Earlier this year, Illinois passed the Paid Leave for all Workers Act, 820 ILCS 192/1 et seq. (the “Act”). The Act goes into effect on January 1, 2024. It requires nearly all Illinois employers to offer 40 hours of paid leave for any reason to all their employees.
Generally, the Act applies to all Illinois employers, including individuals, incorporated entities, and unincorporated entities. Exceptions to the Act include school districts and park districts. Employers subject to local paid time off ordinances may also be exempt.
The term “employee” is broadly defined under the Act. It includes full-time, part-time, exempt, and non-exempt employees. Exceptions to the Act include independent contractors, employees subject to the Federal Railway Labor Act, short-term employees in higher education, enrolled students who are employed on a temporary basis by their college, certain employees in the construction industry who are subject to collective bargaining agreements, and certain employees in the national or internationally transportation industry who are subject to collective bargaining agreements. Additionally, employees represented by a union can be excluded from the Act, so long as the union’s agreement explicitly waives compliance with the Act.
Under the Act, employees must accrue paid leave at a rate of at least one hour of paid time off for every 40 hours worked. Unused paid time off must be carried over to the next year, but an employee’s accrued time off balance can be capped at 40 hours.
Alternatively, employers can front-load the paid time off, such that the time off is available on the first day of the year. If the paid time off is front-loaded, employers do not need to carry over the time to the next year, and may have a “use it or lose it” policy regarding the paid time off.
Employees may use the leave for any purposes and are not required to inform their employer of the purpose. Employers are prohibited from requiring any certification related the paid leave under the Act.
Unlike vacation time or traditional PTO, unused paid time off under the Act does not need to be paid out upon termination, so long as its balance is kept separate from any other form of paid time off provided by the employer.
Designation of 12-Month Period
The 12-month period may be any consecutive 12-month period designated by the employer in writing at the time of hire. Changes to the 12-month period may be made by the employer if notice is given to employees in writing prior to the change and the change does not reduce the eligible accrual rate and paid leave available to the employee. If the employer changes the designated 12-month period, the employer shall provide the employee with documentation of the balance of hours worked, paid leave accrued and taken, and the remaining paid leave balance.
The Act contains a number of additional provisions that each employer will need to consider when administering paid leave under the Act, including determination of the appropriate pay rate, minimum increments of usage, coordination of leave benefits, use of leave during an employee’s probationary period, availability of leave for re-hires and transfers, notice requirements, recordkeeping and prohibitions on retaliation.
The Act will be administered and interpreted by the Illinois Department of Labor. Penalties for violations of the Act include penalties ranging from $500 to $2,500, compensatory damages, and attorney’s fees and costs.
At this point, the Illinois Department of Labor has provided only limited guidance related to the Act. On May 23, 2023, the Department posted answers to eight frequently asked questions. See https://labor.illinois.gov/faqs/paidleavefaq.html. However, there are a number of issues that remain unresolved, especially as it relates to the coordination of leave under the Act and existing leave benefits.
Illinois employers are advised to reach out to their employment law attorneys for assistance in complying with the Act well in advance of its effective date (January 1, 2024). At Reno & Zahm LLP, our professionals have been proud to represent individuals and businesses in Northern Illinois for over 100 years. Our lawyers regularly counsel clients on a wide variety of employment law matters, including paid leave policies. Contact us today at (815) 987-4050 to schedule a consultation.
This posting is for informational purposes only and is not intended to be legal advice. As the facts and circumstances of each employer are unique, the information provided herein should not be used or relied upon without first consulting a lawyer.
The blog published by Reno & Zahm LLP is available for informational purposes only and is not considered legal advice on any subject matter. By viewing blog posts, the reader understands there is no attorney-client relationship between the reader and the blog publisher. The blog should not be used as a substitute for legal advice from a licensed professional attorney, and readers are urged to consult legal counsel on any specific legal questions concerning a specific situation.