Prairie State Wire

State Representative Elizabeth "Lisa" Hernandez has introduced new legislation in Illinois aimed at eliminating the tip credit. The bill, known as HB 2982, proposes a phased approach to reduce the tip credit to 20% by July 1, 2025, then to 10% by July 1, 2026, and fully eliminate it by July 1, 2027. Employers would be required to pay tipped workers the regular state or local minimum wage, whichever is higher.

Currently, employers can credit tips for up to 40% of the wage rate while ensuring that tipped workers receive the full minimum wage. However, this new legislation seeks to change that system.

Hernandez's proposal comes at a time when independent and family-owned restaurants are already facing challenges due to inflation and rising costs. The potential impact of raising the minimum wage for tipped workers is a concern for these businesses.

A similar bill was introduced last year but did not progress beyond a House committee hearing. During that process, NFIB provided written testimony on the proposal.

The current minimum wage in Illinois stands at $15 per hour, making it the highest in the Midwest region.