Mandated Paid Leave Coming to Illinois

On March 13, 2023, Illinois became one of just three states (joining Maine and Nevada) to require employers to provide paid leave that employees can use for any reason at all.  Illinois’ Paid Leave for All Workers Act (the “Act”) will cover most Illinois employers and employees and will take effect on January 1, 2024.

Covered Employers and Employees

The Act applies to all employers of one or more employees, including the State, local governments, and government agencies—but not school districts or park districts. Furthermore, the Act does not apply to employers in Chicago, which has its own paid leave ordinance, or to those located in Cook County municipalities that participate in the similar countywide leave ordinance. 

The Act applies to all employees by default, but the following classes of workers are excluded:

• Student-employees at colleges and universities;
• Certain short-term employees at colleges and universities;
• Railroad workers;
• Employees covered by a collective bargaining agreement who work in the construction industry; and
• Employees covered by a collective bargaining agreement who provide services nationally and internationally of delivery, pickup, and transportation of parcels, documents, and freight.

Additionally, the Act does not apply to existing collective bargaining agreements, and unionized employers can negotiate waivers of the Act’s requirements as part of future collective bargaining agreements.

General Provisions

Under the Act, an employee who works in Illinois is entitled to a minimum of 40 hours of paid leave per year. Paid leave accrues at the rate of one hour of paid leave for every 40 hours worked. Leave starts to accrue on January 1, 2024 (or the first day of work for a new employee thereafter) and can be taken 90 days later on March 31, 2024 (or 90 days after the new employee starts work). Significantly, this leave may be taken for any reason without any explanation, and employers cannot require any proof to support the leave or ask employees to find a replacement to cover their shifts. While on paid leave, employees must be paid their regular wage rate.

Employer Choices / Leave Specifics

Employers do have some choice in how to implement paid leave. First, they may choose to either front-load the paid leave at the beginning of the year, or require that it be accrued at the rate of one hour for every 40 hours worked. If an employer chooses to front-load the paid leave, then any accrued, but unused paid leave need not be carried over to the next year, and may be deemed forfeited. If, however, an employer chooses the accrual method, unused paid leave must be carried over to the next year and may not be deemed forfeited. But, even under the accrual method, employers are not required to provide more than 40 hours of paid leave in a 12-month period.

Employers also have a choice about whether to credit/charge paid leave under the Act to a paid-time-off (PTO) bank or to an employee vacation account, which will affect whether a payout of paid leave is required upon separation of employment. By default, the Act does not require employers to payout unused paid leave at the end of the year or upon separation of employment. But, if an employer chooses to include paid leave under the Act in a PTO bank or employee vacation account, then the employer must pay out unused leave under Act to departing employees just like it does now with accrued but unused vacation time. Employers who choose to fold paid leave under the Act into existing leave programs must have a written policy explaining these details.

Employers can also require employees to give 7-days’ notice for foreseeable leave, or “as soon as practicable” notice for unforeseeable leave use.  Again, employers taking this option must have a written policy explaining the how the employee is to provide such notice. Lastly, while employees may decide how much paid leave to use on any given day, employers can set a reasonable minimum increment of up to two hours per day for the use of paid leave.

Employer Obligations

Employers have other obligations on top of providing paid leave. Employers must keep records of paid leave for each employee for at least three years and allow the state Department of Labor to access those records for compliance review. There are several new notice and posting requirements, including the requirement to display a Department of Labor poster at the workplace. And while the Act does not require a written policy, it highly encourages employers to develop one by providing some flexibility to employers as described above. The Act further requires employers to reinstate accrued, but unused paid leave for employees who are rehired with less than 12 months’ break in service, and it also requires employers to maintain health care coverage under any existing group health insurance plan during any leave periods taken under the Act. Finally, the Act contains anti-retaliation protections which prohibit employers from taking adverse action against employees who exercise their leave rights under the Act.

Liabilities and Penalties

Open questions remain about how the Act’s prohibition on employer inquiries into the reason for an employee’s absence will be squared with common employer practices regarding doctors’ notes and even with notice and designation obligations under the federal Family and Medical Leave Act.  Within these ambiguities lie significant risks.  Employers who violate the Act are liable to the employee for damages in the form of the actual underpayment, compensatory damages, and a penalty of $500 to $1,000. Employees are also entitled to equitable relief, reasonable attorney's fees, reasonable expert witness fees and other costs of the action. Covered employers are further subject to additional civil penalties from $500 to $1,000 for audit violations, and an additional civil penalty of $2,500 for each violation of the Act.

Conclusion

Mandated paid leave for any reason will be coming to Illinois soon, along with its stringent requirements and stiff penalties. Employers should use the coming months to evaluate the Act’s burden on their operations, weigh the steps they must take to implement the Act’s leave and tracking requirements and consider modifications to their existing leave policies to help manage the impact of the new leave entitlement.  If you need any assistance in becoming compliant, or have any questions about how the new law will affect your company or business, please contact a member of Lewis Rice's employment law team.