Recently, various paid leave laws either became effective or will become effective later this year in Illinois, the City of Chicago, and Cook County. All three laws require covered employers to provide up to 40 hours per year of paid leave to covered employees; the ordinance in Chicago also requires employers to provide paid sick leave. The following is a summary of each.
Illinois Paid Leave for All Workers Act
The Illinois Paid Leave for All Workers Act (IPLAWA) went into effect on January 1, 2024, and applies to all employers in Illinois that employ more than one employee, including individuals and partnerships, units of state and local government, as well as government agencies. It does not apply to public school districts or park districts. The IPLAWA requires nearly all covered Illinois employers to provide their eligible employees with up to a minimum of 40 hours of paid leave per 12-month benefit period to be used for any reason. Some of the key provisions are as follows:
Covered Employees: Applies to both part-time and full-time employees, and domestic workers. Part-time employees may accrue or earn less leave time than a full-time employee. Employees not covered are employees as defined in the federal Railroad Unemployment Insurance Act or the Railway Labor Act; temporary college or university student-employees; certain short-term employees of an institution of higher learning; employees in the construction industry who are covered by collective bargaining agreements; and, certain employees covered by collective bargaining agreements that provide shipment services.
Accrual and Frontloading of Paid Leave: Employees accrue at least one hour of paid leave for every 40 hours worked in a 12-month period. Paid leave begins to accrue at the start of employment. Employees may begin to take paid leave after 90 days of employment or March 31, 2024, whichever is later. An employer may frontload the paid leave upon hire and at the beginning of each 12-month period thereafter. If an employer selects the frontload method, the employer must give written notice to the employee informing the employee of the amount of paid leave hours available on or before the first day of employment or on or before the first day of the 12-month period.
Carryover of Paid Leave: An employer that provides paid leave via an accrual system must allow employees to carry over any unused leave annually from one 12-month period to the next 12-month period. Paid leave that is frontloaded may not be carried over.
Use of Paid Leave: Employers may set reasonable minimum increments for the use of paid leave, not to exceed two hours a day. If an employee’s scheduled workday is less than two hours, then the employee’s scheduled workday will be used to determine the amount of paid leave.
Pre-Existing Paid Leave Policy: An employer who has a qualifying pre-existing paid leave policy is not required to modify the pre-existing paid leave policy. If an employer modifies the pre-existing paid leave policy so that it no longer provides 40 hours of paid leave for any reason, then the pre-existing paid leave policy no longer qualifies for an exemption. A “qualifying pre-existing paid leave policy” is defined as a bona fide paid leave policy that an employer has enacted prior to January 1, 2024, that allows all employees to take at least 40 hours of paid leave for any reason of the employee’s choosing.
Notice Requirements: An employer is required to post a notice about IPLAWA in a conspicuous location where notices to employees are customarily posted. If there is a significant portion of non-English speaking employees, the notice must be posted in other languages as well. The required poster is available at the Illinois Department of Labor (IDOL) website: the English version is available here, and there are also Spanish and Polish translations available here. A separate law was recently enacted that allows an employer to email such notices to remote employees or make them available on their company intranet system. An employer is also required to provide a balance of all paid leave time on each pay stub and upon request from the employee.
Record Retention: An employer must keep records for at least 3 years of the following information for each employee: 1) name and address; 2) hours worked each day in a workweek; 3) paid leave earned or accrued in each workweek; 4) paid leave taken or used in each workweek; 5) requests by the employee to use paid leave that the employer denied; and 6) remaining paid leave balance in each workweek and upon employee’s separation or termination from employment.
The Illinois Department of Labor (IDOL) issued proposed implementing regulations on November 3, 2023. The proposed regulations have a 90-day notice and comment period before they can be finalized. While there will be differences between the proposed and the final regulations, the proposed regulations may provide additional guidance for credit unions to consider as to how the IDOL plans to enforce the law. As soon as the regulations are finalized, we will inform our credit unions.
Cook County Paid Leave Ordinance
The Cook County Board of Commissioners recently passed the Cook County Paid Leave Ordinance (Ordinance), which became effective on December 31, 2023. The Ordinance converts the pre-existing Cook County Earned Sick Leave Ordinance into an ordinance requiring general paid leave. The new Ordinance requires all employers, unless they are the federal government, the Illinois state government, or an Indian tribe, with employees in Cook County to provide 40 hours of paid leave to be used for any reason. It is largely modeled after the Illinois Paid Leave for All Workers Act (IPLAWA), but there are some differences. Some of the key provisions are as follows:
Covered Employee: The Ordinance covers all employees other than: employees as defined in the federal Railroad Unemployment Insurance Act; temporary college or university student-employees; certain short-term employees of an institution of higher learning; employees working in the construction industry who are covered by a bona fide collective bargaining agreement; and employees in school or park districts.
Accrual, Frontloading and Carryover of Leave: Employees are entitled to accrue paid leave at a rate of at least one hour of paid leave for every 40 hours worked, up to 40 hours accrued in a year. Carryover of unused time from one year to the next must be allowed. An employer may choose to frontload 40 hours of paid leave on the first day of the benefit year, however, is not required to carryover unused time from one year to the next.
Use of Paid Leave: An employer may limit use of paid leave until an employee’s 90th day of employment, however it may permit employees to use their leave earlier if it wishes to do so. An employer may set a reasonable minimum increment for the use of paid leave, provided the minimum increment does not exceed two hours per day for a full-time employee.
Existing leave policy: An employer may use their pre-existing PTO policies without modification if it: (1) provides employees with at least 40 hours of paid leave per year; and (2) that leave can be used for any reason. Employers may require up to 7 days advance notice of a foreseeable need for paid leave. For unforeseeable events, notice as soon as practicable is acceptable. Documentation is not required for the use of paid leave.
Notice Requirements: Employers must post a notice provided by the Cook County Commission on Human Rights in a conspicuous place at each facility in the County. The notice must also be included in a written document, or written employee manual or policy if the employer has one, and upon an employee’s employment. If there is a significant portion of non-English speaking employees, the notice must be posted in other languages as well.
Record retention: An employer must retain records documenting hours worked, paid leave accrued and taken and remaining paid leave balance for each employee for 3 years.
Chicago Paid Leave and Paid Sick and Safe Leave Ordinance
The City of Chicago recently passed a new Paid Leave and Paid Sick and Safe Leave Ordinance (Ordinance). The Ordinance requires that businesses that employ one or more employees provide those employees with at least 40 hours of paid sick/safe leave per year, and at least 40 hours of regular paid time off per year. Due to go into effect this past December 31st, the Chicago City Council recently passed an amendment to delay the effective date of implementation to July 1, 2024. Chicago’s existing paid leave laws remain in effect until the July 1, 2024 implementation date of the new Ordinance. Some of the key provisions are as follows:
Covered Employee: As part of the recent amendments, the definition of a covered employee was changed. A covered employee is an individual who works at least 80 hours for an employer within any 120-day period while physically present within the geographic boundaries of the city. Once the 80-hour threshold is reached, the employee will remain a covered employee for the remainder of the time that the employee works for the employer.
Accrual, Frontloading and Carryover of Leave: An employer may utilize an accrual or frontloading system. For employers that utilize an accrual system, employees will begin accruing both PTO and sick/safe leave time at one hour per 35 hours worked beginning on the implementation date and may cap accruals under each type of leave at 40 hours. Employee accruals (and caps) are measured across 12-month periods (which begin when the employee starts accruing time). Employees must be allowed to carry over up to 16 hours of PTO each year and up to 80 hours of paid sick/safe leave each year.
An employer may also utilize a frontloading system whereby the employer frontloads at least 40 hours of PTO and 40 hours of paid sick/safe leave at the beginning of the 12-month period. Employers using a frontloading system are not required to allow carryover of PTO but must permit carryover of unused paid sick/safe leave.
Use of Leave: An employee may use PTO for any purpose and may use paid sick/safe leave for the various sick/safe leave purposes under the law. An employer may adopt reasonable policies requiring employees to give prior notice for use of both PTO and the foreseeable need for paid sick/safe leave (with such requirements not to exceed 7 days). An employer may also reasonably require preapproval for the use of PTO. Documentation cannot be required; however, an employer can require various certifications that the employee has used paid sick/safe leave for a permissible purpose after the employee is absent for more than 3 consecutive workdays.
Payout upon Termination: Medium-sized employers who employ 51–100 covered employees will be required to pay out a maximum of 16 hours of accrued but unused paid leave upon separation until July 1, 2025. Starting on July 1, 2025, mediums-sized employers will be required to pay out the full amount of accrued but unused paid leave upon separation. Small employers with up to 50 covered employees do not need to pay out any accrued but unused paid leave upon separation. Large employers with more than 100 covered employees will be required to pay out the full amount of accrued but unused paid leave upon separation.
Notice Requirements: An employer must post, in a conspicuous place at each facility that is located within the geographic boundaries of the City where employees work, a notice advising employees of their right to paid time off. The City of Chicago’s Office of Labor Standards will provide the notice in the near future on their website.
An employer must also provide a notice advising employees of their right to paid time off in the first paycheck issued and annually with a paycheck issued within 30 days of July 1. Each time wages are paid, an employer must provide each employee written notification stating an updated amount of Paid Leave and Paid Sick Leave available and the accrual rates of both. An employer may choose a reasonable system for providing this notice, including, but not limited to, listing available paid time off on each pay stub or by using an online system where employees can access their own information.
Record Retention: Employers must retain records for 5 years. Records must include employee names, addresses, hours worked, pay rates, number of paid leave and paid sick leave hours earned each year, and dates on which paid leave and paid sick leave was used and paid.
Which Laws Apply
The IPLAWA does not apply to employers who must provide paid leave pursuant to any other municipal or county ordinances that provide for paid leave or paid sick leave that are in effect as of Jan. 1, 2024. Any municipal or county ordinances enacted or amended after Jan. 1, 2024, will have to meet, or exceed the requirements of the IPLAWA.
For further information about items in this L & T Bulletin, please contact ICUL’s Compliance & Advocacy Office: