Effective July 1, 2017, Chicago will join a growing contingent of cities and states that require employers to offer paid sick leave to employees. The Chicago City Council unanimously passed an ordinance last week requiring every employer that maintains a business within Chicago and/or is subject to Chicago license requirements — except those in the construction industry — to provide paid sick leave to covered employees. Here’s what employers need to understand now to avoid being caught off guard next summer.

Who Is Covered?

Any individual or business entity that employs at least one “covered employee” and maintains a business within Chicago city limits and/or is subject to Chicago license requirements is covered by the ordinance.

A covered employee is anyone who works for a covered employer for at least 80 hours in any 120-day period, and who works for at least two hours in any two-week period within the city of Chicago. Significantly, time spent travelling within the city (e.g., making deliveries, sales calls, or “travel related to other business activity taking place within the city”) counts toward the two-hour minimum. That means an employee who typically works in the suburbs, for example, but spends a total of two hours working in the city during any two-week period is covered by the ordinance.

What Is Required?

The ordinance requires that covered employers grant covered employees paid sick time, which will accrue at a rate of at least one hour for every 40 hours worked, up to a maximum mandated accrual of 40 hours in a 12-month period. For exempt employees, a 40-hour workweek is assumed. If an exempt employee’s workweek is shorter than 40 hours, the employer bears the burden of showing it. The 12-month period is measured from the date on which an employee begins to accrue sick leave.

Sick leave accrual begins on an employee’s first day of employment after July 1, 2017. (For existing employees, the accrual starts on July 1, 2017.) However, an employee must wait 180 days to start using the accrued time. This limitation will eliminate the benefit for many temporary or short-term workers.

Employees must be permitted to carry over into the following year half of any accrued but unused sick time, up to 20 hours. If the employer is covered by the Family and Medical Leave Act, employees must also be permitted to carry over up to 40 hours of accrued but unused paid sick time to use for FMLA leaves.

Covered employers are required to post a notice, setting forth employees’ rights under the ordinance, at each Chicago facility where a covered worker is employed. Additionally, covered employers must provide employees with a notice of their rights with the first paycheck they receive after the ordinance takes effect. The city will provide a form of notice for employers to use.

What Is Not Required?

An employer is not required to pay out accrued but unused sick time upon an employee’s termination of employment (for any reason), unless an employee is covered by a collective bargaining agreement that mandates it.

Employers that already offer paid time off “in an amount and manner that meets the requirements” of the ordinance are not required to provide any additional paid sick leave. That is, existing PTO or paid vacation policies can be used to satisfy the ordinance, but the policy must clearly allow employees to use the PTO or vacation time for illness and must meet the other requirements of the ordinance.

When Can a Covered Employee Use Accrued Leave?

A covered employee can use accrued sick leave under any of the following circumstances:

• the employee is ill or injured;
• the employee is caring for an ill or injured family member;
• the employee is receiving medical care, treatment, diagnosis, or preventive care;
• the employee is caring for a family member who is receiving medical care, treatment, diagnosis, or preventive care;
• the employee, or a member of his or her family, is the victim of domestic violence or a sex offense; or
• the employer’s place of business is closed due to a public health emergency.

Employers may require up to one week of notice for leave that is reasonably foreseeable (e.g., for scheduled doctor appointments or court hearings in a domestic violence case). But, when the need for sick leave is not reasonably foreseeable (as is often the case), employers can only require employees to give as much notice as is practicable under the circumstances. Under no circumstance may employers require employees to arrange for a co-worker to fill in for them during their paid sick leave.

Can Employers Demand Proof of the Need for Leave?

If an employee is on paid sick leave for three consecutive days, the employer may require proof of the stated reason for taking leave. However, the employer may not require that the employee identify the precise illness, injury or medical condition at issue.

What Should Employers Do Now?

In anticipation of the July 1, 2017 effective date, covered employers should review their policies on paid time off, including all PTO, vacation, and any existing sick time and sick pay policies, and revise them as necessary to comply with the ordinance. Even if no policy revisions are required, all managers and supervisors should be trained on the company’s paid-time-off policies, including an emphasis that retaliation against an employee for exercising his/her rights under the ordinance is unlawful. It will also be important to budget for the additional costs the ordinance may impose, and to plan for the likelihood of increased employee absences once the ordinance takes effect on July 1, 2017.

The ordinance makes clear that it is not intended to change the terms of collective bargaining agreements that are in existence as of July 1, 2017. To the extent that a covered employer negotiates a new collective bargaining agreement before July 1, 2017, the employer should bear the new ordinance closely in mind at the bargaining table. For collective bargaining agreements negotiated after July 1, the requirements of the ordinance may be waived, but only if the waiver is set forth explicitly in the agreement “in clear and unambiguous terms.”