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4 Ways to Hire Employees In Illinois

Hiring in Illinois for the first time can be challenging, especially with the state's complex employment laws. Whether you're hiring independent contractors, setting up a legal entity, partnering with a PEO, or using an Employer of Record (EOR), it's essential to understand the local employment landscape. Playroll's comprehensive guide is here to help, whether you're onboarding local talent or relocating team members.

Here are four primary ways companies can hire employees in Illinois:

Establishing a local entity: Creating a legal entity in Illinois allows for direct hiring, but it can be costly and time-consuming. However, it gives you full control over employment and reduces risk exposure.
Partnering with an Employer of Record (EOR): An EOR, like Playroll, takes on the legal responsibilities of employment, acting as the employer on your behalf. This option streamlines hiring, payroll, and compliance with Illinois’s labor laws, helping you hire in Illinois without navigating the complex legal landscape yourself.
Working with a Professional Employer Organization (PEO): A PEO, such as Playroll, co-employs your team, managing essential HR functions like payroll, benefits, and compliance. Partnering with a PEO ensures you meet Illinois’s labor regulations while offering competitive employee benefits.
Hiring independent contractors: Hiring independent contractors can be more cost-effective, but Illinois has strict contractor classification rules. Proper classification is essential to avoid penalties for misclassification when hiring in Illinois.

Complying with Illinois specific employment regulations and federal laws is critical to avoiding legal risks and costly fines. Our guide focuses on hiring in Illinois, employment compliance, and how Playroll’s services can support your business as you navigate the complexities of hiring in the state.

Good to Know

Access to a highly educated workforce, particularly in finance, healthcare, and technology.

Competitive labor costs compared to other major metropolitan areas.

Strong transportation infrastructure and central location for logistics and supply chains.

State-level incentives for job creation, training, and business investment.

Key Things to Know About Hiring in Illinois

In Illinois, workers’ rights are protected by numerous employment and labor laws, at both the state and federal level. As a result, employees enjoy protection from discrimination based on age, religion, sexual orientation, gender, and race.Here are the key things you need to know about hiring in Illinois.

Do I Need an EIN or Payroll Tax Number To Employ in Illinois?

Both a Federal Employer Identification Number (EIN) and an Illinois Payroll Tax Number are needed to employ in Illinois.

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Working Hours in Illinois

40 hours per week

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What Is Considered Full-Time Employment in Illinois?

In Illinois, full-time employment is typically considered working 30 to 40 hours per week, although the state does not have a legal definition distinguishing full-time from part-time employment.

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Probation Period in Illinois

There is no law specifically regulating probationary periods for employees. However, employers commonly use probationary periods as part of their onboarding process to evaluate a new hire's performance.

Employment and Labor Laws in Illinois

Minimum Wage in Illinois

Illinois's minimum wage is $14.00 per hour.

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Illinois Anti-Discrimination Laws

Illinois enforces comprehensive anti-discrimination laws to protect individuals across various sectors, including employment, housing, public accommodations, and financial credit. The primary legislation governing these protections is the Illinois Human Rights Act (IHRA).

Onboarding New Hires in Illinois

We can help you get your new employee started in Illinois fast, with a minimum onboarding time from just 1-2 working days. Note that the timeline is dependent upon registration with the local authorities, and begins after the employee has submitted all the required information on the Playroll platform.

For non-citizens of the US, a work eligibility assessment may be required, and can add three extra days to the onboarding time. If a follow-up is needed, there may be additional delays.

Please note that payroll cut-off dates can impact the actual first day of employment. Playroll’s payroll cut-off date is the 10th of the month, unless otherwise specified.

Payroll Taxes For Illinois

In Illinois, most employees are typically paid on a biweekly (every two weeks) or semi-monthly (twice per month) basis, as these are the most common payroll frequencies.

Looking to grow your team in Illinois?

Stay Compliant: Navigate Illinois’s complex labor laws with ease.

Affordable Solution: Reduce costs with a budget-friendly EOR option.

Top-Tier Benefits: Access competitive Illinois and federal employee benefits for a stronger team.

Illinois Employment Taxes

Employment taxes and statutory fees affect both your payroll and your employees’ paychecks in Illinois. Understanding the tax obligations for both employers and employees is crucial when operating in [state's] business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Illinois. Note that employees may be liable for additional local taxes in certain cities and jurisdictions.

Employer Tax Contributions

Illinois employers must adhere to several payroll tax obligations, including Unemployment Insurance (UI) Tax, Social Security Tax and Medicare Tax.

Employment Tax Type	Tax Rate
Unemployment Insurance (UI) Tax	New Employers: 3.95% Established employers: 0.85% to 8.65%
Social Security Tax	As per federal legislation
Medicare Tax	As per federal legislation
Federal Unemployment Tax Act	As per federal legislation
Workers Compensation Insurance	Rates vary based on industry classification and the employer's claims history.

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Employee Payroll Tax Contribution

Employee Payroll Tax Contribution	Tax Rate
Social Security Tax	As per federal legislation
Medicare Tax	As per federal legislation

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Tax Due Dates in Illinois

In Illinois, the deadline for filing individual state income tax returns aligns with the federal deadline, typically on April 15. If April 15 falls on a weekend or federal holiday, the deadline is extended to the next business day.

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Pension in Illinois

In Illinois, private-sector employers are not required to provide traditional pensions to employees, but certain regulations encourage retirement savings options:

Illinois requires private-sector employers with 5 or more employees to either offer a retirement plan or enroll employees in the Illinois Secure Choice Retirement Program.
Employees are automatically enrolled at a 5% contribution rate but can adjust their contribution or opt out entirely.
Employers only facilitate the payroll deduction; they do not contribute to the employee’s account or manage the funds.

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The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Illinois tailored to your needs.

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Employee Benefits Requirements in Illinois

In Illinois, employers are mandated to provide certain benefits to employees, ensuring compliance with both state and federal regulations. Key requirements include:

Unemployment Insurance
Workers' Compensation Insurance
Minimum Wage and Overtime
Paid Leave
Health Insurance
Equal Employment Opportunity
Meal and Rest Breaks

Employee Benefits For Illinois

Competitive benefits are essential for attracting and retaining top talent in Illinois. Offering the right package helps employees feel valued and motivated. Our benefits experts understand the local labor market's trends, requirements, and expectations, ensuring your employees feel valued and supported. Common benefits in our Illinois packages include:

Pension or 401(K)
Vision Insurance
Life Insurance
Medical Insurance
Dental Insurance
Health Savings Plan (HSA)
Flexible Spending Account (FSA)

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Are Employers Required To Provide Health Insurance in Illinois?

In Illinois, employers are required to provide health insurance if they meet certain criteria under federal law, specifically the Affordable Care Act (ACA). Employers with 50 or more full-time or full-time-equivalent employees must provide health insurance that meets ACA standards or face potential penalties. Employers with fewer than 50 full-time employees are not required to provide health insurance under federal law.

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Do Part-Time Employees Get Benefits in Illinois?

In Illinois, benefits for part-time employees largely depend on the employer's policies and the specific benefit in question, as there is no state requirement for part-time employee benefits.

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Are Employers Required To Offer 401k in Illinois?

In Illinois, employers are not required to offer a 401(k) or private retirement plan, but there is a requirement for certain employers to provide a retirement savings option through the Illinois Secure Choice Retirement Program if they do not already offer a plan.

Paid and Unpaid Leave Policies in Illinois

Is Vacation Leave Mandatory in Illinois?

Illinois does not require employers to provide paid vacation leave. Vacation leave policies are typically at the discretion of the employer.

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What Are Mandatory Leave Entitlements in Illinois?

Below are the mandatory leave entitlements for full-time employees in Illinois.

Type of Leave	Time Period	Mandatory	Pay Status	Eligibility Criteria
Paid Leave for All Workers Act	1 hour of paid leave for every 40 hours worked	Yes	Paid (Full)	Based on employer. Employers must provide up to 40 hours of paid leave per year
Family and Medical Leave Act	As per federal legislation	Yes	Unpaid	As stipulated by federal FMLA legislation
Sick Leave (Chicago and Cook County)	1 hour of paid sick leave for every 40 hours worked	Yes	Paid (Full)	Employees must work at least 80 hours for an employer within any 120-day period in Chicago or Cook County
Victims’ Economic Security and Safety Act	12 weeks	Yes	Unpaid	Employers with 1+ employees must provide leave for victims of domestic violence, sexual assault, or stalking.
Military Leave	As long as active duty is required	Yes	Unpaid	Military service under the Illinois National Guard Employment Rights Law.
Voting Leave	2 hours	Yes	Paid	Employees must request leave before Election Day
School Visitation Leave	8 hours	Yes	Unpaid	Limited to 4 hours per day and requires prior notice
Jury Duty Leave	As long as matter is at court	Yes	Unpaid	Employee must be summoned for Jury Duty

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Paid Time Off in Illinois

Paid Leave for All Workers Act requires employers to provide employees with up to 40 hours of paid leave per year. Employees earn 1 hour of paid leave for every 40 hours worked. Leave can be used for any reason without requiring documentation.

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Maternity Leave In Illinois

In Illinois, maternity leave is governed by both federal and state laws that provide protections for new and expecting parents:

Family and Medical Leave Act: Applies to employers with 50 or more employees within a 75-mile radius. Employees must have worked for the employer for at least 12 months and at least 1,250 hours in the past year. Employees are entitled to up to 12 weeks of unpaid, job-protected leave for the birth and care of a newborn, or for the adoption or foster placement of a child.
Illinois Human Rights Act: Employers with one or more employees must provide reasonable accommodations for pregnancy, childbirth, and related conditions, including accommodations for recovery post-birth.
Paid Leave for All Workers Act: Provides up to 40 hours of paid leave per year, which can be used for any reason, including maternity-related needs, prenatal appointments, and child bonding.

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Paternity Leave In Illinois

In Illinois, paternity leave is not mandated by state law, but employees may be eligible for leave under federal laws and certain state regulations that provide parental leave protections for new fathers.

‍Family and Medical Leave Act: Provides up to 12 weeks of unpaid, job-protected leave for bonding with a newborn, adopted child, or foster child, available to both mothers and fathers.
‍Paid Leave for All Workers Act: Provides up to 40 hours of paid leave per year to Illinois employees, which can be used for any purpose, including paternity-related needs, such as bonding with a newborn or supporting a partner after childbirth.

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Sick Leave In Illinois

Sick leave requirements vary depending on the location and employer policies.

Paid Leave for All Workers Act: Illinois will mandate that all employers provide up to 40 hours of paid leave per year, which employees can use for any reason, including illness.
Chicago and Cook County Sick Leave Ordinances: Employees accrue 1 hour of paid sick leave for every 40 hours worked, up to a minimum of 40 hours per year. This leave applies to employees who work at least 80 hours within a 120-day period in Chicago or Cook County.
Federal Family and Medical Leave Act: Can be utilised for unpaid, job-protected leave for serious health conditions affecting the employee or immediate family members.

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Military Leave in Illinois

Employees are entitled to military leave under both federal and state laws, which provide protections and benefits for employees who serve in the military. The Federal Law (USERRA) provides up to 5 years of unpaid, job-protected leave for military service. Illinois Service Member Employment and Reemployment Rights Act (ISERRA) covers all Illinois employers and provides additional protections similar to those under USERRA.

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Jury Duty in Illinois

In Illinois, jury duty is a civic responsibility that ensures the right to a fair trial. Employers are required to provide employees with time off to serve on a jury, regardless of the shift they work.

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Parental Leave In Illinois

Parental leave is governed by a combination of federal and state laws, providing various protections and benefits for new parents.

Federal Family and Medical Leave Act: Provides unpaid, job-protected leave for the birth and care of a newborn, adoption, or foster care placement.
Illinois Human Rights Act: Requires employers to provide reasonable accommodations for pregnancy, childbirth, and related conditions, which may include leave.
Illinois Parental Leave for State Employees: State employees are eligible for 10 weeks (50 workdays) of paid parental leave per 12-month period for each pregnancy resulting in births or multiple births.
Paid Leave for All Workers Act: Provides up to 40 hours of paid leave per year, accruing at a rate of 1 hour for every 40 hours worked. Leave can be used for any reason, including parental responsibilities, without requiring documentation.

It’s Easy To Manage Benefits For Employees In Illinois With Playroll

Employment Termination Protocols in Illinois

When it comes to terminating employment in Illinois, understanding the legal obligations regarding severance pay and contributions is essential. Below is a detailed overview of the key considerations for both employers and employees.

Termination Process in Illinois

Illinois is an at-will employment state, meaning that employers or employees can end the employment relationship at any time, with or without notice, and for any reason (or no reason at all), as long as it is not illegal.

It is advisable for employers to document the reason for termination, especially if it is for cause (e.g., performance issues, misconduct), to protect against potential wrongful termination claims.

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Notice Period in Illinois

Employers are not legally required to give notice before terminating an employee unless stated in a contract or policy.

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Severance in Illinois

Illinois law does not require employers to offer severance pay upon termination. However, if an employer has a policy or contract promising severance, they are obligated to honor it.

Hiring Employees in Illinois with an employer of record

An Employer of Record makes it easy to hire in Illinois if you don’t have your own entity set up, by handling the heavy-lifting for you. They take care of compliant employment contracts, all required taxes, and benefits administration for you, so you can focus on growth instead

The employer of record is responsible for:

Employment Compliance: Ensure all employment contracts comply with Illinois's labor laws and regulations, including proper classification of employees.
Payroll Management: Calculate, process, and distribute employee salaries in accordance with Illinois's payroll laws, including deductions for taxes and social security contributions.
Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social security contributions to the relevant authorities.
Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with Illinois's legal requirements.
Benefits Administration: Provide mandatory employee benefits as required by Illinois's labor laws, such as health insurance, pension contributions, and statutory leave.

Employer of Record for Illinois

How to Hire Employees in Illinois