Illinois Set to Become Third State to Mandate Paid Leave for Any Reason
Posted: January 17, 2023
After a "gut and replace" of Illinois Senate Bill 208 at the beginning of the 2023 legislative session, the Paid Leave for All Workers Act (the "Act") passed both houses of the legislature on January 10, 2023. The Act has been sent to the governor, who issued a statement indicating that he is "looking forward to signing this legislation."
Once signed, beginning January 1, 2024, the Act will require nearly all covered Illinois employers to provide its covered employees up to 40 hours of paid leave per year, to be used "for any purpose." This would make Illinois the third state with a mandatory paid time off law, following Nevada and Maine.
Covered Employers and Employees
The Act applies to all employers in Illinois, including units of state and local government and government agencies. It does not, however, cover school districts organized under the School Code or park districts organized under the Park District Code.
The Act covers all employees, with the following exceptions:
- 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 working in the construction industry who are covered by a bona fide collective bargaining agreement (CBA)
- Employee who are covered by a bona fide CBA with an employer that provides services nationally and internationally of delivery, pickup, and transportation of parcels, documents, and freight
It does not apply to employees covered by a valid CBA in effect on January 1, 2024. Following that date, the requirements of the Act can be waived in a bona fide CBA if the waiver is set forth explicitly in the agreement in clear and unambiguous terms.
Intersection with Chicago and Cook County Paid Sick Leave
The Act does not preempt the Chicago Minimum Wage and Paid Sick Leave Ordinance or the Cook County Earned Sick Leave Ordinance. Instead, it states that the Act "shall not apply to any employer that is covered by a municipal or county ordinance that is in effect on the effective date of [the] Act that requires employers to give any form of paid leave to their employees, including paid sick leave or paid leave." Conversely, the Act requires employers not covered by these ordinances to provide paid leave.
For any local ordinances enacted or amended on or after January 1, 2024, an employer must comply only with the provisions of the local ordinance to the extent that it provides benefits, rights, and remedies that are greater than or equal to the benefits, rights, and remedies afforded under the Act. In other words, the Act sets the new floor, but the local ordinance can raise the ceiling.
Accrual, Carryover, and Frontloading
On January 1, 2024, or when employment begins — whichever is later — covered employees will accrue one hour of paid leave for every 40 hours worked. Exempt employees are presumed to work 40 hours per workweek for the purposes of accrual unless their regular workweek is less than 40 hours, in which case paid leave accrues based on that regular workweek.
Employees can accrue up to 40 hours in a 12-month period. Per the Act, a 12-month period may be any 12-month period designated by the employer in writing at the time of hire. Employees may carry over up to 40 hours of paid leave from one 12-month period to the next.
In lieu of accruing time, employers may choose to grant (or "frontload") 40 hours of paid leave on the first day of the 12-month period. If the full 40 hours is frontloaded at the beginning of the 12-month period, carryover from year to year is not required, and any unused leave will be forfeited at the end of the 12-month period.
Employees cannot use their paid leave until they have completed 90 calendar days of employment, or March 31, 2024, whichever is later.
Requesting and (Not) Documenting Paid Leave
Employers may require up to seven days' advance notice of a foreseeable need for paid leave. If leave is unforeseeable, employees need only provide notice as soon as practicable. An employer that requires advance notice for unforeseeable absences must adopt a written policy that contains procedures for the employee to provide notice. Despite these advance notice requirements, however, the Act does not appear to provide an avenue for employers to ascertain whether the employee provided appropriate notice under the circumstances.
Unlike most paid leave laws, the Act expressly prohibits employers from requiring documentation or certification to support an employee's need for leave.
Employers may set a reasonable minimum increment of use for paid leave under the Act, but it cannot be more than two hours. If an employee's shift length is less than two hours, the minimum increment of use will be the length of the employee's scheduled shift.
Employees must receive their hourly rate of pay when using paid leave, which does not include commissions or gratuities. However, an employee's hourly rate of pay for leave under the Act cannot drop below the applicable minimum wage.
End of Employment, Rehiring, and Transfers
Unless an employer is using a more generous paid time off policy for compliance, as outlined below, employers are not required to pay employees for unused paid leave time upon separation from employment.
Unused time must be reinstated and made available for use if the employee is rehired within 12 months of separation. Presumably, these reinstatement requirements would not apply in the event that unused paid leave is paid out upon separation from employment, but the Act does not address this issue. Employees transferring to a separate division, entity, or location will retain their accrued paid leave time.
Using Existing Leave Policies
Employers may use other types of paid leave policies to satisfy their obligation to provide paid leave under the Act.
The Act indicates that an employer is "not required to modify [their] policy" if it satisfies the minimum amount of leave required under the Act and the employee is permitted to take paid leave for any reason. Based on how other paid leave enforcement agencies have interpreted similar statutory language, it is more likely that the Illinois Department of Labor (IDOL) will view this language as the condition under which employers can use pre-existing, more generous policies to comply with their new obligations than any type of exemption to compliance requirements under the Act.
If an employer does use another type of vacation bank to satisfy its obligations under the Act, any unused leave must be paid out upon separation from employment, consistent with the requirements under the Illinois Wage Payment and Collection Act.
Employer Notice and Recordkeeping Requirements
Employers must post a Notice (to be provided by the IDOL) in a conspicuous place on the employer's premises and include a copy of the Notice in a written document, or written employee manual or policy. If the employer's workforce includes a significant portion of non-English speakers, it will be required to post a notice in this language, a model of which will be provided by the IDOL.
Employers must maintain accurate records for each employee showing the employee's: (1) hours worked; (2) paid leave accrued and used; and (3) remaining paid leave balance. Records must be retained for at least three years and must be available for inspection by the IDOL. While an employee's paid leave accruals need not be reported on a paystub, employers must provide this information to an employee upon request.
Prohibited Acts, Enforcement, and Penalties
Under the Act, an employer cannot require that an employee seek or find a replacement worker to cover the hours during which the employee uses paid leave.
The Act contains broad anti-discrimination and retaliation provisions, and explicitly prohibits consideration of the use of paid leave as a negative factor in any employment action that involves evaluating, promoting, disciplining, or counting paid leave under a no-fault attendance policy.
The IDOL will be tasked with the administration and enforcement of the Act. Employees may file a complaint with the IDOL within three years of an alleged violation. There does not appear to be a private right of action for employees.
An employer that violates the Act will be liable to the affected employee for damages in the form of actual underpayment, compensatory damages, and a penalty of at least $500 but no more than $1,000. Affected employees will also be entitled to equitable relief including attorney's fees, reasonable expert witness fees, and other costs of the action. Additionally, employers found to violate the Act will be subject to a $2,500 civil penalty for each separate offense, payable to the Paid Leave for All Workers Fund, a special fund created in the state treasury that is dedicated to enforcing the Act. Employers that violate the Act's notice/posting requirements will be subject to a $500 civil penalty for the first audit violation and $1,000 civil penalty for each subsequent audit violation.
The language of the Act raises a number of questions.
- First, it is unclear whether the carryover requirements impose an overall accrual cap of 40 hours on an employee's paid leave bank. In other words, if an employee carries over 40 hours of accrued but unused paid leave from 2024 to 2025, does the employee's accrual cease once their bank reaches 40 hours? Or does the employee accrue up to another 40 hours in 2025, for a maximum balance of 80 hours, but with an annual use cap of 40 hours?
- Second, the Act suggests that an employer may be able to provide a pro rata frontload to both new hires and part-time employees. However, the IDOL should provide further clarification regarding the impact, if any, of a pro rata frontload on a part-time employee's carryover and annual usage caps.
- Third, and as previewed above, the Act exempts employees who are covered by a bona fide CBA with an employer that provides national "and" international delivery, pickup and transportation services of parcels, documents, and freight. Thus, as written, those employers solely providing national services will not appear to be covered by this CBA exemption. It is unclear whether this actually was the intent of the legislature.
- Fourth, Chicago and Cook County have not made changes to the paid sick leave accruals available to employees under their separate ordinances since the laws took effect July 1, 2017. However, Chicago most recently expanded the covered reasons for use under its ordinance effective August 1, 2021. If Chicago introduces further changes in the future — e.g., a smaller minimum increment of use or the broader definition of a covered family member — would the ordinance also need to be converted to a mandatory paid time off law to comply with the Act?
- Finally, the Act states that employees may choose whether to use their paid leave under the Act "prior to using any other leave provided by the employer or State law." The suggestion here is that employees can now "stack" their paid leave with other state unpaid leave entitlements to extend their total time off from work. This includes, for example, the recently amended and expanded Family Bereavement Leave law, which provides employees with up to 10 workdays for each qualifying bereavement event under the law.
Key Takeaways and Next Steps
The introduction of mandatory paid leave on a statewide level will be a significant shift for Illinois employers. We expect additional guidance to be forthcoming from the IDOL prior to the law's January 1, 2024 effective date. However, employers should start analyzing their compliance strategy with respect to usage of existing paid leave policies and treatment of their Chicago and Cook County workers.
Posted In: Department of Labor (DOL); Employee Benefits; Human Resources, General; Illinois; Wage and Hour Laws
Want to know more? Read the full article by By Stephanie Mills-Gallan, Jeff Nowak, and Meg Karnig at Littler Mendelson