On March 13, 2023, Illinois Governor J.B. Pritzker signed new legislation requiring Illinois employers to provide employees up to 40 hours of paid leave within a 12-month period, which can be used for any reason. The new legislation, referred to as The Paid Leave for All Workers Act — Public Act 102-1143 (referred to herein as the “IPLA”), goes into effect January 1, 2024. Illinois employers should be aware of the IPLA’s application and requirements and take steps to develop or modify paid leave policies to conform to its requirements. A brief summary of the key components of the IPLA is below.
Paid Leave Accrual and 12-Month Period: Under the IPLA, employees accrue or earn 1 hour of paid leave for every 40 hours worked, up to a maximum of 40 hours of paid leave within a 12-month period designated by the employer. IPLA at § 15(b).[1] Employers are responsible for notifying employees in writing of the applicable 12-month period at the time the employee is hired. An employer may change the designated 12-month period provided the employer notifies employees in advance in writing, and that the change will not reduce the accrual rate or amount of leave available. Id. at § 15(d). At the time of making any change to the 12-month period, employers must provide documentation reflecting the balance of hours worked, paid leave accrued and taken, and the employee’s remaining paid leave balance. Id.
Reason for Leave: Employees may take accrued, paid leave under the IPLA for any reason of the employee’s choosing, and employees may not be required to provide employers with a reason for taking paid leave or provide documentation to support or substantiate the reason or need for the leave. Id. at § 15(e)
Calculating Paid Leave Payments: Employees on paid leave under the IPLA must be paid at their regular hourly rate of pay. For employees whose compensation includes commissions or gratuities, the paid leave payments should be calculated using the greater of the employee’s regular hourly rate pay or the full minimum wage in which the employee is employed at the time the leave is taken. Id. at § 15(f).
Commencement of Accrual and 90-Day Waiting Period: Paid leave begins to accrue the later of (i) the commencement of the employee’s employment or (ii) the effective date of the IPLA, January 1, 2024). Id. at §15(g). In other words, employees already employed prior to January 1, 2024 begin accruing paid leave on January 1, 2024, whereas paid leave begins to accrue on the first day of employment for employees hired after January 1, 2024. Employers may impose a 90-day waiting period before employees may use accrued paid leave, beginning on the date paid leave begins to accrue (described above).
Employer Policies and Requests for Use of Paid Leave: Employers may implement reasonable policies regarding employee notifications of requests to use paid leave under the IPLA. Id. at § 15(h). Specifically, employers may require an employee to provide 7 days’ calendar notice of using paid leave if the leave is foreseeable. Id. at § 15(h)(1). If the use of paid leave is unforeseeable, an employer’s policy may require the employee to provide notice as soon as practicable after the employee becomes aware of the necessity of the leave, and the employer must set for procedures for providing such notice in its written leave policy. Id. at § 15(h)(2). The IPLA also requires employers to provide written notice of its paid leave notification policies and requirements by posting them on the employer’s premises in a customary location (e.g., employee cafeteria, lounge, etc.), and to include the written policies in an employee handbook or manual if the employer maintains one. Id. at § 15(h)(3).
Carryover of Unused Paid Leave; Termination: The IPLA generally requires that paid leave accrued but unused prior to the expiration of the applicable 12-month period may carry over to the subsequent 12-month period, provided that an employer is not obligated to allow an employee to use more than 40 hours of paid leave in any 12-month period. Id. at. § 15(i). Upon termination of employment, an employer has no obligation to pay an employee the monetary equivalent of accrued, unused paid leave under the IPLA (which represents a key distinction between earned vacation or paid time off subject to the Illinois Wage Payment and Collection Act). Id. at § 15(j).[2] A terminated or separated employee with accrued, unused paid leave who is rehired within 12 months is entitled to reinstatement of the accrued, unused paid leave. Id.
Exclusions; Local Ordinances; Chicago and Cook County: The IPLA does not apply to employers already covered by a municipal or county ordinance that requires employers to provide any form of paid leave, such as the City of Chicago and Cook County paid sick leave ordinances. If the City of Chicago or Cook County subsequently amend or modify their respective paid sick leave ordinances, employers in Chicago and Cook County will no longer be exempt from the IPLA.
Employer Responsibilities: The Act obligates employers to keep and preserve records reflecting the number of hours worked, paid leave accrued and used, and remaining paid leave balance for each employee for at least 3 years (and for the duration of any pending claim under the IPLA), and to allow the Illinois Department of Labor access to such records. Id. at § 20(a).
Impact on Employer Paid Leave Policies: Employers are not required to modify an existing paid leave policy so long as it satisfies the minimum requirements of the IPLA, including the requirement that employees must be provided the option to use paid leave for any reason at the employee’s discretion. Id. at § 20(b).
Retaliation Prohibited: The IPLA expressly prohibits employers from threatening or taking adverse action against an employee for exercising rights under the IPLA, opposing practices believed to be in violation of the IPLA, or supporting another person’s exercise of rights under the IPLA. Id. at § 25. Employers are also prohibited from considering the use of paid leave as a negative factor in any employment action affecting an employee such as discipline, promotions, termination, etc. Id. An employee may assert a claim against an employer for violating the IPLA with the Illinois Department of Labor within 3 years of the alleged violation. An aggrieved employee may recover compensatory damages and appropriate equitable relief, plus reasonable attorneys’ fees, expert witness fees, and costs. Id. at § 30(b).
For questions about this matter or other employment law matters, please feel free to contact an attorney at SFBBG by calling (312) 648-2300.
[1] For purposes of calculating accrual, “exempt” employees under the Fair Labor Standards Act will be deemed to work 40 hours per week, except for employees whose regular workweek is less than 40 hours per work.
