Hiring Employees in Illinois

Classifying Your Workers Correctly

Your company must decide whether each Illinois hire is an employee or an independent contractor using federal IRS tests and state guidance. The IRS focuses on behavioral control, financial control, and the overall relationship, while Illinois also applies its own tests in areas like unemployment insurance and wage laws.

If you misclassify workers in Illinois, you can face back wages, unpaid overtime, tax assessments, interest, and civil penalties, and you may owe unpaid unemployment and workers’ compensation premiums. You should review Illinois guidance and resources such as https://www.playroll.com/blog/employee-misclassification-guide before finalizing classifications.

Verify Employee Work Eligibility

For every employee you hire in Illinois, you must complete federal Form I‑9 within 3 business days of the start date to verify identity and work authorization. You must examine original acceptable documents from the employee, such as a U.S. passport or a combination of a driver’s license and Social Security card, and record the details on the form.

Illinois does not mandate E‑Verify for most private employers, but you may choose to use it if you follow federal rules and state privacy protections. You must keep I‑9s for at least 3 years after the hire date or 1 year after termination, whichever is later, and store them separately from general personnel files so you can produce them quickly in an audit.

Create an Employee Onboarding Process

When onboarding employees in Illinois, you should issue a clear written offer letter outlining pay rate, pay schedule, exempt or nonexempt status, and key benefits. You will need to collect federal Form W‑4, Illinois Form IL‑W‑4, direct deposit details if the employee opts in, and signed acknowledgments for your handbook, policies, and any restrictive covenants.

Illinois also requires you to provide certain notices, such as unemployment insurance information and workers’ compensation postings, and to report new hires to the state directory within about 20 days. Building a consistent onboarding checklist helps you stay compliant and gives you better visibility into the total cost of hiring each Illinois employee.

Pay Frequency & Methods

In Illinois, most private employers must pay employees at least semimonthly, and wages earned in a pay period must generally be paid no later than 13 days after the end of that period. If you terminate an employee, you must pay all final wages by the next regularly scheduled payday, or you risk wage claims, interest, and penalties under the Illinois Wage Payment and Collection Act.

Payment Methods (How You Can Pay)

You can choose from several payment methods in Illinois, but you must always ensure employees receive full, timely wages and a clear itemized statement each payday.

• Payroll Check: You may pay by check as long as it is payable at full face value in cash at a bank or other established place of business without fees to the employee.
• Cash: You can pay wages in cash, but you must still provide a written wage statement showing hours, rates, deductions, and net pay each pay period.
• Direct Deposit (EFT): You may use direct deposit only if the employee voluntarily authorizes it in writing and can choose the financial institution that receives the funds.
• Paycards: You can use payroll cards if employees have fee‑free access to their full wages at least once per pay period and receive required disclosures and alternative payment options.
• Outsourced Payroll: You may outsource payroll to a provider, but your company remains responsible for compliance with Illinois wage, tax, and recordkeeping requirements.

When you hire employees in Illinois, you must withhold and remit federal and state payroll taxes and pay several employer contributions. You will need to register with Illinois agencies, track taxable wages, and file returns on the schedules assigned to your business.

Employer Tax Contributions

As an Illinois employer, you are responsible for state unemployment insurance contributions, federal unemployment tax, and the employer share of Social Security and Medicare. You must register with the Illinois Department of Revenue and the Illinois Department of Employment Security before running payroll.

Employee Payroll Tax Contributions

Your company must withhold federal income tax, Illinois state income tax, and the employee share of Social Security and Medicare from each paycheck. You are responsible for depositing these amounts on time and providing employees with annual Forms W‑2 summarizing their Illinois wages and withholdings.

Minimum Wage in Illinois

Illinois sets a statewide minimum wage that is higher than the federal rate, with scheduled increases written into state law and a lower rate allowed for certain tipped and youth workers. Your company must also check whether Chicago or other local ordinances impose higher local minimum wages and pay the highest applicable rate.

Working Hours in Illinois

Illinois does not cap the total hours most adults can work, but you must pay at least the minimum wage for all hours worked and keep accurate daily and weekly time records. Certain industries, such as retail and service, are covered by the One Day Rest in Seven Act, which generally requires at least 24 consecutive hours of rest in each 7‑day period and meal breaks for longer shifts.

Overtime in Illinois

Illinois follows the federal standard that nonexempt employees must receive at least 1.5 times their regular rate of pay for all hours worked over 40 in a workweek. Your company must correctly determine exempt status under the Fair Labor Standards Act and Illinois law, and you should define a fixed 7‑day workweek in your policies to calculate overtime consistently.

In Illinois, you decide which voluntary benefits to offer, but federal laws like the Affordable Care Act require applicable large employers with 50 or more full‑time employees to provide affordable health coverage or face penalties. Competitive Illinois employers often add retirement plans, dental and vision coverage, and supplemental benefits to attract and retain talent in a tight labor market.

Mandatory Leave Policies in Illinois

Paid Time Off in Illinois

Illinois does not require general vacation benefits, but once your company offers PTO or vacation, state law treats accrued time as earned wages that must be paid out at separation unless a lawful written policy states otherwise. You must clearly describe accrual rates, caps, carryover rules, and payout terms in your Illinois PTO policy and apply them consistently.

Under the Illinois Paid Leave for All Workers Act and any local ordinances, you must track hours worked and leave balances carefully to ensure employees can use their paid leave without retaliation. Aligning your voluntary PTO program with these statutory leave rights can simplify administration and reduce compliance risk.

Maternity & Paternity Leave in Illinois

Illinois employers covered by the federal FMLA must provide eligible employees up to 12 weeks of unpaid, job‑protected leave for the birth, adoption, or foster placement of a child, as well as for pregnancy‑related serious health conditions. During FMLA leave, you must maintain group health coverage on the same terms as if the employee were working.

Illinois also has pregnancy accommodation laws that require reasonable accommodations for pregnancy, childbirth, or related conditions, which may include schedule changes, additional breaks, or temporary transfers. You can choose to enhance maternity and paternity leave by offering paid parental leave or allowing employees to use accrued PTO or paid leave for bonding time.

Sick Leave in Illinois

Under the Illinois Paid Leave for All Workers Act and separate local paid sick leave ordinances, many employees are entitled to paid time off that can be used for illness, medical appointments, or other covered reasons. If your company provides a general paid leave or vacation policy, Illinois’ Employee Sick Leave Act may require you to allow employees to use a portion of that time to care for certain family members.

You should define accrual rates, waiting periods, and documentation requirements in your sick or paid leave policy, ensuring they meet or exceed state and local minimums. Retaliation for using protected sick or paid leave is prohibited, so managers must be trained on how to handle absences and requests lawfully.

Military Leave in Illinois

Illinois employers must comply with federal USERRA, which provides job‑protected leave and reinstatement rights for employees called to military service. In addition, Illinois law offers protections for members of the state militia and National Guard, including leave for training and active duty.

Your company must allow eligible employees to take required military leave, continue certain benefits as required, and reinstate them to the same or an equivalent position when they return. You should also review any obligations related to Civil Air Patrol leave if your workforce includes volunteers covered by that statute.

Jury Duty in Illinois

In Illinois, you must allow employees time off to serve on a jury and cannot threaten, discipline, or terminate them because of jury service. While state law does not generally require you to pay employees for jury duty, some employers choose to provide paid jury leave as a benefit.

You may request proof of jury service, such as a summons or attendance slip, and you can require employees to report to work for the remainder of their shift if they are excused early, as long as this does not conflict with court instructions. Your policy should clearly explain whether jury duty is paid or unpaid and how employees should notify their managers.

Voting Leave in Illinois

Illinois law requires employers to provide employees up to 2 hours of paid time off to vote in a general or special election if the employee’s working hours begin less than 2 hours after the polls open and end less than 2 hours before the polls close. Employees must generally request voting leave in advance, and you may choose the hours during which the leave is taken.

You cannot penalize or deduct from an employee’s regular pay for approved voting leave within the statutory limits. Including voting leave instructions in your handbook helps employees plan ahead and reduces last‑minute scheduling issues on election days.

Bereavement Leave in Illinois

Illinois’ Family Bereavement Leave Act requires covered employers with 50 or more employees to provide eligible employees with unpaid, job‑protected leave for the death of a covered family member or certain pregnancy‑ and fertility‑related events. The amount of leave and qualifying relationships are defined by statute, and you may request reasonable documentation in some cases.

Your company can choose to offer paid bereavement leave or allow employees to use accrued PTO or other paid leave during this time. Clear communication about how bereavement leave interacts with other leave policies will help employees understand their options during a difficult period.

Termination Process

Illinois is an at‑will employment state, so you may generally terminate employment at any time for a lawful reason, but you must avoid discrimination, retaliation, and violations of contract or public policy. During termination, you should document the reason, collect company property, provide required notices such as unemployment information, and explain how benefits and COBRA continuation work.

Notice Period

Illinois law does not require a general notice period for individual terminations, but federal WARN and Illinois mini‑WARN rules may require 60 days’ advance notice for certain plant closings or mass layoffs. If your company uses employment contracts or policies that promise notice or pay in lieu of notice, you must follow those terms.

Severance

Severance pay is not required by Illinois law, but many employers offer it in exchange for a signed release of claims, especially in layoffs or negotiated separations. If you provide severance, you must comply with federal and state rules on releases, including special timing and disclosure requirements for employees aged 40 or older under the Older Workers Benefit Protection Act.