UPDATE AS OF 12/15/2023: ***Note:  Chicago has delayed implementation of the new Paid Leave and Paid Sick and Safe Leave ordinance until July 1, 2024.***

In 2024, the employment landscape in Illinois, particularly in Chicago, will undergo a significant transformation with the implementation of two pivotal laws governing paid leave for workers. The Illinois Paid Leave for All Workers Act (the “Act”) introduces a comprehensive state-wide standard for paid leave, ensuring a minimum of forty hours annually of paid leave—which can be used for any reason—for all employees. Simultaneously, the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance (the “Ordinance”) imposes additional obligations on employers within the City of Chicago’s city limits.

While these pieces of legislation aim to enhance employee welfare, the sweeping changes they bring pose distinct compliance challenges for businesses across nearly all industries. From adjusting accrual rates and navigating notice requirements, to understanding the intricacies of carry over and payout obligations, companies large and small face a complex landscape requiring careful adaptation to ensure seamless compliance. In this dynamic environment, understanding the nuances of these laws becomes paramount to mitigate risks and foster a thriving and compliant workplace.

Illinois Paid Leave for All Workers Act

The Paid Leave for All Workers Act in Illinois, effective beginning on January 1, 2024, establishes a minimum paid leave standard for all workers in the state. The Act is applicable to most employees in Illinois, with specific exceptions for the construction industry, certain collective bargaining agreements, and employers covered by existing municipal or county ordinances.

The Act allows employees to earn and use a minimum of forty hours of paid leave annually, for any reason (vacation, sick, personal, etc.).  Leave under the Act accrues at a rate of one hour for every forty hours worked. Employers may “front-load” this leave on the first day of employment, or it may accrue over a designated twelve-month period, and employees may use the leave for any reason without providing documentation.  The Act outlines provisions for notice requirements, carryover of unused leave, and certain employer responsibilities. Notably, leave under the Act need not be paid out to employees upon separation of employment.  The Act also emphasizes that employers can adopt more generous leave policies and that collective bargaining agreements may waive certain provisions if explicitly stated in the contract.

The Act prohibits retaliation against employees using paid leave and sets penalties for violations. The Illinois Department of Labor is tasked with administering and enforcing the Act, with employers required to maintain records and provide access for monitoring compliance. The Illinois Department of Labor is in the process of preparing guidance and other resources and materials to educate employees and assist employers with compliance.

Chicago Paid Leave and Paid Sick and Safe Leave Ordinance

The City of Chicago is imposing expanded requirements on employers regarding paid leave for their Chicago-based employees. The newly passed Chicago Paid Leave and Paid Sick and Safe Leave Ordinance is effective beginning December 31, 2023, and provides to workers twice as much paid time off than does the State of Illinois Paid Leave for All Workers Act.

The ordinance mandates that all Chicago employers must provide their employees with eighty hours of leave, which fall into two categories:  forty general Paid Leave Hours (“PLH”) (to be used for any reason) and forty Paid Sick Leave Hours (“PSLH”) (to be used for certain covered reasons). The ordinance has distinct rules for eligibility, usage, carry over, and payout upon termination. The accrual rate for both types of leave is one hour for every thirty-five hours worked.

For general PLHs, employees become eligible after ninety days of employment and can use PLHs for any reason. Employers may require pre-approval, but documentation is not required. General PLH must be used in 4-hour (or more) increments, with a potential carry over of up to 16 hours.  The law also includes provisions for carryover in situations where employers deny leave approval, increasing permissible carry over amounts.  Employers can meet carryover requirements through front loading or an unlimited Paid Time Off (“PTO”) policy.

PSLH requires a 30-day employment period, with possible notice requirements and documentation for three consecutive days of leave. PSLH can be taken for various reasons, including illness, caring for family, addressing domestic violence, and responding to public health emergencies. It can be taken in as small as two-hour increments, and employees can potentially carry over up to eighty hours PSLH.

Upon termination, employees may be entitled to a payout of unused PLH, with varying requirements based on the size of the employer. Unused PSLH does not require payout. Unlimited PTO exempts employers from carry over requirements, but does not exempt them from payout obligations upon termination.  Enforcement includes fines and penalties for non-compliance, and the Ordinance provides a private right of action.

Conclusion

Existing policies that meet or exceed the above requirements are considered compliant. Employers with Chicago-based employees should review and update their policies to align with the new Ordinance, but even those employers without Chicago-based employees should prepare now to comply with the Illinois Paid Leave for All Workers Act.

For more information or any questions, please contact Adam Maxwell at [email protected] or at (312) 648-2300.