Illinois restaurant laws did not sit still this year, and operators who set their menus and handbooks in January are already out of date. On June 25, 2026, Governor Pritzker signed the Junk Fee Ban Act, which will change how every restaurant in the state displays service fees and mandatory gratuities. Six days later, Chicago’s minimum wage climbed again. If you run a restaurant, bar, or fast-casual concept anywhere in Illinois, the second half of 2026 is the time to re-check your pricing, your tip practices, and your leave policies.
This guide walks through the four pressure points regulators and plaintiffs’ lawyers are watching most closely: service fees, tipped wages, paid leave, and menu pricing. Transitions between these areas matter, because a mistake in one usually shows up in another.
What You’ll Learn
- Why Illinois restaurant laws keep changing
- Service fees and the new Junk Fee Ban Act
- Tipped wages in 2026: state, Cook County, and Chicago rates
- Tip pooling, service charges, and who owns the gratuity
- Paid leave: state law versus Chicago’s ordinance
- Menu pricing, surcharges, and disclosure practices
- A 2026 compliance checklist
- Frequently Asked Questions
Why Illinois Restaurant Laws Keep Changing
Illinois restaurant laws sit at the intersection of three active lawmaking bodies: the General Assembly in Springfield, the Cook County Board, and the Chicago City Council. Each has passed its own wage, leave, and consumer-protection rules, and each adjusts them on a different calendar. Springfield typically makes laws effective January 1, while Chicago and Cook County adjust wages every July 1.
As a result, a restaurant group with locations in Naperville, Evanston, and the West Loop can face three different wage floors and two different paid leave regimes on the same day. The Illinois General Assembly added another layer this summer with statewide fee-disclosure legislation. Multi-unit operators should map which rules apply to each address rather than assuming one policy fits all.
Service Fees and the New Junk Fee Ban Act
The Junk Fee Ban Act (House Bill 228), signed June 25, 2026 and effective January 1, 2027, makes it unlawful to advertise, display, or offer a price that does not include all mandatory fees or surcharges, other than taxes. That reaches the 3 percent “kitchen appreciation” fee, the flat “wellness surcharge,” and any mandatory gratuity added to large parties.
In practice, restaurants have two clean options. First, fold the fee into menu prices. Second, present the full, fee-inclusive price wherever a price appears, including online ordering screens and third-party delivery menus. We covered the broader statute in our breakdown of the Illinois junk fee ban, and restaurants are among the most exposed businesses because their prices appear in so many places at once.
What to Do Before January 1, 2027
- Inventory every fee: service charges, credit-card surcharges, delivery fees, large-party gratuities, and event minimums.
- Decide which fees survive: each one must either become menu price or appear in the advertised total.
- Update every channel: printed menus, QR menus, kiosks, catering proposals, and delivery platforms.
Tipped Wages in 2026: State, Cook County, and Chicago Rates
Statewide, the Illinois minimum wage has been $15.00 per hour since January 1, 2025, with a tipped-employee base of $9.00 under the state’s 40 percent tip credit. Cook County runs its own ordinance with rates that adjust each July 1, and suburban operators should confirm the current county figures rather than assume the state floor applies.
Chicago is the outlier. As of July 1, 2026, the citywide minimum wage is $17.05 per hour, and the tipped-worker base rose to $12.96, according to the City of Chicago’s Office of Labor Standards. The One Fair Wage compromise passed this spring paused the scheduled elimination of the tip credit: the credit is frozen at 24 percent through June 30, 2028 rather than phasing out entirely in 2027. Employers must still make up the difference whenever tips plus the base wage fall short of $17.05 for any workweek.
Payroll systems are where these rules break. If your point-of-sale allocates tips weekly but your payroll trues up bi-weekly, shortfall calculations can silently go wrong. That is the same category of quiet compliance failure we see with biometric timeclocks under BIPA, which we covered in Illinois BIPA: fingerprint timeclocks are still lawsuit bait.
Tip Pooling, Service Charges, and Who Owns the Gratuity
Under the Illinois Wage Payment and Collection Act, gratuities are the property of the employees who earn them. Owners, managers, and supervisors cannot participate in a tip pool, and that federal rule under the Fair Labor Standards Act applies regardless of whether you take a tip credit.
A service charge is different. A mandatory charge added by the house is the restaurant’s revenue, not a tip, provided customers are not led to believe it goes to staff. If the check says “service charge in lieu of gratuity,” you need documentation of where that money goes, and your servers need to understand it. Mislabeling is where wage-and-hour class actions start, and the risk compounds for operators who run tipped roles across state lines; compare our summary of Missouri wage and tip compliance for how differently a neighboring state treats the same paycheck.
Paid Leave Obligations: State Law vs. Chicago’s Ordinance
The Paid Leave for All Workers Act gives most Illinois employees one hour of paid leave for every 40 hours worked, up to 40 hours per year, usable for any reason. The Illinois Department of Labor publishes guidance and FAQs on the state requirement at labor.illinois.gov.
Chicago restaurants follow the city’s separate Paid Leave and Paid Sick and Safe Leave Ordinance instead, which requires up to 40 hours of paid sick leave plus up to 40 hours of general paid leave per year, each accruing at one hour per 35 hours worked. Cook County has its own mirror of the state law. The traps are the details: front-loading rules, carryover caps, and payout-on-separation obligations differ by jurisdiction. We flagged the interaction issues in our earlier piece on Illinois paid leave and pay transparency.
Menu Pricing, Surcharges, and Disclosure Practices
Between now and January 1, 2027, Illinois restaurant laws still allow disclosed surcharges, but the Consumer Fraud Act already punishes deceptive pricing today. The safe pattern is simple: the price a guest sees before ordering should be the price they pay before tax and voluntary tip.
Operators redesigning menus this fall should also think about margin strategy, not just compliance. Folding a 3 percent fee into prices changes how items are perceived, and menu engineering is an operations problem as much as a legal one. Our sister consultancy Collateral Base works with regulated retailers on exactly this kind of pricing and SOP redesign, and the discipline translates directly to hospitality.
A 2026 Compliance Checklist for Illinois Restaurants
Use this end-of-summer checklist to get ahead of the January 1 deadline while wage changes are still fresh:
- Wages: confirm the correct floor for each location (state $15.00, Chicago $17.05, Cook County per the county ordinance) and verify tip-credit top-up math in payroll.
- Tips: re-issue your tip pooling policy in writing; exclude managers; document service-charge distribution.
- Fees: run the Junk Fee Ban Act inventory described above and set a December menu-reprint deadline.
- Leave: match each location to the right regime (state, Cook County, or Chicago) and audit accrual settings.
- Hiring paperwork: if you are staffing up, our guide to hiring your first employees covers the onboarding documents that restaurants most often skip.
- Disputes: if a demand letter or class action has already landed, involve litigation counsel early; our affiliated firm Howard Law Group handles wage-and-hour defense referrals.
Frequently Asked Questions
Are automatic gratuities still legal under Illinois restaurant laws?
Yes. Mandatory gratuities for large parties remain lawful, but beginning January 1, 2027 the Junk Fee Ban Act requires any mandatory gratuity or service fee to be included in the advertised price. Until then, clear and conspicuous disclosure is the standard.
What is the tipped minimum wage in Chicago right now?
As of July 1, 2026, tipped workers in Chicago must receive a base wage of at least $12.96 per hour, and total earnings including tips must reach the full $17.05 minimum wage. The tip credit is frozen at 24 percent through June 30, 2028.
Do small Illinois restaurants have to provide paid leave?
Yes. The Paid Leave for All Workers Act applies to nearly all private employers regardless of size, providing up to 40 hours of paid leave per year. Chicago and Cook County employers follow their local ordinances instead, which have their own accrual and carryover rules.
Next Steps
The wage increases are already in effect, and the fee rules arrive January 1, 2027. A two-hour policy review now is far cheaper than a class action later.
Get your locations audited before the menu reprint season. Schedule a consultation with Howard East.
Disclaimer: This article discusses Illinois, Cook County, and Chicago requirements as of July 5, 2026. It is general information, not legal advice. No attorney-client relationship is created by reading it. Attorney Advertising.
