In March 2023, Governor JB Pritzker signed the Paid Leave for All Workers Act (“Act”) into law, making Illinois only the third state in the U.S. that requires employers to provide their employees with paid time off for any reason. The Act, which goes into effect on January 1, 2024, imposes significant new requirements on Illinois employers. Under the Act, covered employers must allow all employees (full-time, part-time, and seasonal) to earn and use up to 40 hours of paid leave each year, which employees can use for any purpose. Employers who already offer paid leave benefits that meet the minimum requirements of the Act do not have to grant “additional” paid time off to their employees. However, every employer will need determine the best way for their organization to satisfy the Act’s requirements, draft any new policies that are needed, carefully review and revise any existing paid time off policies to ensure compliance with the Act, post the required notice, and set up a system to comply with the Act’s record-keeping requirements. Employees may begin using paid leave under the Act on March 31, 2024, or after the first 90 days of their employment (whichever is later). The full text of the Act is available here.
On May 23, 2023, the Illinois Department of Labor (“IDOL”) released its initial FAQs regarding the Act, although the FAQs do not answer many of the questions left unanswered by the Act’s statutory language. The IDOL’s FAQs are available here: Paid Leave for All Workers Act FAQ (illinois.gov). The IDOL is in the process of preparing additional guidance regarding the Act, and we will provide updates as they are issued. Nonetheless, we recommend that employers begin planning now for the changes that will need to be in place by January 1, 2024.
Covered Employers and Employees
Employers: Most employers with employees in Illinois are covered by the Act, regardless of the employer’s size. Limited exceptions include federal government employers, public school districts, and public park districts. Notably, the Act does not apply to an employer whose employees are already covered by the Chicago Paid Sick Leave Ordinance, the Cook County Earned Sick Leave Ordinance, and/or any other county or municipal ordinance in effect on January 1, 2024, that requires the employer to provide paid sick leave or paid leave to their employees. Presumably, however, if an employer has some employees covered by such an ordinance and some not so covered, the employer will need to provide leave under the Act to those employees who are not covered.
Employees: The Act applies to most employees in Illinois, with some narrow exceptions that include employees covered by collective bargaining agreements in certain industries (e.g., construction). After January 1, 2024, parties to a collective bargaining agreement in an industry that is not covered by one of the specific exclusions may agree to waive the Act’s requirements, but only if the waiver is set forth explicitly in the agreement in clear and unambiguous terms.
Paid Leave Accrual, Carry Over, and Use
Employers may require employees to “accrue” paid leave hours over time, so long as employees accrue at least one hour of paid leave for every 40 hours worked, up to a total of 40 hours annually. With the accrual method, the Act entitles employees to carry over any paid leave they have accrued under the Act from year to year (even though employers do not have to let employees use more 40 hours of paid leave under the Act in a year).
As an alternative to the accrual method, employers can elect to “frontload” the full amount of the Act’s paid leave to employees on their first day of employment or at the beginning of the designated 12-month period (e.g., on January 1st if a calendar year is being used). If an employer frontloads the paid leave, the employer is not required to carry over paid leave from one year to the next and may require employees to use all paid leave within the year or forfeit any unused portion.
Employees may use paid leave for any reason – and without providing their employer with a reason or any documentation regarding their leave. In addition, the statute provides that employees may “choose” whether to use paid leave under the Act prior to using any other leave provided by the employer or Illinois law, which raises significant questions about whether an employee will be able to use paid leave under the Act to extend the time period for other paid or unpaid absences available to them under an employer policy or Illinois state law.
Employee Notice Requirements
If the use of paid leave under the Act is foreseeable, employers can require employees to provide 7 calendar days’ notice before the date the leave is to begin. If the need for such leave is not foreseeable, employers may require employees to provide notice of the need for leave “as soon as is practicable.” If an employer requires its employees to provide notice when the leave is not foreseeable, it must have a written policy that describes the procedures the employee is required to follow to provide such notice.
Provisions Regarding Pay Out Upon Termination
Like most state-mandated paid sick leave and paid leave laws, the Act does not require an employer to pay an employee any accrued, but unused paid leave provided under the Act upon termination of employment. However, in instances where an employer charges paid leave required under the Act to an existing vacation or paid time off policy, such payout would be required under Illinois law.
Under the Act, employers may not:
- Set a minimum increment for the use of paid leave that exceeds two hours;
- Require an employee to provide a reason for the leave;
- Require an employee to provide any documentation or certification in support of the leave;
- Require an employee taking leave to find a replacement worker to cover the time they will be on leave;
- Retaliate against an employee for exercising rights under the Act, opposing acts that violate the Act, or supporting the exercise of rights under the Act; or
- Consider use of paid leave under the Act as a negative factor in any employment action that involves evaluation, promoting, disciplining, or counting paid leave under a no-fault attendance policy.
Employer Posting, Notice, and Record-Keeping Requirements
Starting January 1, 2024, employees will need to post a notice prepared by the IDOL regarding the Act and its requirements. The notice, which has not yet been released by the IDOL, will summarize the Act’s requirements and explain how employees can file a charge with the IDOL regarding suspected violations of the Act. In addition, the notice will have to be included in a written policy or the employer’s personnel handbook.
The Act also will require employers to retain records documenting hours worked, paid leave accrued and taken, and paid leave balances for all employees for at least three years.
Coordination with Existing Employer Policies
As noted above, if an employer already has vacation or paid time off policies that are consistent with or more generous than the minimum requirements of the Act, the employer can charge paid leave under the Act to those policies. However, if an employer chooses to do so, the employer must expressly state in its vacation or paid time off policies that it is doing so.
Employers should fully consider the pros and cons of using an existing vacation or PTO policy to satisfy the Act’s requirements before assuming that doing so is the best option, particularly given various nuances in the Act relating to accrual, rollover, notice, etc. There is no “one size fits all” solution or recommendation for complying with the Act, and each employer will need to determine what works best for their organization.
Potential Damages and Penalties
Employees who believe their employer has violated the Act may file a complaint with the IDOL. Employees have three years after the alleged violation to file such a complaint. If an employee prevails on their claim, the employer may be liable to the employee for the following: the amount of any actual underpayment, compensatory damages, a penalty of not less than $500 and no more than $1,000, equitable relief, reasonable attorney’s fees, reasonable expert witness fees, and other costs of the action.
Employers who violate the Act also are subject to a $2,500 civil penalty for each separate offense. That penalty will be deposited into a fund created in the State treasury that is dedicated to enforcing the Act.
The IDOL is in the process of preparing additional guidance and other resources and materials to assist employers with compliance with the Act. In the meantime, employers should begin reviewing their existing policies regarding sick leave, vacation, and/or paid time off and working with their employment counsel to prepare for these changes before January 1, 2024.