Chicago’s minimum wage to increase amid new labor laws
Chicago’s minimum wage will increase in July as part of significant labor law updates, as reported by ABC News on June 4, 2025.
The wage hike coincides with new enforcement rules under the city’s Paid Leave and Paid Sick Leave ordinance.
These changes aim to solidify worker protections across industries, reinforce fair compensation practices, and align Chicago’s labor policies with inflation and evolving economic needs. Employers across the city will also face new responsibilities under updated scheduling and paid time off mandates.
Chicago’s Minimum Wage Changes
Mayor Brandon Johnson and the Department of Business Affairs and Consumer Protection (BACP) has confirmed a citywide minimum wage increase beginning July 1, 2025. The minimum wage will rise to $16.60 per hour, or $16.50 per hour for subsidized youth employment programs or subsidized transitional employment programs.
An annual increase tied to the lower of either a 2.5% ceiling or changes in the Consumer Price Index (CPI) is stipulated under Chicago’s Minimum Wage Ordinance. The CPI tracks the price of the daily cost of living, and this structure aims to keep wages responsive to inflation without destabilizing business operations.
Additionally, tipped workers, such as restaurant servers and bartenders, currently earning $12.62 per hour will see an 8% annual wage increase, until it equals the standard minimum wage rate by July 1, 2028.
What Other Changes are Coming?
Under the revised Paid Leave and Paid Sick and Safe Leave Ordinance, employees are now entitled to a total of ten days of paid time off annually, consisting of five days of general paid leave, which can be used for any reason, and five days of paid sick leave for medical or safety-related needs.
Both types of leave will accrue at a consistent rate: one hour of leave for every 35 hours worked, capped at 40 hours within 12 months. Paid sick leave becomes available after 30 days of employment, while paid general leave must be made accessible by day 90.
Employees are also allowed to carry over unused leave into the following year; up to 16 hours for general paid leave and up to 80 hours for sick leave.
Importantly, employers are not required to ask employees for the reason behind their use of general paid leave. This means workers can take time off without the pressure of justifying their absence.
Furthermore, the Fair Workweek Ordinance will be updated to include revised compensation metrics. This policy covers employees within healthcare, hotel, building services, retail, restaurant, manufacturing, or warehouse industries, who earn less than $32.60 per hour or $62,561.90 annually.
Additionally, the employer must either have at least 100 employees globally or, for restaurants, operate with 250 employees across 30 or more locations.
Employers who fall within the Fair Workweek Ordinance criteria are now required to give employees advance notice of their work schedules and provide financial compensation if those schedules change at the last minute.
What does this Mean for Employers and Employees?
The wage increase, part of Johnson’s broader pro-labor agenda, reaffirms Chicago as a leading advocate for urban labor rights. Workers across sectors will not only benefit from higher earnings but also gain access to stronger paid leave protections.
“Chicago’s workers and their families are the backbone of our city,” said Mayor Johnson. “They deserve to be paid fairly and valued.”
For employers, however, the change signals new compliance requirements and higher overheads at a time when many businesses are still recovering from the COVID-19 pandemic.
Businesses must update payroll systems, train HR departments, and educate employees about their rights under evolving legislation.
Failure to meet these mandates could lead to complaints and penalties enforced by the Office of Labor Standards (OLS), which oversees implementation and compliance across Chicago.
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