On March 13, 2023, Illinois Governor J. B. Pritzker signed the Paid Leave for All Workers Act (the Act).^[1] The Act is the first statewide paid leave law in Illinois; it mandates paid leave "for any reason" for employees. The new Act, including the leave accrual requirements, will take effect on January 1, 2024. Illinois employers should review their current policies and procedures for compliance.

Coverage

In the Act, the definition of "employer" is said to mirror the definition set forth in the Illinois Wage Payment and Collection Act,^[2] which includes any individual, partnership, association, corporation, limited liability company, business trust, or employment and labor placement agency (where the agency or business pays individuals who are in a contract with the business or agency for work they perform for the business or agency). There is, however, one notable exception. Unlike the Wage Payment and Collection Act, the Act also includes as "employers" the State of Illinois and local governments, as well as any agencies and political subdivisions thereof. 820 ILCS 192/10.

"Employee" is defined in the Act to generally include all individuals who work in Illinois, except individuals who meet the legal definition of an independent contractor and state and federal government employees. Id. (This generally tracks the meaning of "employer" in the Wage Payment and Collection Act.) In addition, the Act does not apply to:

• Employees as defined in the federal Railroad Unemployment Insurance Act or the Railway Labor Act
• Temporary college or university student employees
• Certain short-term employees of an institution of higher learning
• Construction industry employees who are covered by a bona fide collective bargaining agreement (CBA)
• Employees who are covered by a bona fide CBA with an employer that provides national and international delivery and transportation services for parcels, documents, and freight.

Id.

Leave Requirements

Under the Act, employees may use leave "for any reason of [their] choosing." 820 ILCS 192/5. Beginning on January 1, 2024, or when employment begins (whichever is later), covered employees must accrue at least one hour of paid leave for every 40 hours worked, for up to 40 hours of paid leave for every 12-month period. For accrual calculation, overtime exempt employees are generally deemed to work 40 hours each work week, unless their regular work week is under 40 hours. 820 ILCS 192/15.

Employees are eligible to begin taking leave after 90 days of employment with the employer, or 90 days after January 1, 2024, whichever is later. Eligible employees may determine when they use leave and how much they choose to use, but employers may set a minimum leave increment of up to two hours per day (i.e., an employer may require that an employee use at least two hours of paid leave on any given day). Employers must allow employees to earn and use up to 40 hours of leave during a 12-month period.^[3] Id.

Carryover and Front-loading

Under the Act, employers may choose between an accrual system or a front-loading system. Id. Under the accrual system, paid leave time gradually builds to a minimum of 40 hours over the course of a 12-month period. If an employer opts for the accrual system, it must allow employees to carry over all unused paid leave from one 12-month period to the next. 820 ILCS 192/15(b).

On the other hand, the front-loading system provides employees with 40 hours of paid leave on the first day of the 12-month period and does not require carryover from year to year. Employers that choose this system may enforce "use it or lose it" policies that require unused paid leave to be forfeited at the end of the 12-month period. 820 ILCS 192/15(c).

Pay Requirements

The Act requires that employees be paid their normal hourly rate of pay when taking the paid leave. 820 ILCS 192/15(f). For employees who are regularly paid gratuities or commissions as part of their pay, their pay rate on the paid leave will be at least minimum wage in their jurisdiction of employment. Employers are not required to pay out unused paid leave upon an employee's separation, unless the employer has "credited" the paid leave to an employee's paid time off or vacation banks, in which case the usual Illinois rules for paying out unused leave upon separation apply. 820 ILCS 192/15(l).

Notice and Recordkeeping Requirements

Written notice of the Act's requirements must be posted in a "conspicuous" place at the workplace and in the employee handbook (if the employer has a handbook). 820 ILCS 192/20. This notice must include:

• The Illinois Department of Labor's (IDOL) prescribed notice regarding the Act.
• If applicable, a notice that employees are responsible for paying their share of any health insurance to maintain coverage while on leave.

Id.

Employers must also maintain records for each employee showing (1) number of hours worked; (2) number of paid leave hours accrued and taken; and (3) remaining paid leave balance. These records must be kept for at least three years and be available for inspection by the IDOL and, if an employer uses an accrual model, by the employee upon request. Id.

In addition, the employer must provide notice to employees within five calendar days after making any changes to its reasonable paid leave policy notification requirements for employees.^[4] 820 ILCS 192/15(h)(3).

Enforcement and Remedies

The IDOL is charged with administering and enforcing the Act. Employees may file complaints with the IDOL within three years of an alleged violation, and the IDOL may refer such violations to an administrative law judge to schedule a formal hearing. 820 ILCS 192/30.

Employers that violate the Act may also be subject to a civil suit by an affected employee for damages, including the amount of the actual underpayment, any other compensatory damages, and a penalty of $500 to $1,000. Id. The Act further allows employees to recover appropriate equitable relief, as well as reasonable attorneys' fees and expert witness fees. Id. Additionally, employers will be subject to a $2,500 civil penalty for each separate offense, to be deposited into a special fund created in the state treasury dedicated to enforcing the Act.^[5] 820 ILCS 192/35.

[1] 820 ILCS 192/.

[2] 820 ILCS 115/.

[3] Employers must provide in writing a definition of "12-month period" to employees at the time of hiring, such as by adopting a calendar year system or by using the employee's hiring date as the starting point for the 12 months. The employer may modify this period by providing written notice to employees prior to the change, as long as the change does not reduce the eligible accrual rate or paid leave available to the employees. 820 ILCS 192/15(d).

[4] Employers may also impose reasonable paid leave notification requirements on employees, including:

1. Requiring employees to provide seven calendar days' notice before the date that foreseeable leave is to begin.
2. If paid leave under the Act is not foreseeable, the employee may be required to provide notice as soon as is practicable after the employee becomes aware of the necessity of the leave. In this case, the employer must provide a written policy that contains procedures for employees to provide notice for unforeseeable leave.

820 ILCS 192/15.

[5] For posting or notice violations, employers face a fine of $500 for the first violation and $1,000 for each subsequent violation. 820 ILCS 192/30.