal Pay Act Salary History Ban FAQ
Credit History Ban
Subject to some exceptions, all Illinois employers are prohibited from inquiring about or considering an applicant’s credit history for the purposes of employment or compensation.
Employers in Chicago are also prohibited from inquiring about the credit history of an applicant or employee, unless an exemption applies, under Chicago’s Human Rights Ordinance. The ordinance also prohibits employers from including in a job post that applicants are required to be employed.
When classifying workers as employees or independent contractors, there are a few things to consider, including the different tests that apply under different federal and state employment laws, and potential penalties and other liabilities for misclassifying employees as independent contractors. Certain state laws apply tests that are more stringent than the guidance provided by federal agencies, such as the IRS and Department of Labor, to apply in conjunction with federal laws.
You can read our general Help Center article on contractors, and view information on how to determine if someone is a contractor or employee in Illinois in the relevant section at the link below.
Illinois Department of Employment Security: Employee v. Contractor Guidelines
Illinois has minimum wage requirements in excess of the federal minimum wage. Employers can find the most up-to-date state minimum wage requirements on the Illinois Department of Labor website.
The localities in Illinois, listed below, have a higher minimum wage than at the state level. Where both laws apply to an employee based on worksite, the law that favors the employee should be followed. Minimum wages in these localities are always changing, and this list is always growing. The very best way to ensure compliance with all applicable laws is to consult with legal counsel.
Meal and Rest Breaks
The One Day Rest in Seven Act guarantees Illinois employees a minimum of twenty four (24) hours of rest in each calendar week. Subject to limited exceptions, the law also requires that employees who work at least 7.5 hours per day must be given a 20-minute break meal break, which must begin no later than 5 hours after the start of work. Please note that there are additional break requirements for minors under the age of 16.
Illinois DOL: One Day Rest In Seven Act
State Retirement Program
Illinois Secure Choice is the state of Illinois' program designed to give employees access to a retirement savings plan when their employer does not offer a private plan meeting the minimum standards. You can read more about state retirement programs at the link below.
Paid Sick Leave
Illinois does not presently have a statewide paid sick leave law applicable to private employers. However, under the statewide Employee Sick Leave Act, employers who already provide paid sick leave through an existing company policy are required to allow employees to use a portion of available sick leave for absences due to the illness, injury, or medical appointment of certain relatives.
Additionally, two localities — Chicago and Cook County — have paid sick leave laws that are currently in effect for private employers.
As of January 1, 2023, Illinois employers with 50 or more employees are required to allow employees to take up to 10 working days of unpaid leave time for any of the events covered by the Family Bereavement Leave Act to grieve, to attend a funeral, or to make arrangements necessitated by the death of the family member (as defined by the law). This also covers fertility, pregnancy, and adoption-related loss.
Further, beginning in 2024, covered Illinois employers will be required to provide additional unpaid time off to employees who experience the loss of their child by suicide or homicide, and to employees who experience the loss of a family or household member who is killed in a crime of violence.
COVID-19 Vaccine-Related Leave [Chicago]
The City of Chicago enacted an ordinance that prohibits employers from both retaliating against workers who receive the COVID-19 vaccine during work hours and requiring that workers receive the vaccine only during non-work hours. The ordinance defines “worker” as any individual who performs work for the employer, including independent contractors.
Employers that do not require vaccinations must allow employees to use any accrued paid time off (PTO) if requested. Employers that require vaccinations must provide employees with up to four hours of paid time off per dose, not to be deducted from an employee’s existing PTO balance.
Harassment & Discrimination
In Illinois, employment discrimination is prohibited based on actual or perceived membership in any protected class for all employers under the Illinois Human Rights Act.
Employers in Chicago are subject to further anti-discrimination regulations based on additional protected classes under Chicago’s Human Rights Ordinance.
All Illinois employers are required to provide annual sexual harassment prevention training to all employees. All new hires must be trained as soon as possible, and training must be provided once annually thereafter. Restaurants and bars in Illinois must establish and circulate a written policy and provide supplemental training.
Harassment Prevention and Inclusion Trainings in Justworks
Illinois employers should familiarize themselves with specific compliance requirements for separating employees.
If the employee quits or resigns, the employee must receive their final wages as soon as possible, but not later than the next regular payday.
Illinois employers are required to pay out all earned vacation upon separation.
Additionally, unemployment insurance information (Form CLI111L, What Every Worker Should Know About Unemployment Insurance) must be provided to all separating employees, regardless of the reason for leaving. In Illinois, Justworks is considered the employer of record for unemployment insurance purposes. The information below should be listed where employer information is requested on this form and unemployment insurance claims.
Justworks Employment Group LLC
P.O. Box 7119, Church Street Station, New York, NY 10008-7119
Illinois DOL: Wage Payment and Collection Act FAQ
Business Closings and Layoffs
Federal and state law in Illinois impose certain notice and other obligations on businesses before conducting large-scale business closures, layoffs, or relocations. Under Illinois law, businesses with as few as 75 employees may be covered. For more information on these laws, visit the links below.
U.S. Department of Labor: Worker Adjustment and Retraining Notification (WARN) Act Advisor
Illinois Department of Commerce and Economic Opportunity: Notices of Layoffs and Closures (WARN)
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.