Illinois State Labor Laws 2026

Illinois has businesses from many sectors such as finance, manufacturing, healthcare, technology, agriculture, and logistics. The Chicago metropolitan area is one of the largest and economically significant in the U.S. It has strong financial institutions, transportation infrastructure, and a vibrant business community. Illinois is home to several prestigious universities and research institutions, fostering innovation and contributing to a skilled workforce.

Key 2026 Updates

• Minimum Wage: Illinois statewide minimum wage remains at $15.00/hr. Chicago's minimum wage is $16.60/hr (employers with 4+ employees, effective July 1, 2025).
• Income Tax Rate: Illinois flat income tax rate remains at 4.95%. The personal exemption increased to $2,925 for 2026.
• Paid Leave for All Workers Act: Since January 1, 2024, all Illinois employers must provide up to 40 hours of paid leave per year that employees can use for any reason.
• AI in Hiring Decisions: Effective January 1, 2026, the Illinois Human Rights Act prohibits the use of artificial intelligence in employment decisions where it has the effect of discriminating based on protected classes. Employers must disclose AI use in hiring.
• Nursing Mothers: Effective January 1, 2026, employers must provide paid break time for employees to express breast milk for one year after childbirth.
• Neonatal ICU Leave: Effective June 1, 2026, employers with 16+ employees must provide unpaid, job-protected leave when an employee's child is hospitalized in a neonatal ICU (10 days for 16–50 employees; 20 days for 51+ employees).
• Blood/Organ Donation Leave: Expanded to part-time employees, with up to 10 days of leave in a 12-month period for organ donors.
• Unemployment Insurance: Employer UI tax rates range from 0.75% to 7.05% (including 0.55% fund-building surtax) on a wage base of $14,250. New employer rate is 3.35%.
• FLSA Salary Threshold: The federal exempt salary threshold remains at $684 per week ($35,568/year).

Minimum Wage Mandates

The statewide minimum wage in Illinois is $15.00 per hour as of January 1, 2025. No further statewide increases are currently scheduled. Workers under 18 who work fewer than 650 hours per year earn a minimum of $13.00 per hour.

Several local jurisdictions in Illinois have higher minimum wages:

Jurisdiction	Minimum Wage (2026)	Notes
Chicago (4+ employees)	$16.60/hr	Adjusted annually on July 1 based on CPI
Chicago (tipped workers, 4+ employees)	$12.62/hr	Tip credit being phased out by 2028
Cook County	$15.00/hr	Matches state minimum

Overtime Rules

Overtime rules in Illinois follow the guidelines set by the federal Fair Labor Standards Act (FLSA). The act sets minimum wage, overtime pay eligibility, record keeping, and child labor standards.

Non-exempt employees in Illinois get overtime pay for the hours worked beyond 40 hours in a week. The overtime pay is calculated at 1.5 times the regular hourly pay.

Meal and Rest Breaks

Illinois has specific rules regarding meal and rest breaks for employees. Employees in Illinois are generally entitled to a meal break of at least 30 minutes for every 7.5 hours worked. Employees and employers can mutually agree to waive the 30-minute meal break if the nature of the work allows the employee to take breaks throughout the day.

In certain industries or occupations, employees may be exempt from the 30-minute meal break requirement, or the break may be shorter. For example, certain healthcare workers may be subject to different rules.

Illinois law does not explicitly require paid rest breaks. However, short breaks of 20 minutes or less that are given to employees must be counted as hours worked and, therefore, paid.

In unionized workplaces, collective bargaining agreements may establish specific provisions regarding meal and rest breaks.

Businesses with young employees also have to comply with the federal child labor laws, which require breaks for young workers.

Paid Leaves and time off rules in the state of Illinois

Paid Leave for All Workers Act: Since January 1, 2024, Illinois requires nearly all employers to provide employees with up to 40 hours of paid leave per 12-month period. Employees accrue one hour of paid leave for every 40 hours worked and may use this leave for any reason. Leave begins accruing at the start of employment, and employees may begin using accrued leave after 90 days of employment.

• The federal Family and Medical Leave Act (FMLA) applies to eligible employees in Illinois. FMLA provides eligible employees with up to 12 weeks of unpaid leave in a 12-month period for specific family or medical reasons, including the birth or adoption of a child, the serious health condition of the employee or a family member, or certain military-related events.
• The City of Chicago has its own Paid Sick Leave Ordinance that may impose additional requirements on employers within its jurisdiction.
• Many employers in Illinois choose to offer additional paid time off as part of their benefits package. Employers may have their own policies regarding vacation, personal days, or other types of paid leave.
• If an employee is temporarily laid off or experiences a reduction in work hours, they may be eligible for unemployment benefits through the Illinois Department of Employment Security (IDES).
• Collective Bargaining Agreements: For employees covered by collective bargaining agreements, the terms related to paid leave and time off may be outlined in the agreement.

Exempt vs. Non-Exempt Classification

The classification of employees as exempt or non-exempt in the state of Illinois, as in the rest of the United States, is primarily governed by federal law, specifically the Fair Labor Standards Act (FLSA). The FLSA sets forth rules regarding minimum wage, overtime pay, and exemptions for certain categories of employees.

Exempt Employees:

• Salary Basis Test: Exempt employees are typically paid on a salary basis, meaning they receive a fixed salary that is not subject to reduction based on the quality or quantity of work performed.
• Salary Level Test: Exempt employees must earn a minimum salary to qualify for exemption. The minimum salary for exemption is $684 per week ($35,568 per year).
• Duties Test: Exempt employees must perform specific job duties that fall into one of the FLSA's exempt categories, such as executive, administrative, professional, or certain computer-related duties.

Non-Exempt Employees:

• Hourly Pay: Non-exempt employees are typically paid on an hourly basis and are entitled to overtime pay for hours worked beyond 40 hours in a workweek.
• Overtime Pay: Overtime pay for non-exempt employees is generally calculated at 1.5 times their regular rate of pay for each hour worked beyond 40 hours in a workweek.
• Employers must keep accurate records of non-exempt employees' hours worked, wages paid, and other related information.

Equal Pay Act

Illinois has an Equal Pay Act (EPA) that aims to address and prohibit wage discrimination based on sex. The Illinois Equal Pay Act is separate from the federal Equal Pay Act, and it provides additional protections for employees in the state.

• Equitable Work: The Illinois EPA requires that employers pay employees the same wage for substantially similar work, regardless of their gender, job title or location. The law considers work to be substantially similar if it requires similar skill, effort, and responsibility and is performed under similar working conditions.
• Pay differences are allowed if they result from seniority, merit, quantity or quality of production, or factors other than sex or race.
• The law prohibits employers from retaliating against employees who exercise their rights under the Illinois EPA.
• The Illinois No Salary History Law prohibits employers from asking job applicants about their salary history.
• Employers are required to keep records of wages and wage rates, job classifications, and other terms and conditions of employment for a period of at least three years.
• In addition to the Illinois EPA, employers must also adhere to Title VII of the Civil Rights Act of 1964 that prohibits discrimination based on race, color, religion, and national origin.

Rules for hiring and firing employees in the state of Illinois

Hiring and firing employees in the state of Illinois are subject to various federal and state laws that govern employment relationships. Employers should be aware of and comply with these regulations.

• At-Will Employment Illinois follows the principle of at-will employment, which means that, absent a contract stating otherwise, employment relationships can be terminated by either the employer or the employee at any time, with or without cause, and with or without notice.

• While at-will employment allows for termination without cause, employers cannot terminate employees for illegal reasons, such as discrimination, retaliation, or in violation of public policy.

• Anti-Discrimination Laws: Employers in Illinois must comply with federal anti-discrimination laws, such as the Civil Rights Act of 1964 and the Americans with Disabilities Act (ADA). Illinois also has its own state anti-discrimination laws that employers must follow.

• Equal Employment Opportunity (EEO): Employers should provide equal employment opportunities to all individuals regardless of race, color, religion, sex, national origin, disability, or age.

• Background Checks: Employers may conduct background checks on job applicants, but they must comply with federal and state laws, including the Fair Credit Reporting Act (FCRA) and the Illinois Human Rights Act.

• AI Disclosure: As of January 1, 2026, employers using AI in hiring decisions must disclose this to applicants, and AI tools may not be used in ways that discriminate based on protected classes.

• Work Eligibility Verification: Employers are required to verify the work eligibility of employees through the Form I-9 process in compliance with federal immigration laws.

• Employer Meetings: Employers are prohibited from retaliating against employees who refuse to attend meetings or receive communications about the employer's religious or political opinions.

• Final Paychecks: Illinois law requires employers to pay an employee's final paycheck by the next regularly scheduled payday.

• Unemployment Compensation: If an employee is terminated, they may be eligible for unemployment benefits through the Illinois Department of Employment Security (IDES).

• Employers may enter into severance agreements with departing employees, outlining terms such as severance pay, benefits continuation, and confidentiality provisions.

• WARN Act: The federal Worker Adjustment and Retraining Notification (WARN) Act may apply to employers with 100 or more employees, requiring them to provide advance notice of plant closings or mass layoffs.

It is important for employers to remain well-informed about changes in employment laws and to seek guidance from legal professionals to ensure compliance with the latest regulations. It's advisable to establish clear and meticulously documented employment policies and procedures to aid employers in complying with the labor laws.