ILLINOIS PAID LEAVE
Starting on January 1, 2024, employees in Illinois will accrue Paid Leave, which they’ll be able to use for any purpose. The Illinois Department of Labor (IDOL) has published FAQs for employers. IDOL is also working on final rules that will clarify how the law should be applied—those should be released no later than March 31, 2024. In the meantime, a draft of the proposed rules was filed November 3, 2023.
Applicability
Paid Leave applies to employers of all sizes and almost all employees, with limited exceptions.
Employers that are covered by a municipal or county ordinance that requires them to provide any form of paid leave to employees (currently Chicago and Cook County) should continue to follow those municipal or county requirements for employees in those locations. Note that employers located in Cook County must provide state Paid Leave if they’re in a municipality that opted out of the Cook County Earned Sick Leave Ordinance.
Accrual and Carryover
Employees will accrue Paid Leave at a rate of one hour for every 40 hours worked. Employers can calculate exempt employee accrual based on a 40-hour workweek (even if the employee generally works more than that) or they can use their normal work schedule if they regularly work less than 40 hours.
Employers can cap accrual at 40 hours per year. Unused Paid Leave must be carried over from year to year. (The proposed rules suggest that carryover can be capped at 80 hours per year, but you can still limit use to 40 hours per year, as covered below.)
Frontloading
Instead of using an accrual system, employers can frontload an employee’s Paid Leave bank at the beginning of each year (or on a new hire’s first day of employment), in which case they don’t need to allow carryover of unused Paid Leave. Employers will need to frontload 40 hours of Paid Leave for most employees. However, according to the FAQs, employers can prorate this lump sum for part-time employees, and, per the proposed rules, employers can prorate hours for full-time employees hired mid-benefit year. If an employer chooses to prorate for part-time employees, but they ultimately work more hours than anticipated, they must accrue additional Paid Leave for the extra hours worked.
Use
Employees can begin to use their Paid Leave on March 31, 2024, or after 90 days of employment, whichever is later. Employers can cap use of leave at 40 hours per year.
Employees are entitled to determine how much Paid Leave to use, though employers can require them to use their Paid Leave in increments as large as two hours, or their entire workday if it’s shorter than two hours. Paid Leave must be paid at the employee’s regular rate of pay or minimum wage if the employer usually relies on tips or commissions to bring the employee to minimum wage.
Employers can’t require employees to provide the reason for the leave or documentation to support their need for Paid Leave.
As is standard with sick leave laws, employers can’t require that an employee find their own coverage or deny them leave if a replacement worker can’t be found.
Notice
Employers are required to post a notice about employees’ Paid Leave rights in a conspicuous location where notices are usually displayed. They also need to provide written notice of these rights to employees by March 31, 2024, or upon hire, whichever is later. Per the proposed rules, if employers usually communicate with employees by electronic means (email or messaging app), the notice should be provided electronically. IDOL will create the required notice by the end of 2023.
The proposed rules also suggest that employers will need to provide an employee’s Paid Leave balance on each paystub.
Payout
Employers aren’t required to pay out unused Paid Leave when an employee quits or is terminated. Employees who are rehired within 12 months of separation must have their unused Paid Leave restored.
Existing Policies
Employers can use their existing vacation or paid time off (PTO) policy to fulfill their obligations under the new Paid Leave law, as long as the policy provides at least 40 hours of paid leave that employees can use for any reason. If employers use their existing vacation or PTO policy to fulfill their Paid Leave requirements, unused time must be paid out when an employee leaves employment (as required for vacation and paid time off under state law).
Action Items
Add a Paid Leave policy to your handbook or, if you already have a vacation leave or PTO policy that you want to use to comply with the law, review it and update as needed to ensure compliance
Keep an eye out for the Paid Leave poster from the Illinois Department of Labor and, when it’s available, post it at each worksite
Provide the written notice (either individually or in a handbook) to employees by March 31, 2024, or upon hire, whichever is later
Review the FAQs available on IDOL’s website
If you thirst for more knowledge, plan to attend a Paid Leave webinar hosted by IDOL
CHICAGO PAID LEAVE AND PAID SICK AND SAFE LEAVE
Not to be outdone by the state, Chicago has beefed up its paid (sick) leave requirements significantly. As of December 31, 2023, the city will replace its Paid Sick Leave ordinance with a more robust Paid Leave and Paid Sick and Safe Leave Ordinance. Under the new ordinance, employees will be entitled to accrue two separate types of leave: Paid Leave that can be used for any reason, and Paid Sick Leave that can be used for the reasons allowed by Chicago’s previous paid sick leave law. Here are some highlights:
Accrual: Both types of leave begin to accrue on January 1, 2024 (or upon hire, whichever is later) at a rate of one hour for every 35 hours worked (so, an employee who works 35 hours will have earned one hour of Paid Sick Leave and one hour of Paid Leave). Employers can cap accrual at 40 hours per year for each type of leave.
Carryover: Employees can carry over up to 16 hours of Paid Leave and up to 80 hours of Paid Sick Leave per year.
Use: Employers can’t cap use of either type of leave but can impose a 30-day waiting period on Paid Sick Leave use and a 90-day waiting period on Paid Leave use, from the time of hire.
Payout of Accrued but Unused Leave at Termination: Employers don’t have to pay out unused Paid Sick Leave. However, with respect to Paid Leave, employers with 101 or more employees have to pay out any unused Paid Leave at termination. Midsize employers (51–100 employees) have to pay out up to 16 hours of unused Paid Leave in 2024, and all of it in 2025. Small employers don’t have to pay out unused Paid Leave.
Be aware that some of the other details of this law are never-before-seen in paid leave or sick leave laws. For instance, if either type of leave was unreasonably denied, employers must increase the amount of carryover allowed to credit the employee for the leave they weren’t allowed to take. We encourage you to read more on the platform.
Action Items
Update your policy to comply with the new ordinance
Keep an eye out for a new required notice from the city