Update: On April 30, 2024, the Illinois Department of Labor (IDOL or “the Department”) published the final regulations implementing the Paid Leave for All Workers Act, effective immediately following publication. This article has been updated to include changes and clarifications to the Act’s requirements under the regulations.

In January of 2023, the Illinois legislature passed the Paid Leave for All Workers Act (Act), which required employers to provide Illinois employees with earned paid leave beginning January 1, 2024. Illinois employees are now entitled to accrue 1 hour of paid leave for every 40 hours worked, up to a minimum of 40 hours of leave in a 12-month period. Employees can use this paid leave for any reason after 90 days of employment.

How much paid leave are employees entitled to under the Act?

Eligible employees who work in Illinois are entitled to earn and use up to a minimum of 40 hours of paid leave during a 12-month period. Eligible employees are entitled to accrue 1 hour of paid leave for every 40 hours worked, up to a minimum of 40 hours of paid leave (employers can choose to provide more than 40 hours). Alternatively, employers can “frontload” the 40 hours (or a prorated amount, as applicable) on an employee’s first day of employment or the first day of the 12-month period. The final regulations clarify that employers may frontload a prorated amount of hours for employees hired mid-year or for part-time employees based on their expected schedule for the remainder of the 12-month period.

What is the 12-month period?

The 12-month period can be designated by an employer in writing at the time of hire. Changes can be made to the designated 12-month period if the employer (1) provides advance written notice to employees prior to any change; (2) does not reduce the eligible accrual rate or paid leave available; and (3) provides employees with documentation of the balance of the hours worked, paid leave accrual taken, and the remaining leave balance.

Does unused leave carryover?

If an employer uses the accrual method rather than frontloading time, unused paid leave must carryover from year to year; however, employers are not required to provide more than 40 hours of paid leave in a 12-month period, unless the employer chooses to do so. The regulations clarify that an employer may choose to accrue time for some employees and frontload time for some employees, as long as the difference in policy is based on a bona-fide business classification such as part-time vs. full time status.

For which reasons can employees take 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.

Further, an employer may choose whether to use leave provided under the Act prior to using any other leave provided by the employer or pursuant to state law.

How much must employees be paid during the leave?

Employees must be paid their hourly rate of pay during the leave. However, if an employee is in a position in which gratuities or commissions customarily have been recognized as a part of their renumeration, their employer must provide them with at least the minimum wage of the applicable jurisdiction when leave is taken under the Act.

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 are eligible to begin using the paid leave after 90 days of employment or 90 days following the effective date of this Act (January 1, 2024), whichever is later.

Can employers require employees to provide notice before they take leave?

An employer can implement a “reasonable” paid leave notification requirement if the following conditions are met:

  • If the use of paid leave is foreseeable, the employer may require the employee to provide notice within 7 calendar days before the leave is to begin.
  • If the use of paid leave is not foreseeable, the employer may require the employee to provide notice as soon as practicable after the employee is aware of the need for leave. If an employer requires this, they must provide a written policy that contains procedures for the employee to provide such notice.
  • Employers must provide a written notice of the paid leave policy notification requirements.
  • Employers cannot require that an employee search or find a replacement worker to cover hours during the time the employee is taking leave.

Can employers deny an employee’s leave request?

The final regulations clarify that an employer may deny an employee’s leave request if the following conditions are met:

  • The employer’s policy for considering leave requests, including the reason for the denial, is disclosed to the employee, in writing;
  • The employer’s policy establishes certain limited circumstances in which paid leave may be denied in order to meet the employer’s operational needs for the requested time period; and
  • The employer’s policy is consistently applied to similarly situated employees and does not effectively deny an employee adequate opportunity to use all paid leave time they are entitled to over a 12-month period.

Are employers required to compensate employees for unused paid leave upon separation of employment?

No, employers are not required to provide payment to an employee for unused leave upon the employee’s termination, resignation, retirement, or other separation of employment, as long as the leave is tracked separately from any existing time off allowance bank.

If an employer chooses to credit the paid leave required under the Act to an existing paid leave allowance provided by the employer, the employer must pay out the entirety of any unused balance an employee accrues under that policy upon separation of employment to the same extent that vacation time is paid under the Illinois Wage Payment and Collection Act.

Here is an example provided in the regulations, under Section 200.460:

Prior to January 1, 2024, Employer A, who is subject to the Illinois Wage Payment and Collection Act, offers two weeks of paid vacation to all employees. Beginning on January 1, 2024, Employer A allows employees to accrue paid leave under the Paid Leave for All Workers Act, and terms that leave “PLAW Leave.” Employer A maintains records of the distinct balance each employee has in the employee’s vacation account and in the employee’s PLAW Leave account. Because Employer A maintains separate documentation of the vacation leave and PLAW Leave, Employer A does not have to pay out PLAW Leave upon an employee’s separation. When Employee A requests to use leave, Employer A should ask Employee A whether they wish to deduct the leave from their vacation balance or their PLAW Leave balance in order to appropriately document Employee A’s remaining paid leave balances.

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 previously accrued. If an employee is rehired within 12 months of a separation of employment, the employer must reinstate any unused accrued paid leave.

Does an employer’s existing paid leave policy satisfy the Act’s requirements?

The Act includes a broad exception to the requirements of the Act for policies in existence prior to January 1, 2024. As long as the policy provides employees with the minimum amount of paid leave required under the Act, the existing policy would not have to be adjusted to otherwise meet the Act’s requirements. The final regulations issued by the IDOL clarify that an employer’s existing paid leave policy does not have to give 40 hours of paid leave to all employees, including part-time employees, but must allow all employees to, at a minimum, accrue time at the rate provided under the Act (one hour for every 40 hours worked). The regulations also clarify that employers may maintain more than one policy to meet the Act’s requirements, such as a pre-existing policy that was in place for full time employees prior to the Act, and a second policy enacted following the effective date to meet the Act’s requirements for employee’s not covered by the existing policy. The regulations do not address an employer’s ability to amend a pre-existing policy after January 1, 2024, to meet the Act’s requirements and still be covered by the carveout. The regulations also clarify that policies that allow for “vacation time” and that require manager pre-approval can still qualify for this exception, as long as the time is permitted to be taken for any reason.

What records must employers keep?

Employers must retain records documenting hours worked, paid leave accrued and taken, and remaining paid leave balances for each employee for at least 3 years (and for the duration of any pending claim). Per the regulations, employers must also keep a record of any denied leave requests and the reason for the denial. Employers must allow the Department access to these records upon their request.

If an employer provides paid leave on an accrual basis, they must provide employees with the amount of paid leave used and accrued upon their request.

Are employers required to notify employees of leave entitlements under the Act?

Employers are required to post a notice summarizing the requirements of the Act in a conspicuous place at worksites. Employers must also include this notice in a written document or employee manual/policy. The Act states that any employer that places limitations, terms or conditions on how a paid leave may be used must have the policy in writing.

If an employer’s workforce is comprised of a significant portion of workers who are not literate in English, the employer must notify the Department and the Department will prepare the notice in the appropriate language. Employers who fail to comply with these notice requirements may be subject to a civil penalty of $500 for the 1st violation and $1,000 for any subsequent violation.

Additional Notice Requirements Under the Final Regulations

Under the final regulations, employers who frontload paid leave time are required to provide employees with an “Initial Notice of Frontloading” notifying them of the amount of frontloaded hours they will receive. This notice must be provided either on or before an employee’s initial date of employment or on or before the first day of their initial 12-month period.

Employers are required to notify employees as soon as practicable of any changes in their paid leave policy. If an employer changes from frontloading to accrual in a new 12-month period, the employer must notify employees at least 30 days prior to the start of the new 12-month period. If an employer changes the amount of hours frontloaded, it must notify the employee of the hours they will be receiving on or before the date the new 12-month period begins.

In addition, if an employer chooses to credit the paid leave provided for under the Act to an existing paid leave allowance provided by the employer, the employer must notify employees no later than 30 days after the start of employment or 30 days from the effective date of the policy.

What are the potential penalties for non-compliance?

The Department is responsible for administering and enforcing the Act. The Department has the power to conduct investigations, depositions, and discovery and issue subpoenas.

Employees may file a complaint with the Department within 3 years of an alleged violation of the Act. Employers may be liable to pay aggrieved employees any underpayments, compensatory damages, penalties between $500 and $1,000, reasonable attorney and expert witness fees, and other costs of a legal action.

Further, employers may be subject to a civil penalty of $2,500 for each separate violation of the Act.

Employer Action

Employers with Illinois employees were subject to the Act beginning January 1, 2024, and were subject to the final regulations immediately following their effective date . Employers should consider the following actions to comply with the Act:

  • 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.
    • If frontloading, provide employees with the Initial Frontloading Notice no later than the beginning of the 12-month period.
  • If employer is currently crediting leave required by the Act to another existing time off policy, they must provide employees with notification of the policy.
    • Employers should also ensure they are notifying new employees upon hire.
  • If employer is crediting paid leave required under the Act to an existing time-off policy that requires payout, employer must comply with the payout requirements.
  • Determine whether to require employees to provide reasonable notification of the need for leave, and if required, develop a policy for the notification process.
  • Continue to retain records that document hours worked, paid leave accrued and taken, and paid leave balances for each employee.
  • Employers should also begin retaining records of any denied paid leave requests, and the reason for denial.
  • Post the required notice at worksites and incorporate it into written materials or any employee handbook.
    • Determine whether the employer must request the notice in another language from the Department (i.e., if a significant portion of employees are not literate in English), and if needed, submit such a request.

Additional Resources

Originally posted March 14, 2023.

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog. © 2024 Sequoia. All Rights Reserved.

Emerald Law — Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.