July 1 has become a key date for labor law changes in recent years — and 2025 is no exception. This year two important provisions delayed under the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance and the One Fair Wage Ordinance will take effect. Here’s what you need to know to stay compliant.

Chicago minimum wage increase

Effective July 1, 2025, there will be an increase in the Chicago minimum wage for all employees. The minimum wage will increase to $12.62 for employees engaged in occupations that primarily receive gratuities and to $16.60 for all other employees.

Expanded salary covered under One Fair Workweek

Similarly, the salary threshold for employees who are covered under the One Fair Workweek Ordinance will increase to cover employees who earn equal to or less than $32.60 per hour or $62,561.90 per year. Employers whose industries involve building services, healthcare, hotels, manufacturing, restaurants, retail and warehouse services should review their employee classifications to determine which roles now fall under the coverage of the ordinance coverage.

New paid leave payout requirements for medium-sized employers

Lastly, the temporary exemption for medium-sized employers (those with 51 to 100 covered employees) under the Chicago Paid Leave Ordinance will end on July 1, 2025. Under the Chicago Paid Leave Ordinance, medium-sized employers were previously only required to pay out two days of any accrued and unused paid leave upon termination of employment. On July 1, 2025, all medium-sized employers will be required to pay out all accrued and unused vacation time upon termination of employment.

Preparation for upcoming changes

Staying ahead of regulatory changes is essential for protecting your business and supporting your workforce. To proactively address these changes, employers should meet with their human resources departments in the coming weeks to update company policies and ensure compliance.