Coalition of Tipped Workers, Service Operators, Local Businesses and the Illinois Restaurant Association Applaud City Council for Supporting Tip Credit Freeze
CHICAGO, March 18, 2026 /PRNewswire/ — Mayor Brandon Johnson is threatening to veto an ordinance that more than half of the City Council supported that would stop the damage being done to the vibrant restaurant industry in each of Chicago’s 77 communities.
The ordinance that passed 30-18 freezes the city’s tip credit at 24 percent of Chicago’s minimum wage, providing needed stability for restaurant workers and operators facing rising costs and economic uncertainty. A veto of the ordinance would further threaten jobs, reduce take-home pay for workers, raise prices for customers, and accelerate restaurant closures in neighborhoods across the city.
“Every restaurant worker is already mandated by law to make the minimum wage in Chicago and across Illinois,” said Sam Toia, President and CEO, Illinois Restaurant Association. “However, the continued phase-out of the tip credit will eliminate many of their jobs and cause irreparable damage to Chicago’s world-renowned, independent, neighborhood restaurants. We need to freeze the tip credit and give a fighting chance to our restaurants and the dedicated workers they employ.”
In the first half of 2025 alone, 496 Chicago restaurants closed, and, as of December 2025, Chicago’s full-service restaurants remain 7,800 jobs below their pre-pandemic employment levels.
The original ordinance that passed in 2023 set Chicago’s tip credit to be phased out over five years until the employer-paid tipped wage matches the city’s minimum wage. Following the most recent increase on July 1, 2025, 98% of operators surveyed said they made changes to their restaurant operation.
In a March 2026 survey, restaurant operators reported they expect to be forced to make even more dramatic changes to their business model if the minimum tipped wage continues to increase. Of 204 respondents:
- 99% are likely to increase menu prices.
- 95% are likely to cut employee hours.
- 90% are likely to reduce staffing levels.
- 86% are likely to postpone plans for new hiring.
Additionally, a majority of operators would plan to postpone plans for expansion, add labor-saving equipment or technology, trim their hours of operation, and cut employee benefits.
Currently, most restaurant operators in Chicago use the tip credit to pay employees. Under this compensation model, no tipped worker makes less than the city’s full-mandated minimum wage. Restaurant owners pay a portion of the tipped employee’s hourly minimum wage, with the rest made up by tips to equal at least the full city-mandated minimum wage. If employees do not make at least the hourly minimum wage with combined base wage and tips, restaurants are required by law to pay the difference to ensure that every tipped worker makes at least minimum wage, which is currently $16.60.
A coalition of tipped workers, service operators, and local businesses applauded members of City Council for voting to pass an ordinance to freeze the scheduled phase-out of the tip credit. With the passage of today’s ordinance, Chicago joins Washington D.C. and Michigan in rolling back efforts to eliminate the tip credit. A number of other states and municipalities have considered eliminating the tip credit since Chicago’s original ordinance passed in 2023. In 2024, 17 states and 3 municipalities considered tip credit elimination. In 2025, 14 states considered eliminating the tip credit. It did not pass a single legislative house in any state in the country.
“The Black restaurant owner is the one who bets on our neighborhoods, not outside special interest groups who come into our city, lobby, and leave. We are the ones hiring the returning citizen or the high school student working their first job. When we close, who’s going to open in our place? No one,” said Eric Williams, owner, Bronzeville Winery.
“I’ve worked in the restaurant industry for 14 years. As a proud single mother, my career as a server has given me the agency to build a life on my own terms, and the ability to support my family and pursue my education. The tip credit system allows me to earn well above minimum wage, and being a tipped server fuels my future. I appreciate the City Council for protecting my job, my income, and my ability to support my family by voting to freeze the tip credit,” said Monet Jackson, server, The Dearborn.
“When costs go up, that money has to come from somewhere. Often, the back of house feels the impact first. Back of the house workers don’t get tips, so we rely on stable wages, hours, and opportunities for raises. I’ve seen restaurants cut cooks and reduce kitchen staff, delay raises and reduce overtime to balance payroll. And some coworkers who used to work one job now need two or even three just to pay their bills. We want restaurants to succeed because our livelihoods depend on them, and the tip credit will help them do so,” said Martin Arellano, back-of-house, Fifty/50 Group.
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SOURCE Illinois Restaurant Association
