HIGHLIGHTS:

• The City of Chicago will require employers to provide paid sick leave to their employees effective July 1, 2017.
• A "covered employee" is an employee who performs at least two hours of work for his or her employer in any two-week period while physically inside of the geographic boundaries of Chicago.
• A "covered employer" is any entity or person that employs at least one "covered employee" while maintaining a business facility within the geographic boundaries of the city and being subjected to city license requirements.

Chicago has joined a growing list of states and cities that require employers to provide paid sick leave to their employees. The paid sick leave provisions were added as an amendment to the Chicago Minimum Wage Ordinance – now named the Chicago Minimum Wage and Paid Sick Leave Ordinance – and take effect on July 1, 2017.

The Paid Sick Leave Amendments

Who is Entitled to Paid Sick Leave and Which Employers Must Provide Paid Sick Leave

Under the paid sick leave amendments to the Chicago Minimum Wage and Paid Sick Leave Ordinance, a "covered employee" is eligible for paid sick leave if the employee works at least 80 hours for an employer within any 120-day period. A "covered employee" is an employee who performs at least two hours of work for his or her employer in any two-week period while physically inside of the geographic boundaries of Chicago. Any compensated travel time (e.g., deliveries and sales calls) qualifies, but uncompensated commuting time does not. Exempt and nonexempt employees may be "covered employees." A "covered employer" is any entity or person that employs at least one "covered employee" while maintaining a business facility within the geographic boundaries of the city and being subjected to city license requirements. Thus, an employer who has employees conducting sales calls within the City of Chicago, but is not physically located within the city and not subject to any city licensing requirements, is not subject to the amended ordinance.

Accrual of Paid Sick Leave

A "covered employee" of a "covered employer" accrues one hour of paid sick leave for every 40 hours worked. Nonworking paid time, such as PTO and paid holidays, is not considered hours worked and is not used for accrual purposes. Paid sick leave accrues only in one-hour increments. "Covered employees" who are exempt from overtime are assumed to work 40 hours in each workweek unless their normal workweek is less than 40 hours. In that case, accrual is based upon the normal workweek. Paid sick leave begins to accrue on the first calendar day after the employee begins employment.

Accrual of paid sick leave is capped at 40 hours per 12-month period. That period begins on the date an employee begins to accrue paid sick leave; thus, it is not a rolling cap. A "covered employee" carries over half of his or her accrued paid sick leave at the end of the 12-month period up to a maximum of 20 hours. If the employer is subject to the Family and Medical Leave Act (FMLA), all of the employer's employees may carry over an additional 40 hours of paid sick leave to use exclusively for FMLA purposes. Of course, for an employee to take advantage of this additional carryover, the employee must be eligible for FMLA leave. So, for practical purposes, an employee who is eligible for FMLA leave may carry over up to 60 hours of paid sick leave if he or she carries over 20 hours of paid sick leave in one year and accrues 40 hours of paid sick leave in the following year without using any paid sick leave. The employee would continue to accrue up to 40 hours of paid sick leave in the current year.

Use of Paid Sick Leave

An employee may begin using paid sick leave no later than on the 180th calendar day following the beginning of his employment, and may use only 40 hours of paid sick leave during the one-year period. However, if an employee carries over 40 hours of FMLA-related paid sick leave and uses it, he may use only up to an additional 20 hours of accrued paid sick leave in the same 12-month period. The employer may set minimum increments of paid sick leave, but those increments cannot exceed four hours per day.

An employee may use paid sick leave for the following reasons: 1) the employee's own illness or injury, or for the receipt of medical care; 2) to care for a family member who is ill, injured or receiving medical care; 3) as a victim of domestic violence or a sex offense; and 4) the employee's workplace is closed due to a public health emergency, or the employee needs to care for a child whose school or childcare location has been closed to due public health emergency. A "family member" can be an employee's child, legal guardian or ward, spouse, domestic partner, parent, spouse or domestic partner's parent, sibling, grandparent, grandchild, or any other individual related by blood or whose close association with the employee is the equivalent of a family relationship.

For reasonably foreseeable leave, an employer may require up to seven days' notice before leave is taken. If leave is unforeseeable, the employer may require the employee to provide notice as soon as is practicable on the date the employee intends to take leave. This notice may be provided via phone, email or text message. If the employee is absent more than three consecutive work days, the employer may require certification that the absences qualified for paid sick leave. For absences due to the employee's or a family member's illness, injury or receipt of medical care, documentation signed by a licensed healthcare provider satisfies the certification requirement. For absences due to domestic violence or a sex offense, any evidence that supports the employee's claim – such as a police report, a court document or a signed statement from an attorney, clergy member or a victim services advocate – shall suffice for the purposes of certification.

Retaliation Prohibited

An employer may take disciplinary action against an employee who uses paid sick leave for unauthorized reasons. However, employers may not consider bona fide paid sick leave when determining discipline under their absenteeism policies. Retaliation for the legitimate use of paid sick leave is prohibited. An employer is not required to pay an employee accrued paid sick leave upon separation of employment.

Moving Forward

Employers in Chicago need to determine if they are subject to this paid sick leave ordinance, and if so, whether their existing PTO/paid sick leave policies are compliant or if modifications are needed. Ensuring proper accrual credit and use will involve ongoing recordkeeping and follow-up. Employers will need to inform their supervisory ranks that retaliation against employees who take paid sick leave is prohibited, and that any absences due to paid sick leave may not be used against employees under an absenteeism policy. However, reasonable suspicions regarding the misuse of paid sick leave should be reported and investigated to prevent abuse. Employers also may wish to prepare their operations for increased and unexpected employee absences, as well as any budgetary issues that may result from fluctuations in manpower due to paid sick leave use.