Chicago server pay and tip rules: a 2026 guide

A Chicago mailing address, a Cook County employer, or an Illinois job posting is not enough. Chicago’s labor ordinances cover work performed inside the City’s geographic boundaries, but they do not all use the same coverage test. For the minimum-wage ordinance, the Office of Labor Standards describes a covered employee as someone who, in any two-week period, performs at least two hours of work for an employer while physically present in Chicago. That two-hour test is not the Fair Workweek test and is not the paid-leave 80-hours-in-120-days test. Employer headquarters outside the City do not move Chicago hours into a different local wage.

Suburban Cook County is a separate layer. As of July 1, 2026, the County lists $15.40 for non-tipped employees and $9.25 for tipped employees, and it requires the employer to pay any seven-day shortfall when tips plus tipped wages do not reach the full County minimum. The County’s ordinance does not apply in the City of Chicago. Other municipalities may have their own wage or may have opted out of the County ordinance, and the County says that opt-out list changes. Work elsewhere in Illinois generally falls back to the statewide Illinois Minimum Wage Law, plus any federal Fair Labor Standards Act rule that is more protective in a particular respect.

Read the rest of this guide as a comparison among those layers, not as one “Chicago wage” that follows a worker into a suburb or onto a statewide floor.

As of July 1, 2026, the City of Chicago lists a $17.05 hourly minimum wage for employers with four or more employees. The same City pages list $12.96 as the tipped worker minimum wage for those employers. If a tipped worker’s wages plus tips do not equal the full Chicago minimum wage, the employer must make up the difference.

Those figures are a City ordinance overlay, not a restatement of Illinois’s $15.00 adult statewide minimum. When covered Chicago work is involved, the higher City combined floor is the number to check against the paystub. Chicago also publishes overtime minimums of $25.58 for non-tipped work and $21.49 for tipped work on the July 1, 2026 labor-law notice.

The City’s ordinance generally applies to employers with four or more employees. Domestic workers are called out separately as receiving the full Chicago minimum even when the household is smaller. Youth workers, as of the July 1, 2026 update, must also receive at least the $17.05 minimum rather than a lower youth cash wage. Illinois’s Minimum Wage Law also excludes, from the definition of employee, a person working for an employer with fewer than four employees exclusive of the employer’s parent, spouse, child, or other immediate family, except domestic workers. A one-to-three-person restaurant that falls outside both the City ordinance and that Illinois employee definition should not be assumed to have the $15 statewide floor; whether federal FLSA coverage applies is a separate, fact-specific question.

Chicago began reducing its tipped wage credit on July 1, 2024. The Office of Labor Standards says the credit was 40% until June 30, 2024, 32% beginning July 1, 2024, and 24% beginning July 1, 2025. The July 1, 2026 update keeps that 24% credit for all covered employers through June 30, 2028. Twenty-four percent of $17.05 is about $4.09, which is the remaining credit; after that credit, the City’s published tipped cash wage is $12.96.

The remaining credit is scheduled to keep shrinking after that date, and the later years are not the same for every employer. For large employers with 21 or more employees, the City lists 16% on July 1, 2028, 8% on July 1, 2029, and no credit on July 1, 2030. For small employers with 4 to 20 employees, the City lists 16% on July 1, 2030, 12% on July 1, 2031, 6% on July 1, 2032, and no credit on July 1, 2033. Those later dates are a planning fact, not the current cash wage.

The credit is an allowance toward the $17.05 combined floor when tips actually received support it. It is not an extra deduction from tips, and it is not a reason to treat $12.96 as the worker’s entire legal wage.

On and after January 1, 2025, the Illinois Minimum Wage Law requires at least $15.00 an hour for employees 18 and older. For an occupation in which gratuities have customarily been part of pay, the statute allows an employer an allowance for gratuities of no more than 40% of the applicable minimum wage. Illinois’s administrative code says an employee cannot be treated as a tipped employee unless that employee received $20 or more per month in gratuities. The employer claiming the allowance must be able to show substantial evidence that the employee actually received the claimed gratuities in that period and that no part was returned to the employer. When those conditions are met, the Illinois Department of Labor restates the cash wage as 60% of the minimum wage—$9.00. That $9.00 figure is not an unconditional statewide cash wage for every worker who receives some tips.

Illinois also describes a first-90-days training wage: $14.50 without the tip credit, or $9.00 if the 40% credit is applied. Youth under 18 who have not yet worked 650 hours for that employer in a calendar year may be paid $13.00; after 650 hours, the adult $15.00 rate applies. Day laborers, temporary workers, and certain short, irregular jobs are excluded from the adult 90-day reduced rate.

Those Illinois figures matter when Chicago’s ordinance does not cover the work. They do not authorize a $9.00 cash wage for covered Chicago hours that are subject to the City’s $12.96 / $17.05 pair. Keep the two floors in separate columns on any comparison.

The federal Fair Labor Standards Act still uses a $7.25 minimum wage and, for a tipped employee, allows a tip credit if the employer pays a cash wage of at least $2.13 and the worker customarily and regularly receives more than $30 a month in tips. Because Illinois and Chicago cash wages are higher, the federal cash-wage number is not the Chicago paystub figure. Federal conditions still matter for who may share tips and when a tip credit is even available as a legal concept.

An employer taking a federal tip credit must inform the worker in advance of the cash wage, the credit claimed, the requirement that the worker retain tips except for a lawful pool, and that the credit does not apply to a worker who was not informed. Tips belong to employees. Federal rules prohibit employers, managers, and supervisors from keeping employees’ tips, whether or not a tip credit is taken. A manager or supervisor may keep only tips received directly from customers for service that person directly and solely provides.

If the employer takes a tip credit, a required pool may include only employees who customarily and regularly receive tips. If the employer pays the full minimum wage and takes no tip credit, the pool may include other employees such as cooks or dishwashers, still excluding the employer, managers, and supervisors. Dual-job hours are a separate federal limit: time in a non-tipped occupation, as distinct from related side work inside a tipped occupation, cannot be paid with a tip credit.

Illinois requires overtime after 40 hours in a workweek at one and one-half times the employee’s regular rate. The Illinois Department of Labor says compensatory time off in place of overtime pay is not legal in the private sector, and that working a Sunday or holiday does not by itself create overtime unless those hours push the workweek over 40. Ask the employer which seven-day period it treats as the workweek before comparing a paystub.

Chicago’s July 1, 2026 notice publishes overtime minimums of $25.58 and $21.49. Those are City minimums tied to the $17.05 wage and the remaining tip allowance, not a substitute for Illinois’s regular-rate method. Federally, a tipped employee’s regular rate for overtime includes the tip credit the employer actually takes; tips above that credit are not added into the regular rate.

Illinois’s One Day Rest in Seven Act is a separate hours rule for covered employees. It generally requires at least 24 consecutive hours of rest in every consecutive seven-day period and a meal period of at least 20 minutes for a 7.5-hour shift, beginning no later than five hours after the start of the shift, with another 20-minute meal period for every additional 4.5 continuous hours. The rest-day rule does not apply to part-time employees whose hours for that employer in a calendar week do not exceed 20, or to employees whose hours, days, and rest periods are set through collective bargaining. The meal-period rule also does not apply where meal periods are established through collective bargaining. The Illinois Department of Labor may issue a permit for voluntary seventh-day work. Those rest and meal rules are not Chicago Fair Workweek rights and should not be blended with the City’s restaurant-chain scheduling ordinance.

A tip is a voluntary amount the customer determines. The IRS treats a mandatory service charge that the customer cannot change as wages when it is distributed to an employee, not as a tip. Suggested percentage lines on a check remain tips when the customer can enter another amount or leave the line blank. Combining auto-gratuities with cash and card tips in one daily total hides that distinction on both the wage record and the later tax record.

Illinois requires employers to keep, for at least three years, the employee’s name, address, occupation, rate of pay, amount paid each pay period, and hours worked each day in each workweek. Covered Illinois wages are generally due at least semi-monthly and no later than 13 days after the end of the pay period. The IRS instructs employees to keep a daily tip record, to report cash tips of $20 or more from one employer in a calendar month to that employer, and to report all tips on the federal return. Chicago requires a current labor-law notice in the workplace and with the first paycheck, then annually with a paycheck issued within 30 days of July 1, covering minimum wage, Fair Workweek if applicable, paid leave, and wage theft. The City’s notice treats wage theft as non-payment of wages, including paid time off or other paid benefits.

A useful personal shift record includes start and end times, breaks, cash tips, card tips, pooled distributions or tip-outs, whether any amount was a mandatory service charge, job location inside or outside Chicago, and notes about split shifts or non-tipped duties. Keep corrections instead of silently replacing an earlier number. The personal log can surface a question; it does not replace the employer payroll file, the City notice, or the IRS daily record.

Chicago’s Fair Workweek Ordinance requires certain employers to provide predictable schedules and compensation for changes. Coverage is not “every restaurant worker in Chicago.” The City currently lists seven covered industries: building services, healthcare, hotels, manufacturing, restaurants, retail, and warehouse services. The current Fair Workweek page also states a global size test of at least 100 employees, or 250 employees and 30 locations for a restaurant.

The Office of Labor Standards FAQ adds further gates that all have to be met. The worker must spend a majority of time working for that employer inside Chicago and perform a majority of work in a covered industry. The employer must employ 50 covered employees under those same tests. For franchise restaurants, the FAQ requires 30 locations and 250 employees globally and ownership of at least four locations in Chicago. A worker who splits time across suburbs, works mostly outside the listed industries, or works at a franchise with three or fewer Chicago locations should not assume coverage.

The worker must also meet the current compensation ceiling. As of July 1, 2026, the City’s Fair Workweek page and July update list that ceiling as $33.85 per hour or $64,945.55 per year; use those current figures rather than older FAQ dollar amounts. Covered employees are described as receiving a work schedule at least 14 days in advance, a right to decline previously unscheduled hours, one hour of predictability pay for listed shift changes within 14 days, and a right to decline hours that would begin less than 10 hours after the end of the previous day’s shift. The FAQ states that if such a short-rest shift is worked, the entire shift is paid at 1.25 times the base rate.

Those rights should not be generalized to an independent restaurant, a single-location bar, or a workplace that fails any of the employee-count, location-count, industry, geography, or pay-ceiling tests. If coverage is unclear, read the current City Fair Workweek page, the OLS FAQ, and the posted workplace notice rather than assuming a neighbor’s chain-restaurant rule applies.

Chicago’s Paid Leave and Paid Sick Leave ordinance is not limited to large restaurant chains. The City says any employee who works at least 80 hours for an employer in Chicago within any 120-day period is covered and eligible for both paid leave and paid sick and safe leave. Accrual begins on the first calendar day after employment begins, at one hour of paid leave and one hour of paid sick leave for every 35 hours worked.

The July 1, 2026 public notice adds use and carryover mechanics: each leave type accrues up to 40 hours in a 12-month period; paid leave must be usable no later than the 90th day of employment and paid sick leave no later than the 30th day; up to 16 paid-leave hours can carry over if leave is not front-loaded; and up to 80 paid-sick-leave hours can carry over. Paid leave is for any reason the employee chooses. Paid sick leave is for medical and specified safety reasons for the employee or family members, including certain closures of a child’s place of care.

Payout of unused paid leave at separation is another coverage split. The Office of Labor Standards FAQ says small employers with 1 to 50 Covered Employees—not all employees worldwide—are exempt, and payout applies when the employer has 51 or more Covered Employees, with no more than 56 hours required at separation. Covered Employee counts are aggregated across a single unitary business group as defined for Illinois income tax purposes. The July 1, 2026 notice’s “employees” shorthand should be read against that Covered Employee test. The payout rule is not a Fair Workweek rule and is not an Illinois Minimum Wage Law rule.

No official wage table can predict an individual server’s tips. Workplace type, menu prices, section size, shift length, pool structure, season, staffing, and guest choices all affect the result. Unsupported neighborhood rankings and hourly ranges can sound precise while saying nothing about a specific job.

Use a consistent personal history to compare hours, gross tips, tip-outs, service charges, and take-home amounts across enough shifts to form a useful question. TipKeepr keeps all historical data available on Free, with weekly analytics navigation; Premium adds broader date ranges and additional work records when needed. Those records remain a personal supplement. They are not a City, State, or IRS filing, and they do not determine coverage under any wage ordinance.