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HB 2982

Relating to small watercraft.

2025 Regular Session Introduced by Tom Andersen and 12 co-sponsors

Phases out tip credits, mandating full minimum wage for tipped workers (tips on top) by July 1, 2027; offers $1.50/hour tax credit for 2025-2027; penalties for violations.

Chapter 381, (2025 Laws): Effective date January 1, 2026.
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Bill Summary · HB 2982

Summary — HB 2982 (One Fair Wage with Tips on Top Act) — House Amendment 001

Status: Rule 19(a) / Re-referred to Rules Committee. Introduced Feb 18, 2025; House Amendment 001 filed Mar 19, 2025. Primary sponsor: Rep. Elizabeth “Lisa” Hernandez; co‑sponsors: Reps. Lilian Jiménez, Michelle Mussman, Lisa Davis, Anna Moeller.

Purpose

The bill phases out the employer “tip credit” (allowing employers to count gratuities toward meeting the statutory minimum wage) and establishes incentives and protections intended to shift tipped workers to receiving the full statutory minimum wage directly from employers (“tips on top”). It also adds employer notice requirements, prohibits certain deductions from tips, treats service charges as employee property, and creates penalties for violations.

Key provisions

  • Name: Designates the Act as the “One Fair Wage with Tips on Top Act.”

  • Tax credit (Illinois Income Tax Act — new Section 246):

    • For taxable years beginning on or after January 1, 2025 and ending before January 1, 2028 (calendar years 2025–2027), an employer who lawfully could have taken a gratuity allowance (tip credit) but chooses not to may claim a credit of $1.50 per hour for each hour for which the allowance could have been claimed but was not.
    • Credit is nonrefundable (cannot reduce tax below zero) but excess may be carried forward up to 5 years and is applied to the earliest taxable year with liability.
    • Claimants must retain records the Department of Revenue may require.

  • Elimination of gratuity allowance (Minimum Wage Law):

    • As described in the bill synopsis, on and after July 1, 2027 employers will no longer be entitled to take an allowance for gratuities; employers must pay tipped employees at least the applicable minimum wage (including any higher municipal minimums).
    • Employers must provide specified notices to employees who receive gratuities (rate of pay and related information).

  • Tip handling and service charges (Illinois Wage Payment and Collection Act, per synopsis):

    • Employers may not withhold credit card processing fees from gratuities paid by card.
    • Any service charge imposed by an employer on a customer is to be treated as a gratuity and is the property of employees.

  • Penalties:

    • Violation of the prohibition on taking gratuity allowances (as described) may subject the employer (or agent) to penalties up to $1,500 per day per violation, payable to the Department of Labor’s Wage Theft Enforcement Fund.

  • Effective dates:

    • Provisions in the synopsis are effective July 1, 2025 (for notice and tip/fee rules); elimination of tip credit becomes effective July 1, 2027. The tax credit applies to tax years beginning Jan 1, 2025 through Dec 31, 2027.

Who is affected

  • Employers of tipped workers (restaurants, bars, hospitality) — affects payroll practices, potential tax credits, and liability exposure.
  • Tipped employees — would receive full statutory minimum wage from employer (no tip credit) starting July 1, 2027, and protections around card tips and service charges.
  • Municipalities — minimum wage higher than State minimum would still apply (bill preserves municipal higher rates).
  • State agencies — Department of Revenue (credit administration/recordkeeping) and Department of Labor (enforcement, penalties).

Legislative status & recent actions

  • Filed Feb 18, 2025; multiple committee referrals and co‑sponsors added.
  • House Amendment 001 filed Mar 19, 2025; adopted in Executive Committee (Do Pass as Amended 8–4) and referred to Rules Committee (Rule 19(a)) on Apr 11, 2025.
  • Further action pending in Rules Committee / floor scheduling.

Compiled from official sources — confirm details with the bill’s official record.

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