In March 2023, Illinois became the third state nationwide to require employers to provide paid time off for any reason when Governor J.B. Pritzker signed the Paid Leave for All Workers Act (“the Act”). The Act will take effect on January 1, 2024.
Here are the key things employers should know:
Covered Employers and Employees
The Act applies to all employers with one or more employees, with limited exceptions. The exceptions include certain school and park districts. The Act also applies to all employees as defined by the Illinois Wage Payment and Collection Act. The Act does not apply, however, to independent contractors as well as certain railroad and student or other individuals employed less than full time or on a short-term basis for colleges and universities.
Amount of Paid Leave
Employees who works in Illinois are entitled to earn and use up to a minimum of 40 hours of paid leave during a 12-month period or a pro rata number of hours.
Paid Leave for Any Reason
Employees may take paid leave for any reason and are not required to provide a reason to an employer. Any reason whatsoever counts.
Accrual of Paid Leave
Paid leave accrues at the rate of one hour of paid leave for every 40 hours worked up to a minimum of 40 hours of paid leave, or such greater amount if the employer provides more than 40 hours. Employees who are exempt from overtime requirements are deemed to work 40 hours in each workweek for purposes of paid leave accrual unless their regular workweek is less than 40 hours, in which case paid leave accrues based on that regular workweek. Employees determine how much paid leave they want to use, however employers may set a reasonable minimum increment for the use of paid leave not to exceed two hours per day.
Front-Loading Versus Accrual System
Employers may make available the minimum number of hours of paid leave to employees on the first day of employment or the first day of the 12-month period. Employers that do this are not required to carry-over paid leave from 12-month period to 12-month period and may require employees to use all paid leave before the end of the benefit period or forfeit the unused amount (i.e., use-it-or-lose-it policy). Employers that do not do this are required to allow employees to carry over paid leave under the Act annually to the extent not used by the employee.
The 12-Month Period
Employers may designate any consecutive 12-month period in writing at the time of hire. Employers may make changes to the 12-month period if notice is given to employees in writing before the change and the change does not reduce the eligible accrual rate and paid leave available to the employee.
Transferred and Re-Hired Employees
If an employee is transferred to a separate division or location within the same employer, the employee is entitled to all paid leave accrued at the prior division or location. Additionally, terminated employees who are re-hired within 12 months are entitled to use accrued paid leave at the commencement of re-employment.
Timing of Paid Leave
Employees may begin using paid leave 90 days after beginning employment or 90 days after the effective date of the Act, whichever is later.
Requesting Paid Leave
Employers must provide paid leave on the oral or written request of an employee in accordance with the employer’s reasonable paid leave policy notification requirements. These requirements may include:
- Foreseeable Leave: If use of paid leave is foreseeable, the employer may require the employee to provide seven calendar days’ notice before the date the leave is to begin.
- Unforeseeable Leave: If use of paid leave is unforeseeable, the employee must provide such notice as soon as practicable after the employee is aware of the necessity of the leave. An employer that requires such notice must have a written policy containing procedures for the employee to provide notice.
- Changes to Employer Policies: Employers must provide employees with written notice of the paid leave policy notification requirements within five calendar days of any change.
- Replacement Workers: Employers cannot require the employee to find a replacement worker to cover the hours during which the employee takes paid leave.
As a side note, because employers cannot require employees to specify a reason for paid leave, the distinction between foreseeable and unforeseeable leave likely will not matter in practice.
Rate of Pay to Employees
Employers must pay employees taking qualified paid leave at their regular hourly rate of pay. Employees who are regularly paid gratuities or commissions as part of their pay must be paid at least the full applicable minimum wage.
Payment at Termination
Employers are not required to pay out accrued but unused paid leave upon termination of employment under the Act. Importantly, however, if an employer credits the paid leave to the employee’s paid time off or vacation bank, then it must be paid out at termination under the Illinois Wage Payment and Collection Act. Best practice would be for employers to clearly articulate their intention of whether paid leave will or will not be paid out upon termination in their employee handbook.
The Act Does Not Override Municipal or County Ordinance
The Act does not apply to any employer that is covered by a municipal or county ordinance that is in effect on January 1, 2024 requiring employers to give any form of paid leave to employees. Accordingly, the Act does not apply to many Chicago and Cook County employers, unless either locality amends its ordinance before January 1, 2024.
Collective Bargaining Agreements
The Act does not affect the validity or change the terms of bona fide collective bargaining agreements in effect on January 1, 2024. After that date, the requirements of the Act may be waived in a bona fide collective bargaining agreement so long as the waiver is set forth explicitly in clear and unambiguous terms.
Record Retention Requirement
Employers subject to the Act must make and preserve records documenting hours worked, paid leave accrued and taken, and remaining paid leave balance for each employee for no less than three years. Employers must also allow the Illinois Department of Labor (“IDOL”) access to such records.
Posting Requirement
Employers must post and keep posted a notice to be prepared by the IDOL summarizing the Act in a conspicuous place on the premises where notices are customarily posted. The posting may need to be in languages other than English in certain circumstances. Employers must also include in written documents (e.g., employee handbook, written policies, etc.).
Retaliation
Employers may not take any adverse action against an employee because the employee (a) exercises rights or attempts to exercise rights under the Act; (b) opposes practices that the employee believes to be in violation of the Act; or (c) supports the exercise of rights of another under the Act. Employers may not consider the use of paid leave as a negative factor in any employment action. An employee who has been unlawfully retaliated against is entitled to recover through a claim filed with the IDOL and obtain “all legal and equitable relief as may be appropriate.”
Enforcement
An employee may file a complaint with the IDOL within three years of the alleged violation. An employer that violates the Act is liable to the employee for damages in the form of actual underpayment, compensatory damages, a penalty of between $500 and $1,000, reasonable attorneys’ fees, reasonable expert witness fees, and other costs.
Penalties to IDOL
In addition to the above, an employer that violates the Act shall be subject to a civil penalty of $2,500 for each separate offense.
Before the Act becomes effective on January 1, 2024, the Gordon & Rees Employment Law team recommends Illinois employers take the following actions: (1) review and update policies and practices to ensure legal compliance with these upcoming landmark changes; (2) train human resources professionals and managers/supervisors on the Act’s requirements, if applicable; and (3) be on the lookout for the IDOL’s forthcoming required posting.
Gordon & Rees attorneys including the author are available to provide assistance with these recent changes to the law, and to provide guidance on any other workplace and employment issues.