Starting January 1, 2024, nearly all workers in the state of Illinois are guaranteed at least one week of paid leave under the Illinois Paid Leave for All Workers Act. However, eligibility isn’t guaranteed, and there are some exceptions. Employers in Cook County and the City of Chicago are exempted from this law due to the County and City paid sick leave ordinances already in place. But in November 2023, the City of Chicago passed its new Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, leaving Chicago employers with even more compliance burdens.

In this article we will review the changes in both laws to help Illinois employers, understand the legal requirements related to their employees’ paid leave and paid sick leave obligations.

IL PAID LEAVE FOR ALL WORKERS ACT

Already in effect, the Illinois Paid Leave for All Workers Act (“The Act”) requires all employers to allow employees in the state of Illinois to earn and use at least 40 hours of paid leave per 12-month period for any purpose. The paid leave accrues at a rate of one hour of leave per 40 hours worked. Exempt employees are considered to work 40 hours each workweek for determining leave accrual, unless their regular workweek is less than 40 hours. Employers may not require documentation in support of an employee’s leave.

The Act does not apply to employees covered by collective bargaining agreements already in force on January 1, 2024, and unionized employees may waive the requirements of the Act in future CBAs.

Employers may set a minimum interval to use the leave of no more than two hours. Employers must allow rollover of accrued, but unused, leave from year to year, but may cap employees’ paid leave use to 40 hours per 12-month period.

Employers may also make all leave available to the employee on the first day of employment or coverage. Under such a policy, employers are not required to allow carryover of paid leave from one 12-month period to the next, and may enact a ​“use it or lose it” policy. The employer may set the 12-month period as desired, but must notify the employee at the time of hire of the 12-month period.

Employees must be allowed to use the paid leave 90 days after commencement and employees shall be paid their hourly rate. Tipped employees must be paid at least the full minimum wage in the applicable jurisdiction.

Employers may require up to seven days’ of notice if the reason for the leave is reasonably foreseeable.

Payout of accrued unused leave is not required on separation. Insurance coverage must be maintained during periods of leave taken by employees, and employers must notify employees taking leave that they will be subject to paying for their share of the premiums while on leave.

The Act does not apply to employers covered by other municipal or county paid sick leave ordinances, aka those in Cook County and the City of Chicago.

NEW CHICAGO PAID LEAVE AND PAID SICK AND SAFE LEAVE ORDINANCE

In November 2023, the City of Chicago passed its new Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, requiring ALL employers with employees working in Chicago to provide paid sick leave and general paid leave. For purposes of this article, we will refer to the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance as the ​“Ordinance” (though I prefer the ​“CPLPSSLO” -- the mandates of the Ordinance are as convoluted as the acronym itself.) I will refer to Paid Sick Leave as ​“PSL” and general Paid Leave as ​“PL.”

In short, the Ordinance provides that covered employees are entitled to take up to 40 hours of paid sick leave per year and another 40 hours of general paid leave to use for any reason. Unfortunately, failure to comply may lead to fines for violations by the Department of Business Affairs and Consumer Protection and or private action by aggrieved employees.

Who is Covered?

The most current definition of a ​“covered employee” is a non-union exempt or non-exempt employee who works at least 80 hours within any 120-day period within the geographic boundaries of the City of Chicago. The 80-hour trigger includes compensated travel time in or through the City but excludes non-compensated travel time. Once a covered employee, a person remains a covered employee for as long as they work for the employer.

The Ordinance does not apply to construction industry employees covered by a collective bargaining agreement (“CBA”), and non-construction industry employees covered by a CBA are excluded from coverage during the term of current CBAs and can waive the requirements of the ordinance in future CBAs, but must do so clearly and unambiguously.

The point at which a covered employee is hired or an employee becomes a ​“covered employee” begins the relevant 12-month period. Note: This mandates a 12-month period unique to each covered employee, requiring administration of the policy based on anniversary date rather than a calendar year or other uniform basis.

What are the Basics of the Required Leave?

Starting on July 1, 2024, or the first day of employment thereafter, a covered employee’s leave begins to accrue.

Paid Leave and Paid Sick Leave accrue at 1 hour each for every 35 hours worked. PL and PSL accrue in whole hour increments only. Exempt employees are assumed to work 40 hours a week for purposes of accrual, unless actual normal workweek is less, then the actual workweek should be used. PSL can be used no later than 30th day after covered employee starts employment. PL can be used no later than 90th day after covered employee starts employment

Employers may cap each type of leave at 40 accrued hours of per 12-month period. The applicable 12-month period must be rolling from when leave began to accrue for the covered employee.

Note: The City of Chicago Department of Business Affairs and Consumer Protection issued proposed regulations interpreting the Ordinance, they are not final or in-force. The proposed regulations provide that only hours worked in City boundaries count towards PL and PSL accrual. This provision could greatly affect the accrual of PL and PSL under the Ordinance. We will need to remain attentive to the final regulations whenever they are promulgated.

What can this Chicago Leave be used for?

• PAID LEAVE (PL): Employees may use Paid Leave for any reason of employee’s choosing. An employer may not require employee provide a reason or documentation for time off of work while using PL. The employer’s policy for PL may require employee to give reasonable notice (maximum 7 days), or obtain preapproval for the purpose of maintaining continuity of employer operations.

• PAID SICK LEAVE (PSL): Employees may use Paid Sick Leave for:

• the employee’s or employee’s family member’s illness, injury, or medical care;

• when the employee or employee’s family member is the victim of domestic violence;

• when employee’s place of business is closed by public official for public health emergency, or when employee needs to care for family member whose school, class, or place of care has been closed; or

• when ordered by healthcare provider or public official to stay home to minimize transmission of disease/quarantine.

The employer’s policy may require up to 7 days notice if the need for PSL is reasonably foreseeable. If a covered employee is absent more than three consecutive work days, the employer may require certification for use of PSL (e.g. a signed doctor’s note).

Employers may set a reasonable minimum use increment of four hours per day. Employers may not use qualifying PL or PSL time off as absences that trigger discipline under an absence policy.

How much do employees get paid while on leave?

The pay rate for non-exempt covered employees while using PL or PSL is calculated by:

This calculation should not include overtime pay, premium pay, gratuities, or commissions. But the pay rate must be at least the full applicable minimum wage (even for tipped employees, i.e. not the tipped minimum wage). Leave time must be paid with same benefits as hours worked.

Do paid leave balances get paid out on separation from employment?

PSL balances are not required to be paid out. The answer for PL depends on the size of your business.

• SMALL EMPLOYERS: 50 or fewer covered employees. No payout of PL on an employee’s separation or transfer away from City (where they cease to be a covered employee).
• MEDIUM EMPLOYERS: 51-100 covered employees. Must payout the value of an employee’s accrued but unused PL at the final rate of pay upon separation or transfer away from the City. However, the payout is limited to 16 hours of PL until July 1, 2025. Thereafter, medium employers must pay out all accrued unused PL.
• EMPLOYERS With 101+ EMPLOYEES: Upon separation or upon ceasing to be a covered employee because of transfer out of the City, the employer must pay out all accrued unused PL at the final rate of pay.

Do employers have to allow paid leave to rollover?

Employers with a non-complying leave paid sick leave policy prior to July 1, 2024 that allows for paid leave time rollover, must allow employee to roll over their accrued but unused time under the old policy as PSL under this Ordinance.

Reminder: employers may cap the accrual for each type of leave at 40 hours of PL and 40 hours of PSL per 12-month period. The maximum amount of leave the employee may rollover from one 12-month period to the next is 16 hours of PL and 80 hours of PSL. This effectively sets the maximum amount of paid leave a covered employee may possess at 56 PL hours and 120 PSL hours per 12-month period.

The Ordinance does not explicitly contemplate employers capping the use of accrued leave time during a 12-month period. However, see the options for ​“frontloading” leave below where PL is effectively capped at 40 PL hours rather than 56 PL hours.

Are there alternative compliance options for employers? (i.e. is there an easy way out?)

• FRONTLOADING: an employer may grant 40 hours of PSL or PL, or both, on the covered employee’s first day of employment or 12-month accrual period. If PL is front loaded, then there is no required rollover of PL time (PSL still must be allowed to rollover up to 80 hours per 12-month period).
• UNLIMITED PTO: an employer may utilize an unlimited PTO policy if the unlimited PTO is awarded on first day of employment or of the 12-month period. If such a policy is used, carryover of PL and PSL is not required. Payout on separation for unlimited PTO policies is calculated by taking 40 hours of PL or PSL minus the amount of each type of leave used by the employee in the 12 months before the date of separation. If the covered employee used more than 40 hours of the unlimited paid leave in the prior 12 months, the payout is $0.

Employers may not contract around the Ordinance or contract for employees to waive their rights to PL or PSL, or to waive their right to payout on separation.

What do employers with ​“qualifying employees” need to do next?

Employers with employees who work within the City of Chicago for at least two hours every two weeks need to quickly assess their leave policies and consider several factors as they consider changes to come into compliance with the Ordinance.

First, employers should determine how many employees or what percentage of the workforce will be ​“covered employees” under the Ordinance. Next, employers should determine if the employer’s current paid sick leave and paid time off policies are compliant with the Ordinance. If the current policies are not compliant, based on the answer to the first consideration, employers must determine whether it makes sense to administer more than one paid leave policy for covered employees and non-covered employees. Finally, employers need to modify their paid leave policies to come into compliance.

Final Miscellaneous Requirements of the Ordinance

The ordinance requires a written paid leave and paid sick leave policy. Employers must notify a covered employee on leave that employee still must pay their share of premiums for health care benefits, if any. If the employer has facilities in City, the approved workplace notice must be posted. Employers must send a notice with first paycheck to covered employee, and again every year within 30 days of July 1st, of employee rights under the Ordinance.

Finally, employers have two options to notify employees of their leave balances. The first requires employers send employees their PL and PSL balances with each pay check (unless PL awarded monthly, then once a month), as follows:

The updated amount shall include accrued paid time off since the last notification, reduced paid time off since the last notification, and any unused paid time off available for use.

Alternatively, employers may choose a reasonable system for providing this notification, including, but not limited to, listing available paid time off on each pay stub or developing an online system where Covered Employees can access their own Paid Leave and Paid Sick Leave information.

The Ordinance provides for fines of $1000-$3000 per employer offense in addition to liability for 3-times the amount of leave improperly denied or lost, plus interest, plus reasonable attorneys’ fees. The private right of action for PSL accrues on July 1, 2024, but the private right of action for PL does not accrue until July 1, 2025.

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