Hiring New Employees in Illinois: Legal Guidelines for Employers

Develop an employment application form that complies with Illinois law. Ensure it doesn't include prohibited questions about criminal history (Ban the Box law), salary history (prohibited under Illinois Equal Pay Act), or other protected characteristics. Include a disclaimer that employment is at-will unless specified otherwise.

Draft an offer letter that includes position details, compensation, start date, employment classification (exempt/non-exempt), at-will status (if applicable), and contingencies (background checks, drug tests, etc.). In Illinois, be aware that salary history inquiries are prohibited, and ensure compliance with the Illinois Equal Pay Act.

If offering more than at-will employment, prepare a formal employment contract. Include terms of employment, compensation, benefits, termination conditions, and any restrictive covenants. Note that in Illinois, non-compete and non-solicitation provisions must comply with the Illinois Freedom to Work Act, which prohibits non-competes for employees earning less than $75,000 annually (increasing to $80,000 by 2027) and non-solicitation agreements for employees earning less than $45,000 annually (increasing to $50,000 by 2027).

Draft an NDA to protect confidential business information. Ensure it's reasonable in scope and duration. In Illinois, NDAs are generally enforceable if they protect legitimate business interests and are reasonable in scope.

If using a non-compete, ensure compliance with the Illinois Freedom to Work Act. Non-competes are prohibited for employees earning less than $75,000 annually (increasing to $80,000 by 2027). The agreement must be supported by adequate consideration (employment for at least 2 years or other adequate consideration), protect a legitimate business interest, and be reasonable in geographic scope and duration (typically 1-2 years maximum).

Create a standalone document for background check authorization that complies with the Fair Credit Reporting Act (FCRA) and Illinois law. Illinois follows the 'Ban the Box' law, prohibiting employers from asking about criminal history until after determining the applicant is qualified and selected for an interview.

After receiving signed authorization and making a conditional offer, conduct background checks in compliance with Illinois law. Remember that Illinois prohibits employers from asking about criminal history until after determining the applicant is qualified and selected for an interview (Ban the Box law). If you decide not to hire based on background check results, follow FCRA adverse action procedures.

Create an employee handbook that includes company policies, procedures, and expectations. Include Illinois-specific policies on paid sick leave (required in Chicago and Cook County), pregnancy accommodations, nursing mother accommodations, and meal/rest breaks. Also include policies on harassment, discrimination, and retaliation that comply with the Illinois Human Rights Act.

Prepare Form I-9 to verify the employee's identity and employment authorization. The employee must complete Section 1 by their first day of work. You must complete Section 2 within 3 business days of the employee's first day. Retain the form for the later of 3 years after hire date or 1 year after employment ends.

Provide the employee with IRS Form W-4 to determine federal income tax withholding. The employee should complete this before their first payroll processing.

Provide the employee with Illinois Form IL-W-4 for state income tax withholding. The employee should complete this before their first payroll processing.

Create a form for employees to authorize direct deposit of their paychecks. Include fields for bank account and routing numbers. Note that in Illinois, employers cannot require direct deposit as the only payment method.

Prepare forms for enrollment in company benefit programs (health insurance, retirement plans, etc.). Include information about eligibility, coverage options, costs, and enrollment deadlines. Note that Illinois has specific requirements for certain benefits, such as the Secure Choice Retirement Savings Program for employers with 25+ employees that don't offer a retirement plan.

Create a form to collect emergency contact information from the new employee. Include fields for multiple contacts and their relationship to the employee.

If not already registered, register with IDES for unemployment insurance. All employers with at least one employee in Illinois must register within 30 days of becoming subject to the Illinois Unemployment Insurance Act.

If not already registered, register with the Illinois Department of Revenue for withholding tax. Employers must register if they have employees who work in Illinois or are Illinois residents.

Secure workers' compensation insurance coverage. In Illinois, all employers are required to have workers' compensation insurance, with very limited exceptions.

Report the new hire to the Illinois Department of Employment Security within 20 days of the hire date. This can be done online through the Illinois New Hire Reporting website.

Ensure all required federal and Illinois workplace posters are displayed in a conspicuous location. Illinois-specific posters include the Illinois Right to Privacy in the Workplace Notice, Pregnancy Rights Notice, Your Rights Under Illinois Employment Laws, and others depending on your business type and location.

If your business operates in Chicago or Cook County, ensure compliance with additional local requirements such as Chicago and Cook County Paid Sick Leave Ordinances and Chicago Fair Workweek Ordinance (for certain industries).