Illinois Mandates Paid Leave ‘For Any Purpose’ Effective January 1, 2024

Illinois Governor JB Pritzker signed SB208, also known as the Paid Leave for All Workers Act, on March 13, 2023. Effective January 1, 2024, covered employees will be able to earn and use up to 40 hours of paid leave during a 12-month period “for any purpose” of the employee’s choosing.

The governor issued a statement praising the passage of the Paid Leave for All Workers Act (the Act) for providing “a safety net to hardworking Illinoisans.”

EMPLOYER AND EMPLOYEE ELIGIBILITY

The Act applies to all private employers in Illinois, as well as state and units of local government or any state or local government agency. However, the Act does not cover school districts organized under the School Code or park districts organized under the Park District Code.

Most Illinois employees are covered, with the exception of the following:

• 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)
• Employees 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

The Act clarifies that it does not affect the validity or change the terms of a CBA in effect on January 1, 2024 (or July 1, 2024 for employees of a state agency); however, after that date, requirements of the Act may only be waived if a bona fide CBA explicitly includes a waiver in clear and unambiguous terms.

EMPLOYERS COVERED BY CHICAGO AND COOK COUNTY PAID SICK LEAVE

The Act does not apply to employers covered by a “municipal or county ordinance” in effect on January 1, 2024 “that requires employers to give any form of paid leave to their employees, including paid sick leave or paid leave.” Therefore, the Act does not preempt the Chicago Minimum Wage and Paid Sick Leave Ordinance or the Cook County Earned Sick Leave Ordinance, and employers that provide employees with paid sick leave in compliance with the Chicago or Cook County ordinances will not be required to provide an additional 40 hours of paid leave.

However, the Act does apply to employers with Chicago or Cook County–based employees who are not currently covered by those ordinances. Additionally, if a municipality or county enacts or amends any local ordinance that provides paid leave after January 1, 2024, then the ordinance must comply with the requirements of the Act. This means the Act functions as a new floor for paid leave, and a local ordinance can set heightened requirements.

EMPLOYERS WITH EXISTING LEAVE POLICIES

Employers who provide any type of paid leave policy that satisfies the minimum amount of leave required by the Act (i.e., at least 40 hours) are not required to modify the policy if employees are allowed to take leave for any reason at their discretion.

PAID LEAVE USES AND ACCRUAL

The Act broadly states that an employee may use leave “for any reason of [their] choosing” and does not provide or set limitations on use.

Covered employees will accrue one hour of paid leave for every 40 hours worked up 40 hours of paid leave beginning on January 1, 2024 or when employment begins (though employers may permit additional accrual). Exempt employees shall be deemed to work 40 hours each workweek (unless their regular workweek is less than 40 hours and then paid leave accrues based on that regular workweek).

Employees can earn and use up to 40 hours of leave during a 12-month period, which may be any consecutive period designated by the employer in writing at the time of hire. Changes to this period may be made if the employer provides written notice to the employees prior to the change, and the change does not reduce the eligible accrual rate and paid leave available to the employees.

Employees are eligible to begin taking leave 90 days after their employment begins or 90 days after January 1, 2024, whichever is later. Once eligible, employees may determine when and how much leave to use, but employers may set a reasonable minimum increment of no less than two hours per day.

CARRYOVER AND FRONT-LOADING

Under an accrual system, employees may carry over all unused paid leave from one 12-month period to the next, but nothing in the Act requires an employer to allow employees to provide more than 40 hours of leave per 12-month period.

Alternatively, employers can choose to “front-load” 40 hours of paid leave on the first day of the 12-month period. With front-loading, carryover from year to year is not required and any unused leave can be forfeited at the end of the 12-month period. In other words, a “use it or lose it” policy is allowed for front-loaded leave.

Unused time must be reinstated and made available for use if the employee is rehired within 12 months of separation.

EMPLOYEE NOTICE AND DOCUMENTATION OF PAID LEAVE

Employers may require up to seven calendar days’ notice before taking paid leave, which employees may make orally or in writing. If leave is unforeseeable, however, employees need only provide notice as soon as is practicable. An employer that requires notice when the leave is not foreseeable shall provide a written policy that contains procedures for the employee to provide notice.

An employer may not require documentation or certification to support an employee’s need for leave or require that the employee search for or find a replacement worker to cover the hours during which the employee takes paid leave.

PAYMENT TO EMPLOYEES

When using the paid leave, employees shall be paid their hourly rate of pay. Employees who are regularly paid gratuities or commissions as part of their pay shall be paid at least the full minimum wage in the jurisdiction in which they are employed.

Employers are not required to pay unused paid leave upon an employee’s termination, resignation, retirement, or other separation, provided that the employer has not “credited” the paid leave to an employee’s paid time off or vacation banks. If an employer has credited the leave to paid time off or vacation bank, then the Illinois rules for paying out unused leave upon separation apply.

EMPLOYER NOTICE AND RECORDKEEPING RESPONSIBILITIES

Employers must post in a “conspicuous” place at the workplace a notice provided by the Illinois Department of Labor (IDOL) summarizing the requirements of the Act and information regarding filing a complaint. Presumably, the IDOL intends to make this notice available on its website before the January 1, 2024 effective date. If an employer’s workforce is comprised of “a significant portion” of workers who are not literate in English, the employer shall notify the IDOL, and the IDOL will prepare a notice in the appropriate language. A copy of the notice shall also be included in an employee handbook or leave policy, if the employer has one.

Employers must also maintain records for each employee showing the employee’s: (1) hours worked; (2) paid leave accrued and taken; and (3) remaining paid leave balance. Records must be retained for at least three years and must be available for inspection by the IDOL and, if an employer uses an accrual model, to the employee upon request.

NO RETALIATION

The Act expressly prohibits employers from retaliating against employees for (1) exercising their rights under the Act, (2) opposing practices the employee believes to be in violation of the Act, or (3) supporting others’ exercise of rights under the Act. Employers also may not consider employees use of paid leave in making employment decisions (such as promotions, disciplines, or evaluations).

ENFORCEMENT AND EMPLOYER PENALTIES

The IDOL is responsible for administering and enforcing the Act, including conducting investigations. Employees may file complaints with the IDOL within three years of the alleged violation. If the IDOL finds cause to believe the Act has been violated, it shall notify the parties in writing, and the matter shall be referred to an administrative law judge to schedule a formal hearing.

Employers who violate the Act’s posting requirements will be fined $500 for the first violation and $1,000 for each subsequent violation. Employers that otherwise violate the Act are liable to the affected employee for damages in the form of actual underpayment, compensatory damages, and a penalty of $500 to $1,000. The Act also permits employees to recover appropriate equitable relief, including reasonable attorney’s fees and expert witness fees.

In addition, employers will be subject to a $2,500 civil penalty for each separate offense to be deposited into the Paid Leave for All Workers Fund, a special fund created in the state treasury dedicated to enforcing the Act. For the purposes of this penalty, an “offense” is defined to mean any violation of the Act other than a violation of the posting requirement.

NEXT STEPS FOR ILLINOIS EMPLOYERS

Illinois employers should take the following steps to comply with these expanded requirements before January 1, 2024:

• Review and potentially revise policies to ensure they are compliant with the expanded paid leave requirements.
• Train managers and human resources on the Act’s requirements.
• Consult the IDOL website, which will likely be updated later this year to provide guidance and a template for the required notice to employees as described above.