By Mark Ishu

On January 1, 2024, the Paid Leave for Workers Act (“Act”) will require Illinois employers to provide their employees with up to 40 hours of paid leave within a 12-month period, to be used for any reason.   Illinois is among only two other states and the first in the Midwest to require employers to pay mandatory time off to their employees.  Under existing law, Illinois employers are not required to provide their employees with any paid leave. Illinois employers need to review their own leave policies to ensure they are in compliance with the Act.         

Who is covered by the Act?

The Act covers all employers (including state and local governments) employing one or more persons.  As the Act doesn’t distinguish between part-time, full-time, or seasonal employees, all three categories of workers are covered by this Act.  The Act, however, has carved out exceptions to its applicability.  The Act does not apply to the following employees and employers:

• • workers who qualify as “employees” under the Railroad Unemployment Insurance Act or the Railway Labor Act;
  • student-workers at institutions of higher education who work less than full-time on a temporary basis;
  • short-term employees who work at institutions of higher education for fewer than two consecutive calendar quarters during a calendar year and who do not have a reasonable expectation that they will be rehired;
  • school districts organized under the School Code;
  • park districts organized under the Park District Code;
  • employees working in the construction industry who are covered by a collective bargaining agreement;
  • employees covered by collective bargaining agreements that provide national and international delivery, pickup and transportation of parcels, documents and freight; and
  • employers covered by municipal or county ordinances that give any form of paid sick leave or paid leave to employees as of Jan. 1, 2024.

What are the Act’s newly mandated leave requirements?

Employers must change their leave policies to ensure employees receive, at a minimum, the leave requirements mandated under the Act.  Here are some of the basic minimum requirements that need to be incorporated in an employer’s leave policy:

Accrual and Use of Paid Leave

• • Beginning on January 1, 2024, or when employment begins, whichever is later, employees shall accrue 1 hour of paid leave for every 40 hours of work.
  • Employees have full discretion to use the leave they accrued under the Act for “any reason of [their] choosing” and are not required to provide any documentation in support of their leave. 820 ILCS 192/5.
  • Employees who are exempt from the overtime requirement of the Fair Labor Standards Act, shall be deemed to have worked 40 hours each workweek unless their regular workweek is fewer than 40 hours, in which case paid leave shall accrue based on the number of hours in their regular workweek.
  • Employees are entitled to begin using the accrued paid leave after 90 days.  March 31, 2024 is the first day employees would be able to take whatever paid leave they accrued since January 1, 2024.
  • Employers are required to pay the employees’ regular hourly rate of pay when taking paid leave.
  • For employees who regularly receive tips or commissions as part of their pay, their pay rate on any paid leave they accrue and use will be at least the minimum wage in their respective jurisdiction.
  • An employer who already offers paid leave benefits that meet the minimum requirements of the Act does not have to add additional time.

Accrual vs. Frontloading

• • The Act allows employers to choose between an accrual or frontloading system for paid leave.
  • As discussed above, if the employer opts to have an accrual system for paid leave, the employee accrues 1 hour of paid leave for every 40 hours of work. Under this system, the employer shall allow employees to carry over all unused paid leave from one 12-month period to the next.
  • If an employer opts to have a frontload paid leave time system, it must give one full year’s worth of leave that meets the minimum requirements of the Act (advancing 1 hour of paid leave for every 40 hours of work during the entire year) to an employee at the beginning of the calendar year.[1] Under this system, employers are not required carry over paid leave from year to year.

Rules Governing How Employees Request Leave

• • Although the Act requires employees to make an oral or written request to use any paid leave accrued, employees must follow the employer’s policy concerning notification of intent to use leave.
  • In instances where the leave taken by the employee is foreseeable, Employers may require 7 calendar days of advanced notice.
  • In instances where the leave is considered not foreseeable, employers may require their employees to provide notice as soon as practical. But, if employers impose rules when an employee’s leave is considered not foreseeable, the employer shall provide a written policy that contains the procedures for the employee to provide notice.

Employee Separation

• • The Act does not require employers to pay out on any unused paid leave upon an employee’s separation unless the employer has a policy which allows the paid leave to be “credited” to an employee’s paid time off bank or employee vacation account. In that case, any unused paid leave shall be paid to the employee upon the employee’s separation in accordance with the usual Illinois rules for paying out unused leave upon separation.

Record Keeping Requirements

• • Employers must maintain records for each employee showing: (1) number of hours worked; (2) number of paid leave hours accrued and taken; and (3) remaining paid leave balance.
  • These records must be retained for at least 3 years and be available for inspection by the Illinois Department of Labor (“IDOL”) and, if an employer uses an accrual system, by the employee upon request.

Employer Notice Requirements

• • Employers must post a notice provided by the IDOL in a “conspicuous” place at the workplace.
  • If an employer has an employee handbook, the requirements of the Act must also be summarize there as well.
  • This notice shall include a statement explaining employees are responsible for paying their share of any health insurance to maintain coverage while on leave.
  • Notice must also be given to employees within five calendar days of any changes made to the employer’s reasonable paid leave policy notification requirements for employees mentioned above.

What are the remedies against Employers who violated the Act?

Although there is no private right of action under the Act, IDOL has statutory authority to fully pursue remedies on the employee’s behalf.  Employers who violate the Act are subject to pay back the employee the amount in unpaid or underpaid leave, compensatory damages, and a civil penalty of up to $1,000 per employee.  The Act further allows employees to recover appropriate equitable relief, as well as reasonable attorneys’ fees and expert witness fees.  Employers will also be subject to a $2,500 civil penalty for each separate offense, to be deposited into a special fund created in the state treasury dedicated to enforcing the Act.  If an Employers violates the Act’s posting requirements mentioned above, the employer will be fined $500 for the first violation and $1,000 for each subsequent violation.

What should you do now?

Employers, if they haven’t already, should immediately make efforts to audit their leave policies and record keeping requirements to determine whether their current policies and practices need to be adjusted to ensure compliance with this new law. If you have questions about how the Act impacts your organization, please reach out to the Labor and Employment Practice Group at Conn Maciel Carey, LLP.

 

[1] Employers may, however, designate a different consecutive 12-month period, which must be communicated to employees in writing at the time of hire.  The employer can designate the calendar year, fiscal year, or a 12-month period based on the anniversary of employment.  If the employer changes the 12-month period, the employer must provide documentation to the employee that includes the balance of paid leave accrued and taken, and the remaining leave balance.