Payroll and Benefits Guide - United States - Illinois

United States - Illinois
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Currency

United States Dollar (USD)

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Capital

Springfield
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Employer Taxes

12.925% – 25.25%
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Date Format

mm/dd/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Illinois is known as the “Land of Lincoln” because it is the birthplace of Abraham Lincoln.

The Chicago River is dyed green every year on St. Patrick’s Day to celebrate the holiday.

The official state bird of Illinois is the Northern cardinal.

The Illinois State Fair is held annually in Springfield.

The city of Rockford, Illinois, is known as the “Forest City”.

The city of Peoria, Illinois, is known as the “Whiskey Capital of the World”.

United-States-Illinois

Contributions

Employee Payroll Tax

Contribution TypeRate
FICA Social Security6.20%
FICA Medicare1.45%
Additional tax0.90%

Employer Payroll Tax

Contribution TypeRate
Unemployment Insurance0.725% – 7.625%
Unemployment – New Employer3.95%
FICA Social Security6.20%
FICA Medicare1.45%
FUTA0.60% -6.00%

Payroll

Payroll Cycle

Employees are generally paid semi-monthly or monthly.

13th Salary

There are no legal provisions regarding 13th salaries.

Work Hours and Week

The workweek is a maximum of 8 hours per day or 40 hours per week.

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.

United-States-Illinois

Leave

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

It is common for an employer to follow the Family and Medical Leave Act (FMLA) which provides certain employees with up to 12 weeks of unpaid, job-protected leave per year for certain family and medical reasons (maternity leave, serious illnesses, or if the employee needs to care for a spouse or child).

Employees are eligible for FMLA if they have worked for their employer for at least one year, completed a minimum of 1,250 hours over the past year, and worked at a location where the company employs 50 or more employees within 75 miles.

FMLA eligible employees are entitled to:

  • 12 working weeks of leave in any one year for a child’s birth and to care for the newborn child within one year of birth.
  • Leave for the adoption or foster care of a child and care for the newly placed child within one year of placement.
  • Care for the employee’s spouse, child, or parent who has a severe health condition.
  • Leave in the event of a serious health condition that makes the employee unable to perform the essential functions of their job.
  • Any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty.”

Or

  • 26 working weeks of leave during a single one-year period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent, or next of kin (military caregiver leave).

In addition to the FMLA, employers with more than 16 employees must provide one hour of paid sick leave for every 30 hours worked, up to a maximum of 48 hours of paid sick leave.

Illinois has an exception for Chicago and Cook County. Employees are entitled to 1 hour of paid sick leave for every 40 hours worked, with a maximum annual accrual of 40 hours. Employees can carry over 20 hours of paid sick leave however, the employee is FMLA eligible, employees may carry over an additional 40 to use for FMLA leave. To be eligible for paid sick leave, employees must work for their employer for six months, at least 2 hours within the city or the county in any two weeks, and at least 80 hours during any 120 days.

Maternity Leave

Maternity leave falls under the FMLA (see Sick Leave).

Paternity Leave

Paternity leave falls under the FMLA (see Sick Leave).

Parental Leave

Parental leave falls under the FMLA (see Sick Leave).

Termination

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

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.

Immigration

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.

VAT

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