October 30, 2023Client Alert

IDOL’s October 18, 2023 FAQs Provide Additional Guidance on How Employers’ Existing Paid Time Off Policies Can Satisfy the Illinois Paid Leave For All Workers Act’s Requirements

As we previously reported on June 1, 2023 (available here), the Illinois Paid Leave for All Workers Act (“Act”) goes into effect on January 1, 2024. The Act requires covered employers to provide eligible Illinois employees with up to 40 hours of paid leave each year, which employees can use for any reason. On October 18, 2023, the Illinois Department of Labor (“IDOL”) published an additional set of FAQs regarding the Act (available here). Those FAQs, as well as information the IDOL shared during its first two webinars about the Act on October 3 and 19, 2023, provide some important updates. Most importantly, the IDOL has finally confirmed that an employer does not need to modify the “terms” of its existing vacation or PTO policy if that existing policy “meets or provides the minimum amount of leave required by the Act (40 hours) in a 12-month period and your employees can in fact take that amount of leave for any reason of their choosing.” Although this is not the last word from the IDOL regarding how employers’ existing policies may meet the expectations of the law, we wanted to alert clients about this significant development and other developments from the past month. 

Due to the Act’s imprecise language and various nuances, employers have faced significant challenges over the last few months trying to determine the best way to modify their existing policies to comply with the Act, particularly in situations where employers already provide employees with generous vacation or PTO benefits. The IDOL’s initial FAQs published in May and August 2023 largely mirrored the statute’s language rather than providing guidance on how the IDOL plans to interpret the Act. However, recent information contained in the IDOL’s October 18th FAQs and the IDOL’s first two webinars held on October 3rd and 19th begin to answer some of employers’ most significant questions. For example:

  • As noted above, the IDOL has confirmed that if an employer’s existing policy on the effective date of the Act already provides employees with 40 or more hours of paid leave in a 12-month period that can be used for any reason, the employer does not need to modify the terms of its policy. To illustrate this concept, the IDOL’s FAQs explain that if an employer’s existing PTO policy satisfies the minimum paid leave requirements but requires employees to use PTO in increments no less than 4 hours, the employer is not required to adjust that 4-hour increment in its policy to comply with the Act’s requirement that employees be allowed to use leave under the Act in increments of 2 hours or less. The IDOL has explained that it will further clarify this issue in rulemaking. As a reminder, if employers intend to charge time required under the Act to an existing vacation or PTO policy, they should amend their existing policy to expressly state that they are doing so.  
  • Another significant question employers have asked is whether an employer can ever deny leave under the Act to an employee who has accrued leave available for use. In response to this question, the IDOL has now advised that under certain circumstances, an employer can deny an employee use of paid leave under the Act. The FAQs explain that nothing in the Act prohibits an employer from adopting a policy that establishes some parameters for taking leave. However, the IDOL has cautioned that the reasons for denying such leave may be limited to operational and safety concerns. The FAQs note that “Any such policy must be communicated to employees, applied equally to all employees, and conform with other applicable state and federal laws.” During the IDOL’s October 19, 2023, webinar, the IDOL emphasized that if an employer is planning to exercise this option to deny leave to an employee, the employer’s policy “must” include: a description of the factors the employer will consider and an explanation of the circumstances under which the employer may deny leave. By way of example, the IDOL explained that it may be reasonable for an employer to limit employees’ use of leave under the Act around the holidays or during the employer’s busy seasons -- but again emphasized that these factors should be addressed in the employer’s policy, communicated in advance to employees, and applied in a non-discriminatory manner.
  • The IDOL’s recent FAQs and webinar series also have provided some additional guidance regarding how the Act interacts with other unpaid leave protections. The Act and FAQs provide that an employee covered under the Act is entitled to use paid leave under the Act before using unpaid leave under any employer policy or other state law. In effect, this means employees will be able to “stack” leave time – e.g., take up to 40 hours of paid leave under the Act before starting unpaid leave under a different employer policy or an Illinois state law that provides unpaid leave (e.g., leave for bereavement, domestic violence situations, or other reasons). Employers will need to consider how to address any current policies they have in place that require employees to use any paid leave concurrently with unpaid leave. Significantly, this provision in the Act does not apply to leave required under federal law, so employers may still require employees to use paid leave under the Act concurrently with unpaid leave under the Family Medical and Leave Act and other federal laws.

The IDOL is in the process of preparing the model notice required under the Act. By January 1, 2024, employers must post that written notice in a “conspicuous” place at the employer’s workplace and include it in the employer’s personnel manual or handbook if the employer has one. The IDOL plans to issue that notice, additional FAQs, and its proposed rules before the end of the year. Based on information we have received from the IDOL, we are hopeful that the IDOL will issue its proposed rules sometime in November. There are many questions that remain unanswered; however, we anticipate the IDOL’s proposed rules will assist in answering those questions.

In the meantime, we recommend that employers continue working with their employment counsel to review and revise their existing policies and draft any new policies that are needed. In addition, employers should ensure they have a plan in place to communicate any changes to their existing policies and any new policies to employees before the Act’s January 1st effective date.

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