Effective January 1, 2024, the Paid Leave for All Workers Act (the “Act”) entitles Illinois workers to receive up to a minimum of 40 hours of paid leave each year, which they can use in their discretion, with certain limited exceptions. It is recommended that Employers, including units of local government, review their current policies prior to the end of 2023 to ensure compliance and avoid significant penalties under the Act. Municipalities and counties have additional options available under the Act to adopt policies and/or ordinances prior to January 1, 2024 to avoid strict application of the Act.
The Act covers most employers in Illinois, including the State of Illinois and local government units, except school districts and park districts. However, the Act does not apply to any employer that is covered by a municipal or county ordinance that is in effect on January 1, 2024, and requires employers to give “any form” of paid leave to their employees, including paid sick leave or paid leave.
All full-time, part-time and seasonal employees who work for covered employers in Illinois are entitled to receive the minimum paid leave benefits under the Act, including domestic workers, subject to certain exceptions.
Covered employees do not include: (1) employees covered by the federal Railroad Unemployment Insurance Act or the Railway Labor Act; (2) students enrolled in and regularly attending classes in a college or university that is also the student’s employer, and who are employed on a temporary basis at less than full time at the college or university and performing work for that college or university; or (3) short-term employees who are employed by an institution of higher education for less than 2 consecutive calendar quarters during a calendar year and who do not have reasonable expectations that they will be rehired by the same employer of the same service in a subsequent calendar year.
Elected officials and volunteers are not considered employees under the Act.
Minimum Paid Leave Accruals
Beginning January 1, 2024, all full-time, part-time and seasonal employees covered under the Act are entitled to earn up to a minimum of 40 hours of paid leave during a 12-month period or a pro rata number of hours of paid leave during a 12-month period, at a rate of 1 hour of paid leave for every 40 hours worked. (Examples: (1) Employee A works 15 hours per week, 52 weeks per year – employee is entitled to earn 19.5 hours of paid leave annually; (2) Employee B works 50 hours per week, 52 weeks per year – employee is entitled to earn at least 40 hours of paid leave annually; (3) Employee C is paid on a salary basis and is exempt under the Fair Labor Standards Act. Employee C’s office hours are regularly 37.5 hours per week. Employee C’s paid leave accrues on the basis of 37.5 hours per week.) Paid leave may be earned via an accrual method, or employers may choose to “front-load” paid leave at the beginning of a 12 month period, to be determined by the employer. Employers must begin recording accrued paid leave at the commencement of employment or January 1, 2024, whichever is later.
Accrual vs. Front-Loading
Accrual Method. Employers may require employees to earn paid leave via accrual over a period of time. Paid leave accrues under the Act beginning the first day of employment (or on January 1, 2024, whichever is later) at a minimum rate of 1 hour of paid leave for every 40 hours worked, up to a minimum of 40 hours of paid leave. If the accrual method is used, accrued paid leave carries over annually to the extent it is not used by the employee. Employees who separate from employment and are rehired within 12 months by the same employer are entitled to reinstatement of previously accrued paid leave that had not been used.
Front-Loading Method. Employers may “front-load” the required minimum paid leave for a 12-month period, making it available on the first day of employment or the first day of a defined 12-month period. Paid leave for part-time workers may be front-loaded at a pro rata amount consistent with the employees’ anticipated work schedules. (If part-time employees work more hours than anticipated, they are entitled to accrue additional hours.) Employers that front-load the required minimum number of hours of paid leave in accordance with the Act are not required to carryover the leave from 12–month period to 12–month period, and they may require employees to use all paid leave prior to the end of the benefit period or forfeit the unused paid leave. An employer may not recoup or require an employee to repay paid leave time that was front-loaded at the beginning of a 12-month period if the employee’s employment ends before the end of a 12-month period.
Use of Earned Paid Leave
Employees are entitled to begin using up to 40 hours of paid leave after 90 days of employment, or 90 days following January 1, 2024, whichever is later. Employers define an applicable 12-month period, which may vary for individual employees. Employees determine how much paid leave they need to use. However, employers may set a reasonable minimum increment for the use of paid leave not to exceed 2 hours per day. If an employee’s scheduled workday is less than 2 hours, the employee’s scheduled workday is used to determine the amount of paid leave.
Employers are not required to provide more than 40 hours of paid leave earned under the Act in a defined 12–month period, even if the employee has accrued unused paid leave time in excess of 40 hours, unless the employer agrees to do so.
Paid leave under the Act is paid at the employee’s regular hourly rate of pay and may be taken by an employee for any reason of the employee’s choosing. An employee is not required to provide their employer with a reason for the leave and may not be required to provide documentation or certification as proof or in support of the leave. An employee may choose whether to use paid leave provided under the Act prior to using any other leave provided by the employer or State law.
Employers may establish reasonable paid leave notification requirements which may include requiring 7 calendar days’ advance notice when the use of paid leave is foreseeable, or providing notice as soon as practicable after the employee is aware of the necessity for the leave. Employers may not require as a condition for approving paid leave that the employee search or find a replacement.
Payout of Accrued Leave
Paid leave under the Act does not have to be paid out upon termination of employment, nor does an employer have to pay an employee for unused paid leave at the end of the benefit year. However, if the paid leave is credited to an employee’s paid time off bank or vacation bank, then any unused paid leave must be paid to an employee upon termination to the same extent vacation time is paid out under existing Illinois law or rule.
Collective Bargaining Agreements
The Act does not affect the validity or change the terms of bona fide collective bargaining agreements in effect on January 1, 2024. As agreements expire after that date, employees covered under a collective bargaining agreement may negotiate minimum standards of paid leave meeting or exceeding what is required by the Act. Employees may also waive the requirements of the Act in a collective bargaining agreement, but only if the waiver is set forth explicitly in such agreement in clear and unambiguous terms.
Municipal and County Ordinances
As noted above, the Act does not apply to any employer that is covered by a municipal or county ordinance that is in effect on January 1, 2024, and requires employers to give “any form” of paid leave to their employees, including paid sick leave or paid leave. As a result, municipalities and counties have the ability to exempt themselves from the Act by adopting an ordinance, prior to January 1, 2024, requiring paid leave for their employees. No distinction is made in the Act between home rule and non-home rule units of government in this regard; both types of units have the authority to enact ordinances with respect to their employees. Any local ordinance that provides paid leave, including paid sick leave or paid leave, enacted or amended after January 1, 2024, must comply with the requirements of the Act or provide benefits, rights, and remedies that are greater than or equal to the benefits, rights, and remedies afforded under the Act.
Qualified Pre-Existing Policies
Employers who have pre-existing policies in place prior to January 1, 2024, that provide “any type of paid leave” that satisfies the minimum amount of leave required by the Act (40 hours in a 12-month period), are not required to modify the policies if employees are given the option, at their discretion, to take paid leave for any reason. According to the Illinois Department of Labor’s preliminary guidance, this means employers can maintain their current parameters for taking leave, including requirements that paid leave must be taken in minimum increments larger than two hours, and may establish otherwise lawful reasons the employer may deny leave, such as for operational necessity and to meet safety objectives.
Existing paid leave policies should be reviewed carefully to confirm that all employees, including first-year, part-time and seasonal employees, are provided with an amount of paid leave that satisfies the minimum requirements of the Act, and that employees have the option, at their discretion, to take paid leave for any reason.
Notice to Employees
Pursuant to the Act, employers must give employees written notice of their paid leave policies, as well as any changes. This includes providing notice at the time of hire of the consecutive 12-month period for accrual and use of the paid leave benefits.
Employers are obligated to comply with various recordkeeping and posting requirements, as well as with anti-retaliation provisions under the Act. The Department of Labor is charged with administering and enforcing the Act, including the adoption of implementing regulations.
Penalties and Other Remedies
Employees may seek damages, including compensatory damages and underpayment of wages, injunctive relief, penalties of $500 to $1,000, attorney’s fees, expert witness fees, and other costs from the employer under the Act in connection with violations of the Act and/or acts of retaliation. Failure of an employer to post notices in compliance with the Act subjects the employer to a fine of $500 for the first audit violation and $1,000 for subsequent violations. In addition to such provisions, employers are subject to civil penalties of $2,500 for each separate violation of the Act or a related rule adopted by the Department of Labor (other than posting requirements).
It is recommended that employers review their current policies prior to the end of 2023 to ensure compliance with the Paid Leave for All Workers Act and to avoid significant penalties. In addition, municipalities and counties may further consider adopting their paid leave policies by ordinance prior to January 1, 2024 to avoid application of the Act.
If you have any questions regarding the Paid Leave for All Workers Act, or how it may affect your workplace, please do not hesitate to contact our attorneys at Klein, Thorpe and Jenkins.
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