Payroll and Benefits Guide United States – Illinois

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee

Employee Income Tax

General

The minimum wage in Illinois for non-tipped workers is 13.70 USD per hour for standard work hours and 20.55 USD per hour for overtime hours.

The minimum wage for tipped employees is 8.00 USD per hour for standard work hours and 14.30 USD per hour for overtime hours.

Payroll Cycle

In general, employees in Illinois are paid semi-monthly or monthly. When the pay cycle is semi-monthly, the employee must make the payment within 13 days before the end of the pay period.

13th Salary

There are no provisions in the law regarding 13th salaries.

General

In Illinois, the workweek is a maximum of 40 hours per week or 8 hours per day.

Overtime

Illinois adheres to the Fair Labor Standards Act (FLSA), and work in excess of 40 hours per week is considered overtime and paid at the rate of 150% of the regular pay. If employees are scheduled to work on weekends or rest days, no additional payment is required.

However, should an employer request an employee to work in exceptional circumstances on these days, then overtime is paid at the rate of 150% of the regular pay.

Working Week

Monday-Friday

Paid Time Off

Illinois does not have any state laws that govern paid time off. However, it is common for employers to decide whether to offer paid or unpaid vacation leave.

This must comply with employment law and must be stipulated in the collective bargaining agreements, however, on 13 March 2023, the Illinois Governor signed the Paid Leave for All Workers Act (Act), requiring Illinois employers to provide employees with up to 40 hours of paid time off during a 12-month period to be used for any reason, which takes effect on 1 January 2024.

Public Holidays

There are 16 public holidays. State law does not require private employers to grant employees time off or paid leave on public holidays.

Sick Days

Termination Process

Except in mass dismissals or as provided for in an employment contract or a collective bargaining agreement, U.S. law does not impose a formal “notice period” to terminate an individual employment relationship, and employment is stipulated “at will.”

This means that either the employer or the employee may end the employment relationship without giving either notice or reason, provided it is not illegal, notable discrimination on the grounds of a category protected by law, etc., and as per the Federal Worker Adjustment and Retraining Notification Act (WARN).

The employment contracts of executives and other highly skilled individuals often incorporate a “just cause termination” clause which mandates that the employer may only terminate the employee for “cause” and lists the permissible grounds. In such cases, the parties negotiate the foundations for a “just cause” termination.

Notice Period

In Illinois, most employees are employed “at-will,” and either party can terminate the employment relationship without notice. In Illinois, payout of unused vacation time is not required by law. However, employers will generally pay an employee for unused vacation days, provided the employee gave some advanced notice of resignation. While there is no official notice period standard practice is 2 weeks.

In mass dismissal cases the Worker Adjustment and Retraining Notification Act (WARN Act) must be followed, and employers must give 60 days’ notice to impacted employees.

Severance Pay

Except as otherwise provided in an employment contract or collective bargaining agreement, severance pay is not required. Many employers choose to offer severance pay based on the employee’s length of employment.

Probation Period

There are no provisions in the law regarding probation or trial periods. However, it is common practice for employers to set a performance evaluation after an initially stated period of employment of 90 days.

VISA

Foreign nationals without permanent resident status or a work visa are not permitted to work in the United States. An employer seeking to hire a foreign national may file a petition with the United States Department of Homeland Security or the United States Citizenship and Immigration Services (USCIS) for an employment visa on behalf of the prospective employee.

If the petition is approved, the prospective employee must obtain a visa stamp from a United States embassy or consulate (Canadian citizens are exempt from this requirement).  To get a temporary U.S. work visa, an employer must file a petition with U.S. Citizenship and Immigration Services (USCIS). An approved petition must be part of the visa request.

The types of visas include:

• H-1B: For applicants with a college degree hired to do specialized work. The visa is valid for three years and can be extended for an additional three years. The visa is connected to the employer that filed the petition. If there is a change of employer, the new employer must repeat the process. There are 65,000 H-1B visas available each year.
• H-1B1: For applicants with a college degree from Chile and Singapore. The US government grants up to 1,400 visas to Chilean citizens and 5,400 from Singapore each year.
• H-2A:  For temporary or seasonal agriculture work. It is limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
• H-2B: For temporary non-agricultural work. These visas are limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
• L: For intercompany transfers (people transferred from a foreign company to a US branch of the company). The applicant must have been employed at the company for a year before the transfer and work in a managerial level position or higher with specialized knowledge.
• O: For people with extraordinary abilities in science, arts, education, business, or athletics.

The standard procedure is to obtain a short-term work visa and then apply for an immigrant visa after the employee has started working in the United States.

For those seeking employment-based immigrant visas:

• E-1: Highest priority employment for those with extraordinary ability in science, arts, education, business, and athletics
• E-2: For those with advanced degrees or exceptional ability
• E-3: For skilled workers and professionals, as well as unskilled workers
• E-4: Members of certain immigrant groups
• E-5: Immigrant investors in US companies (substantial investment)

Alternatively, an employer may sponsor a potential employee’s application for permanent resident status, referred to as a “green card” if the employee can establish that the potential employee is a multinational executive or manager transferee, has unique skills, or has been offered a job in the United States.

The employer must have been unable to recruit a U.S. worker who meets the position’s minimum requirements.

All employers are obligated to verify that all individuals they employ are authorized to work in the United States.

General

Illinois has a minimum combined sales tax rate of 8.74% (state tax at 6.25% and local tax at 2.49%)