Update 12/14/23: On December 13, 2023, The Chicago City Council voted to pass a substitute ordinance delaying the effective date of the Ordinance to July 1, 2024. The substitute ordinance also includes changes to the definition of eligible employee, the payout timeline for medium sized employers, expansion of recordkeeping requirements, and adds a requirement for employers to distribute employee handbooks and policies to Chicago employees in an employee’s primary language, effective December 31st. The information below may no longer be accurate. For an overview of the changes under the substitute ordinance, review our Chicago Paid Leave Update Blog.
This November, the Chicago City Legislature expanded Chicago’s existing Paid Sick and Safe Ordinance (“the Ordinance”) to require employers to provide Chicago employees with up to 40 hours of earned paid leave to be used for any reason, and 40 hours of earned paid sick leave every 12 months beginning December 31, 2023. The Ordinance is enforced by the Commissioner of Business Affairs and Consumer Protection (“the Commissioner”).
Employers providing benefits to Chicago employees under the Ordinance are exempt from providing benefits for covered employees under the Illinois’ Paid Leave for All Workers Act, effective January 1, 2024. For more on the Illinois’ Paid Leave for All Workers Act, please review our blog.
Which employees are covered under the Ordinance?
The paid leave and paid sick leave requirements under the Ordinance apply to employees who perform at least two hours of work within a two-week period while physically present within the geographic boundaries of the City of Chicago.
How much leave are employees entitled to under the Ordinance?
Eligible employees working in Chicago are entitled to earn and use up to a minimum of 40 hours of paid leave and 40 hours of paid sick leave, for a combined total of 80 hours of paid leave during a 12-month period. Eligible employees are entitled to accrue 1 hour of paid leave and one hour of paid sick leave for every 35 hours worked, up to a minimum of 40 hours of paid leave (employers can choose to provide more than 40 hours). If an employee’s normal work week is less than 40 hours, paid leave and sick time will accrue at a rate of 1 hour per the number of hours in the employee’s normal work week. Alternatively, employers can “frontload” the 40 hours on an employee’s first day of employment or the first day of the 12-month period.
Paid leave must begin to accrue (or must be frontloaded) at the commencement of employment or January 1, 2024, whichever is later.
Does unused leave carryover?
Employees must be allowed to carry over 16 hours of paid leave and 80 hours of paid sick leave into the following 12-month period. Employers are not required to payout unused accrued sick leave that cannot be carried over. Employers that grant employees 40 hours of paid leave at the beginning of the 12-month period are not required to allow employees to carry over paid leave into the next 12-month period.
For which reasons can employees take paid leave?
The paid leave may be used by an employee for any reason of the employee’s choosing. Employees cannot be required to provide their employer a reason for leave or documentation in support of the leave.
For which reasons can employees take paid sick leave?
Employees can take paid sick leave for the following reasons:
- The employee is ill or injured, or for the purpose of receiving professional care, including preventive care, diagnosis, or treatment, for medical, mental, or behavioral issues, including substance use disorders;
- an employee’s family member is ill, injured, or ordered to quarantine, or to care for a family member receiving professional care, including preventive care, diagnosis, or treatment, for medical, mental, or behavioral issues, including substance use disorders;
- the employee, or an employee’s family member is the victim of domestic violence;
- the employee’s place of business is closed by order of a public official due to a public health emergency, or needs to care for a family member whose school, class, or place of care has been closed; or
- the employee obeys an order issued by the Mayor, the Governor of Illinois, the Chicago Department of Public Health, or a treating healthcare provider, requiring the employee to stay at home.
How much must employees be paid during the leave?
Employees should be paid at the same rate that they regularly earn during hours worked. Pay for an employee that is not exempt from the overtime requirements of Illinois minimum wage law should be calculated by dividing the employee’s total wages during the full pay periods within the 90 days of employment prior to leave by the hours worked by that employee in the relevant period. Wages under this subsection do not include overtime pay, premium pay, gratuities, or commissions. However, the minimum hourly pay shall not be less than the base hourly wage, the federal minimum wage, the Illinois minimum wage, or the Chicago minimum wage, whichever is higher.
If an employee is employed in a role that traditionally includes gratuities, the employer must pay the highest of the federal minimum wage, the Illinois minimum wage or the full Chicago minimum wage. As of November 29, 2023, Chicago minimum wage is the highest of these amounts.
Must employers continue healthcare benefits during the leave?
Yes, employers must maintain coverage for the employee and any family member under any group health plan for the duration of the leave under the same conditions that would have been provided if the employee was not on leave. Employers must notify employees that they are still responsible for contributing any employee share of the cost of coverage.
When can employees start taking leave?
Employees must be permitted to use accrued paid sick leave within 30 days of commencement of employment. Employees must be permitted to use accrued paid leave within 90 days of the commencement of employment.
Can employers require employees to provide notice before they take leave?
An employer may require the employee to provide notice of the intention to take paid leave within no more than 7 calendar days before the leave is to begin.
If an employee’s need for paid sick leave is reasonably foreseeable, an employer may require up to seven days’ notice before leave is taken. If the need for paid sick leave is not reasonably foreseeable, an employer may require an employee to give notice as soon as is practicable on the day the employee intends to take the leave by telephone, email or other means.
Are employers required to compensate employees for unused paid leave upon the separation of employment or otherwise ceasing to become a covered employee?
Employers are not required to pay out paid sick leave. The requirement to compensate employees for unused leave upon separation or being transferred outside of the geographic boundary depends on employer size:
- “Small employers” (employers with 50 or less Chicago employees) are not required to pay out unused leave.
- “Medium employers” (employers with 51-100 Chicago employees) are required to pay out up to 16 hours of unused paid leave for any reason in 2024 and must begin paying out all unused paid leave on January 1, 2025.
- “Large employers” (employers with 101+ Chicago Employees) must pay out all unused paid leave beginning January 1, 2024
Employees who have not been offered a work assignment for 60 days or more must be notified in writing that they may request a payout of their accrued paid leave.
How is accrued leave treated when an employee is rehired or transferred to another division by the same employer?
If an employee is transferred to a separate division, entity, or location, but remains employed by the same employer, the employee is entitled to all paid leave and paid sick leave previously accrued.
How does the Ordinance apply to employers with unlimited PTO policies?
Instead of allowing employees to accrue paid time off, employers may choose to immediately grant employees unlimited hours of paid time off that may be used for any reason to meet the requirements of the Ordinance. If an employer grants unlimited paid time off on the first day of employment or the first day of the 12-month accrual period, then the employer is not required to carryover an employee’s unused paid time for any reason off to the subsequent 12-month period. Employers that have an unlimited PTO policy must still allow employees to carry over 80 hours of accrued paid sick leave into the next 12-month period. An employer may not require an employee to obtain pre-approval before using the paid time off.
Upon an employee’s separation from employment or when an employee is no longer covered under the Ordinance due to being transferred outside of the city, the employer must pay the monetary equivalent of 40 hours of paid time off minus the hours of paid time off used by the employee in the last 12-month period before the date of separation. If the employee has used 40 hours of paid time off in the 12-month period, the employer is not required to pay out leave.
What records must employers keep?
Employers must retain records documenting hours worked, pay rate, paid leave accrued and taken, and remaining paid leave balances for each employee for at least 5 years (and for the duration of any pending claim).
Employers must provide employees with access to their records upon request.
Are employers required to notify employees of leave entitlements under the Act?
Employers are required to post a notice summarizing their rights to paid leave under the Ordinance, relevant minimum wage information, and human trafficking information in a conspicuous place at Chicago worksites. The Commissioner will develop a notice for this purpose and will make it available to employers. The notice was not available as of the date of this article. Employers must also issue a notice containing the same information with the employee’s first paycheck and annually with a paycheck within 30 days of July 1st.
Employers must notify covered employees of their balances of any accrued paid leave and paid sick leave, including time accrued since the last pay period, any time used since the last period, and the balance of time available for use. Employers can meet this requirement by including this information on employee paystubs or providing employees access to the information through an online system.
What are the potential penalties for non-compliance?
Employers are subject to penalties between $1,000 and $3,000 for each separate offense, except for violations relating to failure to post or provide notices in paychecks as required under the Ordinance. Failure to provide notice may result in a fine of up to $500 for the first violation and up to $1 ,000 for any subsequent violation. Each day that a violation continues is considered a separate and distinct offense to which a separate fine may apply.
The Ordinance establishes a private right of action for employees. Employers that violate the Ordinance are liable to employees for damages equal to three times the full amount of any leave denied or lost by reason of the violation, plus interest, with costs and reasonable attorney’s fees, if applicable.
Employers with Chicago employees should prepare to comply with the Ordinance before the December 31, 2023, effective date. Employers may want to do the following in preparation:
- Determine whether to provide leave entitlements on an accrual basis or by frontloading the requisite hours. If providing leave on an accrual basis, determine how to track accruals and how to provide employees with their accrual balances upon any request.
- Determine whether to require employees to provide reasonable notification of the need for leave, and if required, develop a policy for the notification process.
- Develop a plan to retain records that document hours worked, paid leave and paid sick leave accrued and taken, and paid leave and paid sick leave balances for each employee.
- Plan to post the required notice at worksites and distribute it with employee paychecks upon hire and annually (after the Commissioner releases the notice).
- Chicago Paid Leave and Paid Sick and Safe Leave Ordinance
- City of Chicago Business Affairs and Consumer Protection Website
- Sequoia Foreword: Illinois Will Require Minimum Paid Leave Beginning in 2024
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