With a passing vote from both the Illinois House and Senate on January 10, 2023, the new “Paid Leave for All Workers Act” is primed to become a new law guaranteeing almost all Illinois workers paid leave for any reason. 

Also known as SB 208 Amendment 4, the bill is expected to be signed into law by Governor Pritzker, and will then take effect on January 1, 2024. The bill permits workers to earn and take up to 40 hours of paid time off, for any reason whatsoever. 

What Is the New Law?
Under the new law, Illinois workers will now be entitled to earn a minimum of 40 hours (5 days) of paid leave during a 12-month period, whether the worker is full-time or part-time. Unlike some other existing leave laws, workers will not be required to give their employers any reason for using leave under the new law. Additionally, employers are not permitted to require any documentation supporting the need to take leave under the law. Under the law, employees must be permitted to take paid leave in increments no greater than 2 hours. 

How Is Leave Calculated Under the Act?
The paid leave accrues at a rate of one hour of leave for every 40 hours worked. Exempt employees are presumed to have worked 40 hours in each workweek, unless their regular workweeks are scheduled to be less than 40 hours. 

In lieu of the accrual method, employers may provide employees with a lump sum of 40 hours at the beginning of employment or each applicable 12-month period.

New employees are entitled to use paid leave after 90 days have passed since the start of their employment, unless the employer allows them to use such paid leave prior to the 90-day period. 

Under the accrual system, if an employee does not use all 40 hours in a 12-month period, they can roll those unused hours over into the next year, up to 40 hours. Conversely, employers that provide a lump sum of 40 hours may require employees use all paid leave prior to the end of the benefit period or forfeit the unused paid leave.

Who Does the Act Apply To?
Technically, the Act covers all private employers, as well as state employees and units of local government, other than school districts and park districts. However, the Act does also not apply to any employer that is covered by a city or county ordinance requiring any form of paid leave. In other words, any employer covered by the Cook County Earned Sick Leave Ordinance is not affected by the Act.

What About Those Employees Covered by a Collective Bargaining Agreement?
Significantly, the bill specifically excludes employees working in the construction industry who are covered by a bona fide collective bargaining agreement, as well as those covered by a collective bargaining agreement with an employer providing national and international transportation services. Additionally, the bill permits labor unions to waive its requirements in a collective bargaining agreement, so long as the waiver is in “clear and unambiguous terms.” 

How Does the Employee Use Paid Leave?
The bill allows employers to enforce “reasonable” paid leave policy notification requirements and allows employers to require seven (7) calendar days’ notice when the need for leave is foreseeable (e.g., planned vacation or non-emergency surgery), or notice as soon as practicable when the leave is unforeseeable (e.g. sick or emergency). Again, however, employers may not require employees to provide documentation or certification of the need to take leave under this new law.  

On the upside, employers have discretion to draft their own reasonable notice requirements. But, employers cannot condition paid time off based on the worker finding a replacement.

How Does the New Law Interplay with the IWPCA Upon Termination?
Interestingly, paid leave under this new law is not payable upon termination. In other words, unlike paid time off (PTO) earned under company PTO and/or vacation policies, which, under the Illinois Wage Payment and Collection Act (IWPCA), must be paid to the employee upon termination, paid leave under this new law need not be paid to the employee. In fact, the law expressly states that employers do not need to pay unused paid leave upon termination, provided the employer has not credited such paid leave to an employee’s paid time off or vacation bank.

What are the Consequences for Violating the Law?
Once enacted, and beginning January 1, 2024, the law will prohibit any adverse actions against any employees for exercising their rights under the law, opposing practices that the employee believes to be in violation of the law, and supporting others’ exercise of their rights under the law.  

Claims for violation of the law can be filed by aggrieved employees before the Illinois Department of Labor (IDOL) within three (3) years of the alleged violation. Employers found by the IDOL to have violated the Act are subject to actual damages, compensatory damages, attorneys’ fees, equitable relief and civil penalties. Civil penalties for each offense start at $2,500, and the Illinois Attorney General may bring an action to enforce the collection of any award made by the IDOL under the law. 

What Impact Will This New Law Have on Illinois Employers and How Should They Prepare?
Luckily, Illinois’ employers have almost a year to prepare for this new law to take effect. However, this anticipated new law could have a significant impact on Illinois employers based on, for example, whether they have existing paid time off policies and where the employers are located. For example, if an employer has an existing paid time off or vacation policy that is accrual-based and does not allow for rollover from one year to another, such policy would need to be updated in order to be compliant with this new law, or otherwise have a stand-alone, independent paid time off policy that is consistent with the new law. Employers must therefore give serious thought to whether their existing time off policies must be amended or supplemented in light of this new leave entitlement.

Similarly, those employers covered by the Chicago and Cook County Sick Leave Ordinances must also give thought as to how this new law may impact existing sick leave policies. For example, while the new law appears to exempt those employers covered by those sick leave ordinances, there are some obvious differences between the new law and those sick leave ordinances, such as “roll over” rights and the qualifying reasons to take such leave, that are less generous than under the new law and may have to be reconciled.

Given the effective date of the new law, Illinois employers do not need to panic. Employers should start reviewing their paid time off and other leave policies now to ascertain whether or not those polices must be updated to comply with the new law. Companies with existing paid time off policies that allow for roll over from year to year and very few limits on reasons for taking such leave may not have a heavy lift to become compliant. Other employers, however, with more limited or restricted leave policies may need to make more significant updates to their policies.