Chicago City Council Passes Expanded Paid Leave Requirements

On November 9, 2023, the Chicago City Council passed an expansive and complex paid-leave ordinance (the “Ordinance”).  The Ordinance goes into effect on December 31, 2023, and requires all private Chicago employers to provide their employees with not less than ten (10) days of paid time off per year.

Overview

The Ordinance establishes two types of paid time off:  five (5) paid leave days for any reason (“Paid Leave Days”), and five paid sick leave days (“Sick Leave Days”).  Both types of leave will accrue one (1) hour of leave (up to 40 hours per type per year) for every 35 hours worked, unless an employer provides employees with all ten (10) days up front.

Additionally, an employee may not be required to find a replacement for hours missed for taking approved leave.  Rates for leave that are different from an employee’s regular rate of pay are prohibited.  Employers with existing policies that meet the Ordinance’s requirements shall be deemed to be compliant.

Paid Leave Days

Employees will be eligible to use Paid Leave Days after 90 days of employment.  Businesses with ten (10) or fewer employees need only provide two (2) Paid Leave Days in 2024 but will need to offer five (5) such days beginning in 2025.

Employees may take Paid Leave Days for any reason, and employers may not insist on documentation to support the leave.  Employers may require employees to obtain approval of Paid Leave Days, so they can maintain continuity of their businesses.  Moreover, employers may decline applications for Paid Leave Days if their business needs cannot accommodate the requested leave.  Employees may use Paid Leave Days in increments of four (4) hours.

Sick Leave Days

Employees will be eligible to use Sick Leave Days after thirty (30) days of employment.  When Sick Leave Days are foreseeable, an employer may require an employee to provide up to seven (7) days’ notice or when the employee learns of the need for sick leave.  If an employee uses three (3) consecutive Sick Leave Days, an employer may require documentation from a licensed health-care provider.  Employees may use Sick Leave Days in increments of two (2) hours.

Payouts

Employers are not required to pay out unused Sick Leave Days upon separation.  Whether an employee is entitled to be paid out unused Paid Leave Days at the end of employment will depend on the employer’s size:

• Employers with more than 100 employees must pay a terminated employee unused accrued Paid Leave Days when an employee’s employment ends.
• Employers with between 51 and 100 employees will have a two-year phase in with respect to payouts. By December 31, 2024, such employers must pay out a maximum of two (2) days of unused accrued Paid Leave Days.  Commencing January 1, 2025, such employers must pay out a maximum of seven (7) days of unused accrued Paid Leave Days.
• Employers with 50 or fewer employees will not be required to pay out any unused accrued Paid Leave Days.

Carry-Over and Forfeiture

Unless frontloaded, employees may carry over up to two (2) Paid Leave Days.  Employees may carry over up to ten (10) Sick Leave Days.  Employers may avert the Ordinance’s carry-over requirements if they institute the minimum frontloading requirement of 40 hours for each type of leave.

For employers providing unlimited paid time off, if the benefit is provided on the first day of employment or the first day of an accrual period, employers can avoid the carry-over requirements.  An unlimited paid-time-off policy, however, does not discharge employers from paying out time off at termination of employment.

Employers may require employees to forfeit accrued but unused days that are greater than the law’s carry-over mandates.  When, however, an employer restricts an employee from using either Paid Leave Days or Sick Leave Days in a manner that prohibits an employee from having meaningful access to such paid time off, the employer must increase the permissible carry-over amount.

Posting and Notification Requirements

The Ordinance has posting and notification requirements to ensure employees are aware of their rights.  Moreover, employers must notify employees of their paid leave policy and keep employees apprised of how much leave they have available.

Remedies

Employers violating the Ordinance may face fines between $1,000-$3,000 per day for each separate offense.  Employers also may be liable for damages equal to three (3) times the amount of leave withheld or lost due to a violation, plus interest and reasonable attorney’s fees and costs.  Although the Ordinance provides employees with a private right of action for denial of Sick Leave Days when it takes effect, suits may not be filed until January 1, 2025.

Illinois Laws

Employers that do not have Chicago employees still need to be prepared for the Paid Leave for All Workers Act (the “Act”).  It goes into effect on January 1, 2024, and requires all covered Illinois employers to provide their covered employees with up to 40 hours of paid leave each year.  The Act does not apply to employers subject to municipal or county laws requiring paid leave.  Also, all Illinois employers still need to comply with the Illinois Wage Payment and Collection Act when an employee’s employment with an employer ends.  That law requires employers to pay separating employees, as part of their final compensation, earned and unused vacation pay.

Next Steps

Covered employers will have to comply with the Ordinance soon.  They should review their policies, educate key personnel about the Ordinance, and caution them not to retaliate against employees for exercising their rights under it.

Clark Hill attorneys are prepared to work with employers to navigate the challenges posed by the Ordinance.  For more information, please contact Jon Vegosen at jvegosen@clarkhill.com, Renee Fell at refell@clarkhill.com, or the Clark Hill attorney with whom you regularly work.

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