If Pain (Or Anything Else), Yes Gain—Part 104: Illinois to Become Third State to Enact Paid Leave Law

Seyfarth Synopsis: A bill that would provide paid leave for all workers in Illinois is awaiting Governor Pritzker’s signature.  If signed into law, the bill would provide up to 40 hours of paid leave for eligible employees, effective January 1, 2024.

On January 10, 2023, the Paid Leave for All Workers Act (the “Act”), S.B. 208, passed both chambers in the Illinois Legislature, mere days into the new legislative session. If signed into law, the Act will require all employers in Illinois to provide up to 40 hours of paid leave per year to their workers, to be used for any reason. Illinois would join Maine and Nevada as the only states with such a mandate. This will make Illinois the seventeenth state to enact a statewide paid sick leave or general paid leave mandate. Governor Pritzker has publicly expressed his support for the measure and has said he will sign the Act.  The new statewide law would go into effect on January 1, 2024.

Here are the key highlights of the Act:

• Employer coverage: Employer coverage under the Act is broad. The definition of an employer is borrowed from Illinois’ Wage Payment and Collection Act and includes any individual, partnership, association, corporation, limited liability company, business trust, employment and labor placement agencies where wage payments are made directly or indirectly by the agency or business for work undertaken by employees under hire to a third party pursuant to a contract between the business or agency with the third party, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee, for which one or more persons is gainfully employed.  The definition of an employer also includes state and local governments.
• Employee Definition: Employee is broadly defined using the definition from the Illinois Wage Payment and Collection Act and generally only excludes contractors, employees under the Railway Labor Act, and certain student employees or short-term higher education employees.
• Accrual Rate: Employees will be entitled to accrue one hour of paid leave for every 40 hours worked, up to a total of 40 hours per year. Accrual must begin at the commencement of employment or January 1, 2024, whichever is later. 
• Frontloading: Rather than permit employees to accrue paid leave, an employer can elect to grant employees a lump-sum grant of 40 hours of paid leave each year (or pro rata amount of what the employee would earn if accrued during the year).
• Year-End Carryover: Employees will be allowed to carryover any accrued, unused paid leave at the end of the year. But, employers that frontload the minimum number of hours of paid leave are not required to allow employees to carryover any paid leave time from year to year.  If an employer provides for carryover of paid leave, it may limit an employee’s use of paid leave to 40 hours per year.
• Usage Waiting Period: Employees will be able to begin using available paid leave under this Act either 90 days after beginning employment or 90 days after the effective date of the Act (presumably, March 31, 2024), whichever is later.
• Calendar Year: 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.
• Reasons for Use: The Act does not provide specific reasons for use and instead states that an employee may use leave for “for any reason of [their] choosing.” Further, an employee is not required to provide an employer a reason for the leave and may not be required to provide documentation or certification as proof or in support of the leave. 
• Notice to Employer: If use of paid leave is foreseeable, an employer may require the employee to provide 7 calendar days’ notice before the date leave is to begin. If the leave is not foreseeable, the employee must provide notice as soon as practicable.  If an employer intends to require notice of leave under the Act when leave is not foreseeable, it must provide a written policy that contains the procedures for an employee to provide notice.
• Leave for Reinstated Employees: If an employee is separated from employment, but rehired within a 12 month period, previously accrued, unused paid leave must be reinstated. Further, it appears that the employee will be entitled to use any such paid leave without a waiting period. 
• Payment On Termination. Notably, the Act states that it will not require payout of earned, unused paid leave upon separation from employment. In contrast, Illinois law currently requires payout of earned, unused vacation time upon separation. Therefore, we expect forthcoming regulations and administrative guidance to address the interplay between these conflicting statutory provisions.    
• Local Sick Leave Ordinances: The Act states that it will not apply to any employer covered by a municipal or county ordinance that requires employers to give any form of paid leave to their employees, including paid sick leave, and is already in effect. Both Cook County and Chicago have paid sick leave laws in place; therefore, it appears the Illinois Act would not apply to employers covered by these sick leave ordinances.[1] Any local ordinance that provides paid leave, including paid sick leave or other paid leave, enacted or amended after the effective date of the Act must comply with the requirements of the Act or provide benefits, rights and remedies that are greater than or equal to those of the Act.
• Collective Bargaining Agreements: The Act will not affect any collective bargaining agreement in effect as of January 1, 2024. However, subsequent agreements will need to either comply with the Act or include a specific waiver of its terms, subject to certain industry-specific requirements.
• Administration and Enforcement: The Act will be administered by the Illinois Department of Labor (the “Department”). Aggrieved employees may bring a complaint to the Department within 3 years of any violation. In addition to administrative penalties and the amount of any underpayment, employees can recoup compensatory damages, attorneys’ fees, and other costs.

The Act contains a number of additional substantive provisions that will impact employer administration of paid leave, including, but not limited to, rate of pay, increments of use, coordination with existing employer policies, notice and posting, recordkeeping, and prohibitions on retaliation, discrimination and interference.

Employer Takeaways:

We expect the Illinois Paid Leave for All Workers Act will be signed into law and  become effective January 1, 2024.  Before its effective date, employers should take the following steps:

• Monitor the Illinois Department of Labor’s website for the release of further guidance.
• Review leave or PTO policies and procedures to ensure that they meet at least the minimum requirements of the Act.
• Develop an Illinois paid leave policy that complies with the Act for any employees who are not covered under the employer’s existing paid leave or PTO policies.
• Review and, as necessary, revise anti-retaliation, attendance, conduct, and discipline policies to prevent retaliation against employees for taking time off under the Act.
• Train supervisory and managerial employees, as well as HR, on the Act’s requirements.

With the paid leave landscape continuing to expand and grow in complexity, companies should reach out to their Seyfarth contact for solutions and recommendations on addressing compliance with  paid leave requirements. To stay up-to-date on Paid Sick Leave developments, click here to sign up for Seyfarth’s Paid Sick Leave mailing list. Companies interested in Seyfarth’s paid sick leave laws survey should reach out to sickleave@seyfarth.com.

 

[1] It is unclear at this time how the Act, if passed, will impact employers with operations in Cook County municipalities that have chosen to “opt out” of complying with the County’s paid sick leave ordinance.