Legislative lowdown: Chicago delays phase-out of tipped minimum wage

An effort to phase out the tipped minimum wage in Chicago was recently delayed after pushback from the restaurant industry.

Tipped workers in Chicago won’t get a raise as planned this July, nor the year after, under a measure approved by the City Council on May 20.

The measure stymies plans to phase out the subminimum wage—which allows Chicago employers to pay workers less than the city’s full minimum wage—by 2028.

Stalled efforts. Policymakers’ efforts to phase out the tipped minimum wage date back to 2023. That fall, members of the city council voted in favor of an ordinance that would gradually raise these workers’ wages until they reached the same level as the full minimum wage in 2028. Currently, Chicago employees are entitled to a minimum wage of $16.60 an hour, while the tipped minimum wage sits at $12.62. Employers are required to make up the difference if workers’ tips don’t amount to at least the full minimum wage.

Chicago’s tipped minimum wage rate will now remain at $12.62 until 2028, per the measure that was recently approved. The subminimum wage is now expected to phase out by 2030, a two-year delay.

The tipped minimum wage will stick around longer for workers employed by smaller restaurants, as businesses with fewer than 21 employees have until 2033 to do away with it.

A growing concern for policymakers, employers. The move to delay the phase-out of Chicago’s subminimum wage represents a compromise between Mayor Brandon Johnson and critics of the policy, CBS News reported. Johnson vetoed a measure to freeze the phase-out entirely in March.

Critics from groups such as the Illinois Restaurant Association have expressed concern that these wage hikes will hinder restaurants’ ability to maintain current staffing levels.

“The last few years have shown us that this clearly wasn’t working, and we’ve lost a ton of restaurants, and a lot of servers have lost their jobs, and quite frankly we need servers,” Samantha Nugent, an alderman who led the measure to freeze the phase-out, previously told CBS News.

Even though opponents bought Chicago employers some additional time to adjust to this policy, growing pushback to the tipped minimum wage is on HR departments’ radars, HR Brew reported in September. Seven states, including California, Nevada, and Washington, already pay their tipped workers a full minimum wage. Voters in Washington, DC, also approved a measure to phase it out in 2022—though that legislation, like Chicago’s, has been paused by the city council.