Proposed Illinois law would change wages for tipped workers across state

Tipped workers across Illinois could soon see a major change in how they are paid if newly proposed legislation passes in the state.

State lawmakers in Springfield on Tuesday announced proposed legislation that would raise the hourly rate for tipped workers to minimum wage, as opposed to the subminimum wage many currently make.

In Illinois, the minimum wage for 2024 rose to $14. The minimum wage for tipped employees sits at $8.40, with employers required to make up the difference if tips don't boost that pay rate to the standard minimum wage.

The proposal mirrors one recently passed in Chicago, which raised the minimum wage for tipped workers from $9 to $15.80 per hour, though such employees could still get tips.

“These workers need to be paid a full living wage that starts with guaranteeing minimum wage with tips on top," State Rep. Kevin Olickal of the 16^th District in Skokie said.

The Illinois proposal, which was announced in partnership with the "One Fair Wage" organization, would not take away tips for such workers, but would raise their hourly pay.

"We have tracked 6,000 restaurants across the country, including several hundred here in Illinois that have voluntarily moved from paying a subminimum to paying a full, livable wage with tips on top because that is the only way to recruit staff in the worst staffing crisis in Illinois and national restaurant industry history," the organization said.

Some advocates say the move will offer a fair wage for many restaurant workers who have long gone underpaid, but others have acknowledged the change could put increased pressure on restaurants.

The Illinois Restaurant Association said it "wholeheartedly" disagrees with the idea.

"The removal of the tip credit will hurt tipped workers, restaurants, and customers across the entire state of Illinois when we should be doing what we can to help them," the association said in a statement. "This legislation will do more harm than good as it will fundamentally change the way all restaurants operate, hurting our smaller, family-run and minority-owned businesses the most. The notion that tipped employees make less than minimum wage is simply not true. In fact, the median wage for full-service tipped restaurant workers is over $28 per hour. These changes will lead to job cuts, an increase in labor costs, and ultimately force restaurant owners to make difficult decisions that will negatively impact their workers and result in higher prices for customers. We are opposed to this legislation."

Some have cautioned that changes to labor costs could end up costing consumers even more, as many already battle surcharges due to inflation and more. Meanwhile, lawmakers in favor of the bill noted that many tipped workers were not eligible for unemployment insurance during the coronavirus pandemic "because their wages were too low.”

Franco Francese, the owner of Coarse Italian & Mattone said the legislation could lead to fewer tips for such workers.

“I just don’t know how customers will react," he said, adding that "ultimately it’s going to be the consumer that pays” for the changes.

"We’re hopeful they’re able to stomach that," he said.

According to One Fair Wage, the proposal would phase out the subminimum wage over a two-year period if passed. Employers who violate the bill would be fined up to $1,5000 per day for each violation.

Lawmakers say seven other states have already passed similar legislation.

“Research shows that these seven states have higher restaurant job growth rates, small business growth rates," State Rep. Lisa Hernandez of the 2^nd District in Cicero said.

It comes amid increased debate over tipping culture in the U.S.

BankRate reported recently that a survey found "roughly two in three U.S. adults have a negative view about tipping." But at the same time, 41% of Americans said they believe "businesses should pay employees better rather than relying so much on tips."

"In industry, an operator only has two things that he or she controls - that's either product costs and, or labor costs because fixed costs are fixed costs," Sam Toia, president of the Illinois Restaurant Association, told NBC Chicago in an interview last year.

Still, according to the BankRate survey, fewer people are tipping waitstaff every year, with only 65% saying they always tip a server when dining at a sit-down restaurant, down from 73% in 2022 and 75% in 2021.

The One Fair Wage movement looks to lobby for similar changes for tipped employees across the U.S.