Articles & Updates

Illinois Minimum Wage And Its Impact On Workers’ Compensation Wage Differential Awards

by James M. Gallen

Illinois SB 1 raising the state minimum wage has passed the General Assembly and been signed by Gov. Pritzker.  This will have an impact on the calculation of wage differential awards under Section 8 (d)1 of the Illinois Workers’ Compensation Act.

Under SB 1 the Illinois Minimum Wage will be as follows:

Date of Change

Minimum Wage

Teen Wage

Current

 $8.25

 $7.75

1/1/20

 $9.25

 $8.00

7/1/20

$10.00

NA

1/1/21

$11.00

 $8.50

1/1/22

$12.00

 $9.25

1/1/23

$13.00

$10.50

1/1/24

$14.00

$12.00

1/1/25

$15.00

$13.00

Section 8 (d)1 provides that employees whose earning capacity is diminished by a work accident are entitled to two-thirds of the difference between what they could have earned in their pre-injury job and what they are capable of earning in some other suitable employment.  In presenting or negotiating wage differential cases in which the post-injury job is expected to pay at or near the scheduled minimum wages, which is frequently the case, respondents should be prepared to argue that any wage differential awards should reflect the rise in wages in accord with the escalation in the Illinois Minimum Wage.  This will require calculation of the present value of the wage differential for each year until 2025 when the minimum wage stabilizes at $15 per hour.  This can result in a significant decrease in the present value of the wage differential settlement or the amount paid out under an award.