HB2982, titled the One Fair Wage with Tips on Top Act, would phase out Illinois’ tipped wage credit under the Minimum Wage Law. Under current law, employers in occupations where gratuities are customary may count a portion of tips toward the minimum wage. This bill would reduce that allowance over time and, beginning July 1, 2027, eliminate it entirely, requiring employers to pay tipped employees the full applicable minimum wage before tips, including any higher municipal minimum wage. The bill also preserves existing rules that gratuities belong to employees and bars managers or supervisors from taking any portion of employee tips.
The bill also expands notice and disclosure requirements for employers that have tipped workers. Employers would have to provide written notices, in English and the employee’s primary language, explaining pay rates, gratuity allowances, and employee rights. The Department of Labor would be authorized to issue templates for these notices. In addition, the bill amends the Illinois Wage Payment and Collection Act to treat employer-imposed service charges as gratuities belonging to employees and to prohibit employers from deducting credit card processing fees from tips paid by credit card.
Impact
HB2982 would significantly change Illinois wage law by ending the tipped minimum wage allowance in stages and ultimately requiring full minimum wage payment to tipped employees statewide. It would amend both the Minimum Wage Law and the Illinois Wage Payment and Collection Act, affecting restaurants and other employers that rely on gratuity-based compensation, as well as workers who receive tips and service charges. The bill also adds enforcement tools, including a civil penalty of up to $1,500 per day for violations of the gratuity allowance provisions, payable to the Wage Theft Enforcement Fund, and strengthens employer notice obligations.
Sentiment
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available materials. Based on the bill text, the measure appears strongly worker-protective and aligned with the “one fair wage” policy approach, suggesting support from labor advocates and tipped workers who would benefit from guaranteed full minimum wage plus tips. The absence of voting history means the overall legislative sentiment cannot be measured from the record provided.
Contention
The main point of contention is likely the elimination of the tipped wage credit, which would raise labor costs for employers in tipped industries such as restaurants, bars, and hospitality businesses. Employers may also object to the bill’s treatment of service charges as employee gratuities, the prohibition on withholding credit card processing fees from tips, and the new penalty structure. Supporters are likely to emphasize wage stability, transparency, and protection against tip theft, while opponents may argue the bill could increase operating costs and disrupt existing compensation practices.
Gradually increases the minimum wage for employees receiving gratuities between January 1, 2026 through January 1, 2031 to the minimum wage established in § 28-12-3 exclusive of gratuities.
Labor: hours and wages; employer offset of wages due an employee in a pay period based on the amount of gratuities the employee receives; prohibit. Amends sec. 4d of 2018 PA 337 (MCL 408.934d).