Illinois Employers: Key Changes Already In Effect And What's Coming Later In 2026

Several new and amended laws went into effect beginning Jan. 1, 2026, with others rolling out midyear. In addition, a number of significant changes took effect in 2025. Below is a brief overview of some key developments Illinois employers should know about.

Increase in Chicago Minimum Wage

Effective July 1, 2025, Chicago's minimum wage rose under the City's Minimum Wage Ordinance. The standard minimum wage increased to $16.60 per hour, while the rate for youth and transitional employment program workers rose to $16.50 per hour. For tipped employees (including servers, bartenders, and other hospitality employees), the minimum wage increased to $12.62 per hour. Under the City's One Fair Wage Ordinance, the tipped wage will increase by 8% annually until it equals the standard minimum wage by July 1, 2028.

Expansion of Chicago's Fair Workweek Ordinance

Effective July 1, 2025, more employees became covered under Chicago's Fair Workweek Ordinance, which regulates scheduling predictability and compensation for last-minute changes. The law covers employees in seven industries: building services, healthcare, hotel, manufacturing, restaurant, retail, and warehouse services who earn $32.60/hour or less or $62,561.90/year or less. Covered employers (those with 100 or more employees globally, or 250 employees and 30 locations for restaurants) must provide advance work schedules, compensate employees for unplanned changes, and give employees written schedule estimates at the time of hiring.

Expansion of the Paid Leave and Paid Sick and Safe Leave Ordinance

Effective July 1, 2025, medium-sized employers (51–100 employees) must pay out unused, accrued paid leave upon separation, and employees may bring civil lawsuits for violations of the paid leave provisions if their paid leave is lost or denied. Employees may recover up to three times the value of the denied or lost leave, plus interest, costs, and reasonable attorneys' fees. A 16-day cure period applies through June 30, 2026, allowing employers some time to correct violations before employees can proceed with civil action. The cure period runs until the earlier of the next pay period or 16 days after the alleged violation. After July 1, 2026, this cure period will automatically expire, eliminating that grace period for employers moving forward.

Paid Leave for Military Funeral Honors Became Law

Effective August 1, 2025, Illinois employers with 51 or more employees must provide up to 8 hours/month or 40 hours/year of paid leave to employees participating in military funeral honors details. Eligible employees must be affiliated with an authorized provider and give reasonable notice. However, facilities providing 24/7 care (e.g., nursing homes, assisted living) may deny leave if it would impair safe staffing.

Increased Wage Violation Penalties under the Wage Payment and Collection Act

Effective Aug. 1, 2025, the Illinois Department of Labor has expanded enforcement powers for unpaid wage orders. The Department can now enforce wage judgments directly and without first going through a court. Importantly, employers who fail to timely pay wages owe employees the unpaid amount plus 5% in monthly damages until payment is made, along with costs and attorneys' fees in civil actions. Additional penalties include a 1% per day penalty to the employee and a 20% penalty to the Illinois Department of Labor for failure to comply with an order, as well as administrative fees of $500 to $1,250 depending on the unpaid amount. Repeated or willful violations can lead to misdemeanor or felony charges.

Significant Changes to the Illinois Workplace Transparency Act

In August 2025, Governor J.B. Pritzker signed legislation significantly expanding the Illinois Workplace Transparency Act (IWTA). The amendments expand protections for workers, restrict the types of terms employers may include in agreements, and increase the remedies available to employees. These updates apply to any employment-related contract that is signed, renewed, or modified on or after Jan. 1, 2026.

1. Broader Definition of “Unlawful Employment Practice” — The IWTA originally targeted agreements that discouraged employees from disclosing or reporting discrimination, harassment, or retaliation. The amended statute goes further, covering virtually all violations of state or federal workplace laws. This means that claims involving wages, hours, workplace safety, or labor relations, which were once outside the IWTA's reach, are now explicitly included. Confidentiality or non‑disparagement clauses that restrict discussion of these topics may be void.
2. Protected Concerted Activity — The amendments expressly protect an employee's ability to engage in “concerted activity” concerning workplace issues. This protection extends beyond formal union activity and now includes informal collective discussions about pay, benefits, or conditions of employment. Agreements that limit an employee's ability to join these conversations are likely problematic under the new law.
3. Limitations on One-Sided Contract Terms — Employers are prohibited from requiring employees to accept certain terms as a condition of hire or continued employment, such as provisions that:
   • Cut short otherwise applicable statutes of limitation;
   • Require the application of non-Illinois law to Illinois-based claims; or
   • Force adjudication of Illinois claims outside the state.

These restrictions do not apply where the terms are mutually negotiated, backed by meaningful consideration, and accompanied by written acknowledgements that preserve the employee's rights to report misconduct, participate in proceedings, and engage in concerted activity.

4. Confidentiality in Settlement and Termination Agreements — Employers remain able to include confidentiality language in separation or settlement agreements, but only if strict conditions are met. Specifically:
   • Confidentiality must be supported by separate, bargained-for consideration, distinct from any release of claims;
   • Employers cannot simply declare that confidentiality is the employee's preference; and
   • Such provisions cannot interfere with an employee's ability to engage in future collective activity about workplace matters.

5. Expanded Right to Testify — The amendments confirm that employees, applicants, and former employees may provide testimony not only in court or agency proceedings but also in arbitration. This right extends to participation in depositions. Employers cannot limit or penalize participation in any of these forums.
6. Consequential Damages Now Available — The IWTA now allows employees to seek consequential damages in addition to attorneys' fees and costs. These remedies apply to both affirmative challenges to unlawful contract terms and defenses against claims that an employee violated confidentiality.
7. What Employers Should Do Now — Illinois employers should continue taking proactive steps to ensure ongoing compliance:
   • Audit and update all employment, arbitration, settlement, and termination agreements;
   • Eliminate or modify contract provisions that could be viewed as one-sided;
   • Evaluate confidentiality terms to ensure they supply separate consideration and do not prevent protected activity; and
   • Provide training for HR on the expanded definitions and newly available remedies.

Paid Breaks Required for Nursing Mothers

Effective Jan. 1, 2026, Illinois employers must provide paid break time for nursing mothers to express breast milk. Breaks must be compensated at the employee's regular rate, and employers may not deduct from other paid leave or reduce compensation. This law removes any ambiguity surrounding pay during lactation breaks.

Expanded Organ Donation Leave to Part-Time Employees

Effective Jan. 1, 2026, Illinois amended the Employee Blood and Organ Donation Leave Act, extending organ donation leave to part-time employees at companies with 51 or more employees. While the law states it is “intended to provide time off with pay,” it only mandates paid leave for part-time employees, creating ambiguity about payment for full-time workers. The Illinois Department of Public Health has not updated its regulations since 2006, creating even more ambiguity.

Illinois Neonatal Intensive Care Leave Act

Effective June 1, 2026, Illinois employers with 16 or more employees must provide unpaid, job‑protected leave to employees whose newborn child is in a neonatal intensive care unit (NICU). Employers with 16 to 50 employees must allow up to 10 working days, while those employers with 51 or more must allow up to 20 working days. Leave may be taken intermittently or consecutively, and reasonable verification may be required. Employers must maintain health benefits and reinstate employees to the same or equivalent positions. Given that the FMLA is implicated, employers should revise their policies and handbooks ahead of the June 1, 2026, effective date.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.