On March 13, 2023, Governor Pritzker signed the Paid Leave for All Workers Act (the “Act”), which requires nearly all Illinois employers to provide employees up to 40 hours of paid leave annually to be used for any reason. The Act’s paid leave requirements will go into effect on January 1, 2024. Illinois is now the third state to require employers to provide paid time off to employees to be used for any reason, following Maine and Nevada.

Under the Act, Illinois employees are eligible to accrue paid leave at the rate of one hour of paid leave for every 40 hours worked up to 40 hours in a 12-month period. Employees who are exempt from the overtime requirements of the Fair Labor Standards Act are deemed to work 40 hours in each work week, unless their regular work week is less than 40 hours, in which case paid leave accrues based on that regular work week. Employees must be paid their hourly rate of pay for paid leave. Employees who earn gratuities or commissions must be paid at least minimum wage in the jurisdiction in which they are employed when paid leave is taken. Employees begin to accrue paid leave when they begin employment, or on the effective date of the Act, whichever is later, but employers may require employees to wait 90 days before using accrued paid leave.

Accrued unused paid leave under the Act carries over annually.  However, at no point in time may an employee accrue more than 40 hours. The Act also allows an employer to “frontload” paid leave, which means that the employer provides the minimum number of hours of paid leave to an employee on their first day of employment or the first day of the 12-month period. Employers who frontload paid leave are not required to carry over paid leave from 12-month period to 12-month period and may require employees to use all paid leave prior to the end of the benefit period or forfeit the unused paid leave.

The Act does not require employers to pay an employee for paid leave accrued under the Act upon the employee’s separation from employment. However, if an employer credits the paid leave under the Act to an employee’s paid time off bank or employee vacation account, then any accrued unused paid leave must be paid to the employee upon the employee’s separation of employment.

Under the Act, employees may take paid leave for any reason. An employee is not required to provide an employer a reason for the leave and an employer cannot require an employee to provide documentation or certification as proof or in support of the leave. In addition, employees may choose to use paid leave provided under the Act before using any other leave provided by the employer or state law. The Act also requires employers to maintain coverage for employees and any family members under any group health plan for the duration of the leave.

The Act permits employers to require that employees provide seven calendar days’ notice before the date the leave begins if the use of leave is foreseeable. The Act also permits employers to require that employees provide notice as soon as practicable if the use of leave is not foreseeable. Employers must provide employees with written notice of their notification requirements. Employers also may require employees to use paid leave in increments of two hours.

Employers must post a notice, to be prepared by the Illinois Department of Labor, summarizing the requirements of the Act. Employers also must include the notice in their employee handbook or as a written policy.

The Act provides that an employer that has a paid leave policy which provides the minimum amount of leave is not required to modify its policy so long as the policy offers an employee the option to take paid leave for any reason.

The Act also exempts employers that are subject to a municipal or county ordinance that is in effect as of January 1, 2024, and requires employers to give any form of paid leave to their employees, including paid sick leave or paid leave. Employers subject to Chicago’s Paid Sick Leave Ordinance or Cook County’s Earned Sick Leave Ordinance, therefore, are not required to provide paid leave beyond what is already required by a local ordinance. But the Act requires local ordinances that are enacted or amended after January 1, 2024, to comply with the minimum leave requirements set forth in the Act.

Illinois employers should review their policies to determine whether their paid leave policies need to be updated or whether they need to establish a separate policy to comply with the Act’s paid leave requirements.

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