On November 9, 2023, the Chicago City Council passed the new Chicago Paid Leave and Paid Sick and Safe Leave Ordinance (the "Ordinance"). The Ordinance will take effect on December 31, 2023. It will replace the Chicago Paid Sick Leave Ordinance currently in effect. Like the version of the Paid Sick Leave Ordinance currently in effect, Chicago employees will be entitled to earn up to 40 hours of Paid Sick Leave per 12-month accrual period. However, under the new Ordinance, Chicago employees also will be entitled to earn up to 40 hours of Paid Leave per 12-month accrual period, usable for any reason, in the style of the Illinois Paid Leave for All Workers Act, which takes effect January 1, 2024. With a total entitlement of up to 80 hours of paid time off per 12-month period, the new Ordinance is one of the most generous paid time off laws in the country and will likely require policy changes for all Chicago employers prior to the end of the year.
Covered Employers and Employees
The Ordinance applies to all employers with employees in Illinois. The Ordinance covers employees who, in any two-week period, perform at least two hours of work while physically present within the geographic boundaries of the City.1
The Ordinance does not affect the validity or change the terms of a sick leave or PTO policy in a valid collective bargaining agreement (CBA) in effect on January 1, 2024. Following that date, the requirements of the Ordinance may be waived in a bona fide CBA if the waiver is set forth explicitly in the agreement in clear and unambiguous terms. Employees working in the construction industry who are covered by a bona fide CBA are exempt from the Ordinance.
Accrual, Carryover, and Frontloading
On January 1, 2024, or when employment begins – whichever is later – covered employees2 will accrue one hour of Paid Sick Leave and one hour of Paid Leave for every 35 hours worked. Time will be accrued in whole-hour increments and not in fractions of an hour. However, employers with more generous policies can maintain a monthly accrual. Exempt employees are presumed to work 40 hours per workweek for the purposes of accrual unless their regular workweek is less than 40 hours, in which case paid leave accrues based on that regular workweek.
Employees are entitled to accrue up to 40 hours of Paid Sick Leave and 40 hours of Paid Leave in a 12-month accrual period. Employees may carry over up to 80 hours of Paid Sick Leave and up to 16 hours of Paid Leave from one 12-month accrual period to the next.
In lieu of accruing time, employers may frontload 40 hours of Paid Sick Leave and 40 hours of Paid Leave on the first day of the 12-month accrual period. If the full 40 hours of Paid Leave are frontloaded at the beginning of the 12-month accrual period, unused time does not carry over from one 12-month period to the next. The unused time can be forfeited unless the employer denies access to the time in a manner that prevents the employee from having meaningful access to their paid time off, in which case the employee must be permitted to carry over the denied hours. Importantly, frontloading 40 hours of Paid Sick Leave does not eliminate an employer's obligation to carry over up to 80 hours of unused Paid Sick Leave from one 12-month accrual period to the next.
To summarize because the Ordinance does not impose usage caps, if an employer selects an accrual method, an employee could be entitled to use up to 56 hours of Paid Leave and 120 hours of Paid Sick Leave by the employee's third 12-month accrual period. If an employer instead selects the frontload method, an employee would still be entitled to use up to 120 hours of Paid Sick Leave by the employee's third 12-month accrual period, but they would not have more than 40 hours of Paid Leave to use in a single 12-month accrual period.
Employees may not use their Paid Sick Leave until they have completed 30 days of employment and they may not use their Paid Leave until they have completed 90 days of employment.
Employers may set a reasonable minimum increment of use for Paid Sick Leave and Paid Leave. The minimum increment for Paid Sick Leave may not exceed two hours and the minimum increment for Paid Leave may not exceed four hours. If an employee's shift length is less than the minimum increment of use, the minimum increment of use will be the length of the employee's scheduled shift.
Employees may choose to use Paid Sick Leave or Paid Leave prior to using any other leave provided by the employer or by the city, state, or federal law.
Reasons for Use
Paid Leave may be used for any reason. Paid Sick Leave may continue to be used for the same reasons employees can take leave under the current Chicago Paid Sick Leave Ordinance, namely:
- The employee is ill or injured, or for the purpose of receiving professional care, including preventative care, diagnosis, or treatment, for medical, mental, or behavioral issues, including substance use disorders;
- The employee's family member is ill, injured, or ordered to quarantine, or to care for a family member receiving professional care, including preventative care, diagnosis, or treatment, for medical, mental, or behavioral issues, including substance use disorders;
- The employee or family member is the victim of domestic violence, a sex offense, or trafficking;
- The employee's place of business is closed by order of a public official due to a public health emergency or the employee needs to care for a family member whose school, class, or place of care has been closed; or
- The employee obeys an order issued by the mayor, the governor
of Illinois, the Chicago Department of Public Health, or a treating
health care provider, requiring the employee to:
- Stay at home to minimize the transmission of a communicable disease,
- Remain at home while experiencing symptoms or sick with a communicable disease, or
- Obey a quarantine order or isolation order issued to the employee.
Requesting and Documenting Leave
Employers may require up to seven days' advance notice of a foreseeable need for Paid Leave or Paid Sick Leave. If the need for Paid Sick Leave is unforeseeable, employers may require notice as soon as practicable on the day the employee intends to use the Paid Sick Leave. The Paid Sick Leave notice requirement will be waived in the event the employee is unable to give notice because the employee is unconscious or otherwise medically incapacitated.
Employers may not require documentation for the use of Paid Leave. However, as with the current Chicago Paid Sick Leave Ordinance, an employer may require certification that Paid Sick Leave was used for a permissible reason for absences of more than three consecutive workdays. Reasonable documentation may include the following:
- Documentation signed by a licensed health care provider,
- A police report,
- A court document,
- A signed statement from an attorney, member of the clergy, or victim services advocate, or
- Any other evidence that supports the employee's claim including a written statement from the employee or any other person who has knowledge of the circumstances.
The employee may choose which document to submit and may not be required to provide more than one document per incident of violence or perpetrator of violence. The employer may not delay commencement of Paid Sick Leave or delay wages because the employer has not received certification.
Using Existing Leave Policies
Employers may use their existing paid leave policies for compliance. If an employer has a policy that grants Paid Leave or Paid Sick Leave in an amount and manner that meets or exceeds the requirements of the Ordinance, the employer is not required to provide additional Paid Leave or Paid Sick Leave. However, the existing policy will need to be modified to comply with all other aspects of the Ordinance. If an employer's current Chicago paid sick leave policy does not comply with the requirements of the new Ordinance, any Paid Sick Leave the employee is entitled to roll over from one 12-month accrual period to the next must be transferred to Paid Sick Leave under the new Ordinance.
Unlimited PTO Policies
The Ordinance explicitly addresses the intersection with so-called "unlimited paid time off" policies. If employers immediately provide unlimited paid time off on the employee's first date of employment and the beginning of each subsequent 12-month accrual period, the employer need not track any carryover of unused time. Employers may not require preapproval for paid time off offered under an unlimited policy.
Even though accruals are untracked under an unlimited paid time off policy, employers must pay employees the monetary equivalent of 40 hours of paid time off minus the hours of paid time off used in the 12-month accrual period upon an employee's termination, resignation, retirement, separation, or transfer outside of the geographic limits of the City, unless otherwise provided in a CBA. If the employee used more than 40 hours of paid time off in the 12-month accrual period prior to separation or transfer, the employee would not owe the employer compensation.
Rate of Pay
Employees must receive their regular rate of pay when using Paid Sick Leave and Paid Leave, which includes continuing health care benefits if the employee receives health care benefits from their employer. The regular rate of pay for nonexempt employees will be calculated by dividing the employee's total wages by total hours worked in full pay periods of the prior 90 days of employment. Wages do not include overtime pay, premium pay, tips or gratuities, or commissions. However, an employee's hourly rate of pay for leave under the Ordinance cannot drop below the employee's base hourly wage or the applicable minimum wage.
End of Employment, Rehire, and Transfer
If an employee is transferred to a separate division, entity, or location but remains employed by the same employer, the employee is entitled to all Paid Sick Leave and Paid Leave accrued at the prior division, entity, or location and is entitled to use the accrued leave at the new division, entity, or location.
Upon an employee's termination, resignation, retirement, other separation, or transfer outside of the geographic limits of the City, certain employers are required to pay the employee the monetary equivalent of all unused accrued Paid Leave, dependent on the number of covered employees. Employees working outside Chicago or in other states are not counted toward these thresholds. Small employers (1-50 covered employees) are not required to pay out unused Paid Leave upon separation or transfer. Medium employers (51-100 covered employees) are required to pay out up to 16 hours of Paid Leave on separation or transfer through December 31, 2024. On or after January 1, 2025, medium employers will be required to pay out all unused Paid Leave on separation or transfer. Large employers (>100 covered employees) must pay out all unused Paid Leave upon separation or transfer effective January 1, 2024.
If an employee has not been offered a work assignment for at least 60 days, the employer must notify the employee in writing that the employee may request a payout of their accrued Paid Leave.
Employers are not required to pay out Paid Sick Leave upon termination, resignation, retirement, separation, or transfer outside of the geographic limits of the City.
Employer Notice and Recordkeeping Requirements
The Ordinance requires employers to comply with the following notice and recordkeeping requirements:
- Posting: Employers must post a notice (to be provided by the Department of Business Affairs and Consumer Protection (Department)) in a conspicuous place at each facility within the geographic boundaries of the City. If the employer's workforce includes a significant portion of non-English speakers, the employer also will be required to post a notice in other language(s), a model of which will be provided by the Department. Employers that do not maintain a business facility in the City are exempt from the posting requirement.
- Annual Notice: Employers must provide a notice of the employee's rights under the Ordinance with the employee's first paycheck and annually thereafter with a paycheck issued within 30 days of July 1. A form notice for this purpose will be provided by the Department.
- Paystub Reporting: Each time wages are paid, employers must provide employees with written notification including the amount of Paid Sick Leave and Paid Leave available for use, accrual rates for each,3 the amount of each leave accrued since the last notification, and the amount of each leave used since the last notification. Employers that credit Paid Sick Leave and Paid Leave on a monthly basis may update the notification monthly. Employers may choose a reasonable system for providing this notification, such as itemizing the information on a paystub or making it accessible through an online system.
- Policy: The Ordinance requires that employers provide employees with written notification of their paid time off policy, including accrual rates and any paid time off notification requirements at the commencement of employment. Any change to the employer's paid time off policy requirements must be provided to employees at least five days before the change take effect, and at least 14 days ahead of time if the change will affect the employee's final compensation.
- Records: Employers must retain records for five years or the duration of a claim, civil action, or investigation, whichever is longer. Records must include employee names, addresses, hours worked, pay rates, wage agreements, number of Paid Sick Leave and Paid Leave hours earned each year, dates on which Paid Sick Leave and Paid Leave was used and paid, and any other records necessary to demonstrate compliance with the Ordinance. Employers must provide a copy of the records to employees upon request.
Prohibited Acts, Enforcement, and Penalties
Under the Ordinance, employers cannot use an absence control policy to count paid time off as an absence that triggers discipline, discharge, demotion, suspension, or any other adverse activity. Additionally, an employer cannot require that an employee seek or find a replacement worker to cover the hours during which the employee uses Paid Sick Leave or Paid Leave.
The Department will be tasked with the administration and enforcement of the Ordinance. Employers that violate the Ordinance will be liable to the affected employee for damages including three times the full amount of any leave denied or lost by reason of employer violation, interest at the prevailing rate, and reasonable attorney's fees. Employers found in violation of the Ordinance will also be subject to a $1,000 - $3,000 fine for each separate offense, $500 for the first notice or posting violation, and $1,000 for each subsequent notice or posting violation. Each day that a violation continues constitutes a separate and distinct offense.
The Ordinance also provides a private right of action in which employees may recover damages including three times the full amount of any leave denied or lost by reason of employer violation, interest at the prevailing rate, and reasonable attorney's fees. The private right of action for alleged violations of the Paid Sick Leave provisions will be available December 31, 2023. The private right of action for alleged violations of the Paid Leave provisions will not be available until January 1, 2025.
Overlap with Other Local Laws
Because the Ordinance's December 31, 2023 effective date precedes the January 1, 2024 effective date of the Illinois Paid Leave for All Workers Act, the Ordinance is not preempted by the Illinois law. Chicago employees therefore will be covered by the Ordinance only, not the Illinois Act.
Key Takeaways and Next Steps
This mid-November change is a significant shift in the way Paid Sick Leave and Paid Leave must be provided to employees in Chicago. Employers should immediately turn their attention to addressing any compliance gaps in their current policies prior to December 31, 2023.
1. Prior to January 1, 2025, the Office of Labor Standards will present a report with recommendations for a portable Paid Leave and Paid Sick Leave policy for domestic workers. The portable policy will allow domestic workers to accrue Paid Leave and Paid Sick Leave across multiple jobs and employers.
2. Chicago Public School employees will begin accruing Paid Sick Leave and Paid Leave on July 1, 2024 instead of January 1, 2024.
3. We anticipate that the Department may clarify through future rulemaking or informal guidance what this language means.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.