Illinois mandates 40 hours of paid leave for any reason
On March 13, 2023, Illinois Governor J.B. Pritzker signed SB 208, also known as the Paid Leave for All Workers Act (Act), requiring Illinois employers to provide employees with up to 40 hours of paid time off (PTO) during a 12-month period to be used for any reason.
Illinois is now the third state, along with Nevada and Maine, to mandate PTO for any reason. Below we summarize the key provisions of the new law, which takes effect on January 1, 2024.
Broad coverage, with a major carveout
The Act covers all individual, public, and private employers that have one or more employees in Illinois who do not work in Chicago and/or Cook County, except certain federal and state employers.
Specifically, the Act exempts from coverage employers covered by a “municipal or county ordinance that is in effect on the effective date of this Act that requires employers to give any form of paid leave, including paid sick leave or paid leave,” such as the Chicago Paid Sick Leave and Cook County Earned Sick Leave Ordinances. Accordingly, employers that are subject the Chicago and/or Cook County Ordinances are not subject to the Act, at least with respect to employees who work in Chicago and/or Cook County.
The Act otherwise covers all employees, with certain limited exceptions (eg, employees as defined by the Railway Labor Act, temporary college or university student employees, certain short-term employees of an institution of higher learning). In addition, the Act exempts employees covered by a collective bargaining agreement in effect as of 1 January 2024, provided that the parties to an agreement explicitly waive compliance with the Act.
Accrual and carryover
The Act provides employees up to 40 hours of paid leave in a 12-month period which employees may use for any reason. Employees accrue leave at the rate of one hour for every 40 hours worked beginning on January 1, 2024, or when employment begins, whichever is later. Exempt employees are deemed to work 40 hours in each workweek for purposes of paid leave accrual (unless their regular workweek is less than 40 hours). Employees may begin taking leave 90 days after they begin employment or 90 days after the law is effective, whichever date is later.
Employers may designate any consecutive 12-month period (eg, calendar year, fiscal year) and must communicate the period to employees at the time of hire. Any changes to this period must be documented and provided to employees and cannot reduce the eligible accrual rate and paid leave available to the employee. If the employer changes the designated 12-month period, the employer must provide the employee with documentation of the balance of hours worked, paid leave accrued and taken, and the remaining paid leave balance.
Employers can follow an accrual-based leave policy or frontload leave and make the entire 40 hours available to an employee on the first day of the 12-month period. Employers that frontload may require employees to “use it or lose it” before the end of the period.
Employers are not required to pay out unused paid leave under the Act to departing employees. If, however, the paid leave under the Act is credited to the employee’s paid-time-off bank, any unused paid leave must be paid to the employee upon the employee’s termination or separation as provided by the Illinois Wage Payment and Collection Act (IWPCA). In addition, if the employee is rehired within 12 months of separation by the same employer, the employer must reinstate any previously accrued unused paid leave.
Use, notice and documentation
Employees may take leave for any reason and are not required to provide the employer with a reason for the leave or any documentation or certification in support of the leave. While employers may set a reasonable minimum increment, this increment may not exceed two hours per day. Employers are prohibited from requiring, as a condition of providing leave under the Act, an employee to search for or find a replacement worker to cover their hours.
An employer may implement reasonable paid leave policy notification requirements, which may include seven calendar days’ notice before the date the leave is to begin. If leave is not foreseeable, the employee may be required to provide notice as soon as is practicable. An employer that requires notice when leave is not foreseeable must provide a written policy that contains procedures for employees to provide notice.
Employees must be paid their hourly rate of pay for the hours of paid leave they take. Employees who are paid gratuities and commissions must be paid the greater of their hourly rate or the full minimum wage for the jurisdiction.
Posting and recordkeeping
The Act requires employers to post a notice to be provided by the Illinois Department of Labor (IDOL) summarizing the requirements of the Act and information regarding filing a complaint in a “conspicuous” place. If an employer’s workforce is comprised of “a significant portion” of workers who are not literate in English, the employer must notify the IDOL, and the IDOL will prepare a notice in the appropriate language. A copy of the notice must also be included in any employee handbook or leave policy.
Employers must also maintain records for each employee showing the employee’s hours worked, paid leave accrued and taken and remaining paid leave balance for at least three years. Records must be available for inspection by the IDOL and, if an employer uses an accrual model, to the employee upon request.
Administration and enforcement
The Illinois Department of Labor is responsible for the administration and enforcement of the Act. The Act does not expressly provide for a private right of action. The Act expressly prohibits discrimination and retaliation and provides that employees may file a complaint with the IDOL within three years of an alleged violation.
An employer that violates the Act will be liable to any affected employee for damages in the form of the actual underpayment, compensatory damages, and a penalty of not less than $500 and no more than $1,000. Employees are also entitled to such equitable relief as may be appropriate, in addition to reasonable attorney's fees, reasonable expert witness fees, and other costs of the action.
In addition, an employer will be subject to a $2,500 civil penalty for each separate offense that is payable to the Paid Leave for All Workers Fund, a special fund created in the State Treasury that is dedicated to enforcing the Act. Employers that violate the Act’s notice/posting requirements will be subject to a $500 penalty for the first violation and $1,000 for each subsequent violation.
The IDOL is expected to issue additional guidance and materials prior to the Act’s January 1, 2024, effective date. In the meantime, Illinois employers are encouraged to consider how they will comply with the Act’s requirements and monitor and track time used and accrued for employees.
For more information, please contact the author.