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. 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”, alters the payout timeline for medium sized employers, expands recordkeeping requirements, and adds a requirement for employers to distribute employee handbooks and policies to Chicago employees in an employee’s primary language.

Definition of “Eligible Employee”

The substitute ordinance states that paid leave and paid sick leave requirements now apply to any employee that works at least 80 hours for an employer within any 120-day period, while physically present within the geographic boundaries of the city, consistent with Chicago’s current Paid Sick Leave Ordinance. Once the 80-hour threshold is reached, an employee will remain an Eligible Employee for the remainder of the time that the employee works for the employer. The substitute ordinance does not specify whether the ordinance continues to apply for employees that remain employed, but no longer work in the Chicago area.

Employees of employers with 3 or fewer employees are not considered Eligible Employees after the July 1, 2024, effective date. Prior to the deadline, employers must continue to comply with Chicago Paid Sick Leave Ordinance that took effect in 2020.

Unused Leave Payout Timeline Adjusted

Employers are not required to pay out paid sick leave. The requirement to compensate employees for unused paid 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. Due to the delayed effective date, “Medium employers” (employers with 51-100 Chicago employees) are required to pay out up to 16 hours of unused paid leave for any reason until July 1, 2025, when they must begin paying out all unused paid leave (previously January 1, 2025). “Large employers” (employers with 101+ Chicago Employees) must pay out all unused paid leave beginning July 1, 2024 (previously January 1, 2024).

Recordkeeping Requirements Expanded

Under the prior ordinance, employers must retain records documenting hours worked, pay rate, paid leave accrued and taken, and remaining paid leave balances for each Eligible Employee for at least 5 years (and for the duration of any pending claim). Employers must now collect and maintain these records for any employee that regularly works in the boundaries of Chicago for 5 years, even if this employee would not be considered an Eligible Employee.

Policy Language Requirements Expanded

The substitute ordinance amends the general provisions of Chicago’s Municipal Code, effective December 31, 2023, to require employers to provide their employment policies (including the leave policy, when developed) to employees in the primary language of each employee. Employers must also provide employees with 14-day notice of any changes to employment policies.

For more on the requirements of the ordinance, review our blog: Chicago Expands Paid Leave Ordinance.

Employer Action

Employers with Chicago employees should prepare to comply with the ordinance before the July 1, 2024, leave requirements effective date and the December 31, 2023, “primary language” policy requirement. 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 that works within the geographic boundaries of Chicago for 5 years (or the duration of any pending claims).
  • Plan to post the required notice at worksites and distribute it with employee paychecks upon hire and annually (after the Commissioner releases the notice).
  • Develop a mechanism to determine employee’s primary language and develop a method to provide employment policies to employees in that language.

Additional Resources

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Hailey Trippany — Hailey is a Compliance Specialist for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Hailey enjoys podcasts, baking, travel, and kayaking.