Illinois Becomes Third State to Mandate Paid Leave for Employees Available to Be Used for Any Reason

Under the Paid Leave for All Workers Act (the “Act”), Illinois became the third state to require employers to provide paid leave to employees to be used for any reason.  The Act, effective January 1, 2024, requires all covered employers to provide their covered employees with up to 40 hours of paid leave each year.  This FAQ provides an overview of the Act.

1.         Why Was the Act Passed?

The General Assembly found that it is “in the public policy interests of the State for all working Illinoisans to have some paid leave from work to maintain their health and well-being, care for their families, or use for any other reason of their choosing.”

2.         Who Are Covered Employers and Covered Employees?

With limited exceptions discussed below, the Act covers all employers in Illinois.  This includes units of state and local government and government agencies.  The Act does not cover the following:  school districts or park districts.

The Act covers all employees in Illinois, except:

• an employee as defined in the federal Railroad Unemployment Insurance Act or the Railway Labor Act;
• a student enrolled in and regularly attending classes in a college or university that is also the student’s employer and who is employed on a temporary basis at less than full time at the college or university; however, this exclusion only applies to work performed for that college or university;
• a short-term employee who is employed by an institution of higher education for less than two consecutive calendar quarters during a calendar year and who does not have a reasonable expectation of being rehired by the same employer for the same service in a subsequent calendar year;
• any employee working in the construction industry who is covered by a bona fide collective bargaining agreement (“labor contract”); or
• any employee who is covered by a bona fide labor contract with an employer that provides services nationally and internationally of delivery, pickups, and transportation of parcels, documents, and freight.

The Act does not apply to employees covered by a bona fide labor contract in effect on January 1, 2024.  After that date, the Act’s requirements may be waived in a bona fide labor contract if the waiver is explicitly set forth in the labor contract in clear and unambiguous terms.

3.         Which Employers Are Exempted from the Act?

The Act does not apply to any employer that is already covered by a municipal or county ordinance that requires an employer to provide any form of paid leave—such as paid sick leave.  Therefore, the Act does not apply to Chicago or Cook County employers that already comply with paid sick leave ordinances.  Ordinances that are enacted after the effective date of the Act must provide at least the same amount of benefits as provided in the Act.  If a later-enacted ordinance provides greater benefits than what is provided in the Act, then the employer must comply with that ordinance.

4.         Can an Employee’s Rights Under The Act Be Waived?

No.  Such a waiver is void as against public policy.

5.         How Much Paid Leave Must Be Offered To Employees?

An employee is entitled to earn, and use, a minimum of 40 hours of paid leave during a 12 month period.  The Act permits an employer to define a 12-month period, but it must be in writing at the time of hire.  Paid leave carries over to the extent not used by the employee, but an employer is not required to provide more than 40 hours of paid leave during a 12-month period.  

6.         How Does an Employee Earn Paid Leave?

An employee accrues one hour of paid leave for every 40 hours worked.  Employees who are exempt from overtime pay under the Fair Labor Standards Act are deemed to have worked the requisite 40 hours every week—unless their regular workweek is for fewer than 40 hours, in which case those employees accrue paid leave hours based in accordance with that regular workweek. 

Employers are permitted to provide an employee the 40-hours of paid leave on the first day of employment or the first day of the 12-month period.  This approach has been called the “front-loading” method.  If an employer relies on the front-loading method, an employer is not required to allow carry-overs of unused paid leave to the next 12-month period.  For certain employers, the front-loading method may be the best option, as it streamlines some of the complex requirements of the Act.  Please discuss your options with your regular FVLD contact or legal counsel.

7.         How Is an Employee’s “Pay” Calculated During Leave Periods?

Employees are generally paid their hourly rate of pay for time off under this Act.  In industries where gratuities or commissions are customarily part of an employee’s pay, however, employees must receive at least the full minimum wage in the jurisdiction where that employee works.

8.         May Conditions Be Placed on How an Employee Uses Paid Leave Time?

Yes.  Employers may set a reasonable minimum increment for the use of paid leave, not to exceed two hours per day.  An employer may also put certain policies in place regarding how an employee can use paid leave.  For example, an employer may require 7-days’ notice for foreseeable absence(s).  Employers can also have policies that, if the absence is not foreseeable, an employee must provide notice as soon as is practicable after the employee is aware of the necessity of the absence, and an employer may implement a policy or policies regarding the procedure for giving notice.  Such policies and procedures may not require that the employee find someone to “cover” the employee’s work.

Other conditions, however, are impermissible.  For example, the Act prohibits employers from requiring documentation or certification as proof of an absence.  Similarly, an employer may not require that an employee use paid leave under the Act before any other leave provided by law or under company policy.  The decision when and how to use paid leave under the Act is up to the employee’s discretion.  Since an employee may decide when to use leave under the Act, it appears an employee may use it after using any other leave the employer or applicable law provides and thereby extend his or her time off from work.  The Act does not limit an employee’s ability to use paid leave under the Act immediately following (or preceding) some other form of required paid leave.

9.         Is An Employer Required to Pay an Employee for Accrued Paid Leave Hours Upon Termination of Employment?

No.  If an employer terminates an employee’s employment or if an employee quits, resigns, retires, passes away, or otherwise ceases to be the employer’s employee, the employer is not required to pay that employee for any accrued, but unused, paid leave under the Act.  Having said the foregoing, the Act does not modify an employer’s obligation under the Illinois Wage Payment and Collection Act (the “WPCA”) to pay an employee for earned and unused vacation pay upon separation.  If an employer has a paid time off (“PTO”) policy that combines for example, vacation, sick and personal days, then under the WPCA any earned and unused PTO – including that under the Act – must be paid to the employee upon separation.

10.       Does the Act Prohibit Any Other Actions or Have Any Additional Requirements?

Yes.  No Retaliation:  The Act prohibits an employer from taking adverse action (i.e., from retaliating) against an employee because: (a) the employee exercises rights, or attempts to exercise rights, afforded by the Act; (b) the employee opposes practices that the employee believes violate the Act; and (c) the employee supports another employee who is exercising rights under the Act.  Additionally, an employer is prohibited from considering, as a negative factor, an employee’s use of paid leave when evaluating, considering for promotion, disciplining, or generally reviewing an employee.

Preserving Records.  The Act requires employers to make and preserve records documenting hours worked, paid leave accrued and taken, and remaining paid leave balance for each employee for no less than three years.

Posting Notices.  The Act also requires employers to post notices regarding an employee’s rights under the Act.  While the Illinois Department of Labor (the “IDOL”) has not yet made a poster available for download, the Act contains requirements for posting notices.  Specifically, an employer must place a poster “in a conspicuous place on the premises of the employer where notices to employees are customarily posted, and include it in a written document, or a written employee manual or policy if the employer has one[.]”  While the term “written” is defined in the Act to include electronic media, and therefore an employer can incorporate the poster into an electronic handbook or intranet link, employers may want to have a physical, hard-copy poster as well to minimize risk of a claim of non-compliance with the Act.  The posters must be in English, but the Act also instructs employers to contact the IDOL for additional posters in different languages if a “significant portion of [the employer’s] workforce…[is] not literate in English.”  Employers are required to provide employees with written notice of the paid leave policy notification requirements (explained in Question 8), and must also provide written notice of any changes to the notification requirements.  Also, written notice is required for any changes made to time-off, vacation, paid leave, or other policies which may affect an employee’s right to final compensation. 

11.       How Can an Employee Pursue Remedies Under the Act?

An employee can file a complaint with the IDOL anytime within three years’ of the alleged violation of the Act.

12.       What Are the Consequences of Violating the Act?

If an employee brings an action against an employer who violates the Act, an employer can be required to pay an employee’s damages, compensatory damages, a statutory penalty of $500-$1,000, and the employee’s attorney’s fees, expert witness fees, and other costs.  An employee may also obtain injunctive relief under the Act. 

Additionally, each violation of the Act (except for violations of the notice requirement, below) is subject to a civil penalty of $2,500 to be paid by the employer into the state Paid Leave for All Workers Fund.

As noted above, and similar to other labor and employment laws under Illinois and federal law, the Act requires an employer to post a notice summarizing employee rights under the Act.  First violations for failing to post the notice are punishable by a civil penalty of $500, and subsequent violations are punishable by a civil penalty of $1,000. 

13.       When Can Employees Begin Using Their Paid Leave?

An employee’s paid leave will begin to accrue immediately after the Act becomes effective (January 1, 2024), or after an employee is hired after the Act becomes effective.  Accrued paid leave, however, cannot begin to be used until the later of (a) 90 days after the Act becomes effective or (b) the employee has completed 90 calendar days of employment with his or her employer.

Conclusion

The Act provides expansive rights for employees, including that they be paid for no less than 40 hours’ of leave within a 12-month period.  This may require significant modifications to existing leave policies of employers – and, for those inside Chicago and Cook County, a good time to review current policies and procedures in case the applicable ordinances are amended to match the Act.  In addition, because the Act imposes certain limits on the types of conditions an employer may implement on an employee’s exercise of paid leave, employers should be very careful updating current policies to comply with the Act.  If you have any questions, or would like to confirm whether your current policies comply with the Act, we encourage you to reach out to your regular FVLD contact or your legal counsel.