Illinois Passes Paid Leave for ‘Any Reason’

March 14, 2023 - McGuireWoods

On March 13, 2023, Illinois Gov. J. B. Pritzker signed into law the Paid Leave for All Workers Act (the Act), the first statewide paid leave law in Illinois. The law expands paid leave beyond Cook County and Chicago’s paid sick leave ordinances, making paid leave for any reason available to Illinois employees who are beyond these localities. Given the broad nature and intent of the law, Illinois employers would be wise to examine the Act’s requirements against their own leave policies to ensure compliance, as leave accrual requirements will commence Jan. 1, 2024.

The Act’s Broad Nature

In recent years, many locations nationwide have enacted paid sick leave requirements, including Cook County and Chicago, Illinois. However, the Paid Leave for All Workers Act now provides Illinois employees outside Cook County paid leave for any reason of their choosing. It also defines “employee” broadly to exclude very limited categories of workers.

Leave Requirements

Beginning Jan. 1, 2024, Illinois employees will be entitled to earn and use at least 40 hours of paid leave during a 12-month period or a pro rata number of paid leave hours. Leave must accrue at a rate of at least one hour for every 40 hours worked. For purposes of accrual, the law assumes exempt employees work 40 hours each workweek.

Employers may frontload the 40 hours of paid leave, or a pro rata portion thereof, on an employee’s first day of employment or the first day of any consecutive 12-month period designated by the employer in writing at the time of hire.

To change the designated 12-month use or accrual period, employers must:

• Provide written notice to employees prior to the change.
• Provide employees with documentation of the balance of hours worked, paid leave accrued and taken, and their remaining paid leave balance.
• Ensure that the change does not reduce eligible accrual or paid leave available to employees.

Employers who frontload leave are not required to carry over paid leave from year to year and may require that unused paid leave be forfeited at the end of the year. Employers who do not frontload must allow up to 40 hours of paid leave to be carried over annually but can cap the annual leave use at 40 hours.

Terms of Use

Employees may use leave for any purpose so long as they request to do so in accordance with their employer’s paid leave policy. Employers cannot require employees to provide a reason for the leave or documentation or a certification to support their leave. Employees also may choose whether to use paid leave provided under the Act prior to using any other leave provided by the employer or state law.

During leave, employees must be paid their regular rate, and in the case of commission or gratuity-based employees, at least the minimum wage of the jurisdiction where they are employed.

Employer Limitations

Employers may set reasonable minimum increments for use of this leave, so long as they do not exceed two hours per day. For employees whose workdays are less than two hours, the duration of the workday must be used to determine the amount of paid leave. Additionally, employers may require the following:

• Employees’ use of paid leave under the Paid Leave for All Workers Act will not start until 90 days following commencement of employment (but accrual must begin at the commencement of employment).
• Employees provide seven days’ notice before taking foreseeable leave.
• Employees provide notice as soon as practicable through an established notice procedure before taking unforeseeable leave.

Payout Requirements

Employers need not pay out accrued, unused leave at year’s end or at separation from employment unless the employer’s policy charges or credits paid leave provided for by the Act to a paid time off bank or vacation account. In that case, unused paid leave must be paid to an employee upon employment separation to the same extent as vacation time is required to be paid out under Illinois law. The Act does not affect payout of other types of leave.

Notice and Recordkeeping Requirements

Employers must provide a written and conspicuously posted notice of the Act’s requirements in a handbook or otherwise. This notice must include the following:

• A copy of the forthcoming Department of Labor (DOL) notice related to the Act. If a significant portion of an employer’s workforce is not literate in English, the employer must request that the DOL issue its notice in the employer’s appropriate language.
• If applicable, a notice that employees are responsible for paying their share of any health insurance coverage to maintain coverage while on leave.

Employers must also provide notice within five calendar days of any change to their paid leave policy notification requirements or changes that may impact an employee’s right to be paid out for such leave upon separation.

Employers must keep, for at least three years, records of hours worked, paid leave accrued and taken, and any remaining paid leave balance. Employers must also inform employees of their accrued, unused leave balance upon request.

Other Employee Protections

Like most leave laws, employers may not retaliate against employees for taking, attempting to take or supporting leave under the Act. Likewise, employers may not interfere with leave, deny leave, change an employee’s workdays or hours to avoid leave, or require an employee taking leave to find a replacement worker.

Employees transferred or rehired within 12 months of separation have leave retention rights and employers must allow such employees to use paid leave provided for by the Act at the commencement of employment.

Collective Bargaining Agreements, Existing Policies and Interaction With Cook County and Chicago Paid Sick Leave

The Act does not invalidate or modify existing collective bargaining agreements (CBAs) or CBAs entered into before Jan. 1, 2024. CBAs entered after Jan. 1, 2024, may waive the requirements of the Act only if the waiver is unambiguous. The new law also specifies that it does not apply to employees covered by CBAs in the construction industry or national and international delivery, pickup and transportation services for parcels, documents and freight.

More generally, employers need not modify existing policies if they meet the new law’s requirements.

Interestingly, the Paid Leave for All Workers Act also exempts employers covered by current municipal or county ordinances that provide for any form of paid leave, regardless of whether the ordinances meet the Act’s requirements. In effect, employers required to comply with Chicago’s and Cook County’s paid sick leave ordinances are not required to comply with the broader statewide paid leave law. However, any ordinance enacted or amended after Jan. 1, 2024, must meet or exceed the Act’s requirements, and in that case, the employer need only abide by the local ordinance.

Consequences for Violations and Actions for Employers

Failure to comply with the Paid Leave for All Workers Act may result in:

• Civil penalties of $500 for an initial posting violation and $1,000 for each subsequent violation, and general civil penalties of $2,500 for each offense, all of which would be deposited into the state’s Paid Leave for All Workers Fund.
• A Department of Labor complaint, which would allow an employee to recover for underpayment, compensatory damages, a penalty of $500 to $1,000, and payment of attorney’s and expert fees and costs.

Notably, the new law does not expressly set forth a private right of action.

Employers with any employees in Illinois should review their current leave policies and future collective bargaining agreements to see what, if any, changes are necessary to comply with the Paid Leave for All Workers Act. For those employers who need to make modifications, the best way to comply and the manner of accrual will depend on many individualized factors.

For further information or questions about the information contained in this legal alert, please contact the authors, your McGuireWoods contact, or a member of the firm’s labor and employment team.