Amy Rizzo:
Good afternoon, and thank you for joining us for Kelleher and Holland’s final employment law lunch and learn series webinar of 2023. I am Amy Rizzo, Marketing Manager and webinar moderator. As promised last week, today’s special episode will take a deeper dive into one of our most popular topics: paid leave - specifically, the new Illinois and Chicago laws and how they may affect you.
Today we have a full hour for discussion. If you have been loyal viewers of our series, you will recognize today’s panelists from our employment law practice group: Andy Boling and Madeline Kelleher.
Please submit any questions you may have during the presentation through the Zoom control panel using the Q&A button. We will try to get to them at the end but if time is tight we will follow up with you offline.
So Madeline, let’s revisit the Illinois Paid Leave for All Workers Act. What is the purpose of the Act and what does it change?
Madeline Kelleher:
On March 13, 2023, Illinois Governor J. B. Pritzker signed the Paid Leave for All Workers Act.
The Act is the first statewide paid leave law in Illinois, mandating paid leave for employees to use for any reason of their choosing. The new Act, including the paid leave accrual requirements, will take effect on January 1, 2024. This means that prior to January 1, 2024, ALL Illinois employers should review their current policies and procedures for compliance and take the necessary actions that must be done in 2023.
The Act will require every Illinois employer to provide each of their employees up to 40 hours of paid leave for every 12-month period at an accrual rate of 1 hour of paid leave for every 40 hours worked.
Employees may use this paid leave for any reason of their choosing. Meaning, reasons for paid leave include illnesses, vacation, care of a family member, etc.
While on leave, employees must be paid their normal hourly rate of pay. For employees who are regularly paid gratuities or commissions as part of their pay, their pay rate must be at least minimum wage in their jurisdiction of employment.
Amy Rizzo:
Does this decision apply to all employers?
Madeline Kelleher:
Yes. Notably, in the Act, the definition of “employer” includes any individual, partnership, association, corporation, limited liability company, business trust, employment and labor placement agency, and even includes the State of Illinois and local governments, as well as any agencies and political subdivisions thereof. However, and spoiler alert, if your company has a sufficient nexus with the City of Chicago, you will subject to the more generous leave laws under City law. I will talk about that in more detail later in the program.
Amy Rizzo:
Andy, what about employees?
Andy Boling:
Generally, yes, with some exceptions. The Act does not distinguish between part time, full time, or seasonal employees. This means that employers of day and temporary laborers, or nannies, are not exempted from providing these employees with paid leave under the Act. Such employers should also consider their obligations under the Day and Temporary Labor Services Act and the principles of joint employment.
However, the Act does not cover individuals who meet the legal definition of an independent contractor, construction, delivery, pickup, transportation and state agency employees who are working under a bona fide collective bargaining agreement. and state and federal government employees. There are also exceptions for five categories of employees, including:
Remote Employee Coverage
Does the new law apply to all employees working outside of Illinois? Probably not, but it can get complicated. The Act defines employee in the same manner as the Illinois Wage Payment and Collection Act. The Act does not specify a minimum threshold of hours worked in Illinois for coverage, nor does it require that an employee work for an Illinois-based company for coverage. This ambiguity prompted many questions, such as the coverage of remote employees working in Illinois for a company based out-of-state, remote employees working out-of-state for a company based in Illinois, and numerous permutations of a hybrid work model. All of this is a bit uncertain, as the Illinois Department of Labor continues to issue proposed guidance. Last month the state DOL issued new proposed regulations to implement the paid leave act. The regulations, which won’t be finalized until early 2024 and are still subject to comment, but they are the best information we have to work with now.
The proposed regulations define an employee as one who:
• Works for an employer whose base of operations, regional office, or headquarters is in Illinois and that employee’s work is primarily performed in Illinois; or
• Primarily performs work in Illinois for an employer that performs substantial business in the state, markets its services in the state, or maintains a registered agent within the state of Illinois; or
• Primarily performs work in Illinois and resides in Illinois.
When considering whether work is “primarily performed in Illinois,” IDOL will consider the following factors: (a) the ratio of work performed in Illinois versus outside of Illinois; (b) whether the work performed in Illinois is isolated, temporary, or transitory; and (c) whether the work performed outside of Illinois is of the same nature or has the same duties of the work performed in Illinois.
Amy Rizzo:
What If the Employer Already Provides Paid Leave?
Andy Boling:
If the employer already provides paid leave but does not meet the minimum requirements of the Act, the employer must add additional paid leave to their policy. However, if the employer currently offers Paid Leave for any reason, such legacy policies can probably stay in place, but under a yellow caution flag as I will explain below.
The Act appeared to provide broad exemption language for employers with pre-existing paid leave policies that provided employees at least 40 hours of paid leave and offered employees the option, at their discretion, to take paid leave for any reason. If an employer’s policy fell within this exemption, the Act indicated that the employer would not need to modify its paid time off policy to comply with the Act.
Employers with paid time off (PTO) benefits more generous than what the Act requires have been waiting with bated breath to determine how broadly the IDOL would interpret this provision. Notably, the proposed regulations allow employers to largely keep their current PTO policies intact to meet the requirements of the Act, stating specifically:
Based on the language in the proposed rule, it appears, then, that an employer with a PTO policy that offers its employees at least 40 hours of PTO that can be used for any reason per year does not need to change its policy, even if the PTO policy provisions do not align with the Act on issues such as increment of use, advance notice/pre-approval provisions, and carryover. The proposed regulations do not address whether any job protection must be provided to PTO absences that fall under this pre-existing policy exemption, or if employers can continue to enforce their formal attendance policies and points systems. At the end of the day, I would be very careful if your current policy is more restrictive than what is required under the Act, and would consider establishing a new Paid Leave policy designed to conform with the Act.
Amy Rizzo:
Can an employer choose to provide employees with more paid leave or provide their employees with paid leave at a different rate than that provided under the Act?
Andy Boling:
Yes. But you may want to consider segregating Paid Leave from general PTO/Vacation to reduce vacation payout at termination and for other reasons.
Amy Rizzo:
Madeline, can you explain how accrual works under the Act?
Madeline Kelleher:
There are two ways to comply with the Act. An employer can either “front load” the leave at the beginning of the year, or have employees accrue leave over time. I will explain both options and first address the accrual method.
An employee will accrue paid leave time based on number of hours worked, again, at a rate of 1 hour of paid leave for every 40 hours worked, up to a maximum of 40 hours of paid leave that an employee is entitled to per every 12-month period.
So while a full-time worker will likely accrue the full 40 hours of leave by the end of the 12-month period, a part-time worker might not and, rather, might have accrued fewer than the full 40 hours of leave. The amount of leave for a part-time employee is just based on the number of hours the employee has worked.
Example: Employee A works 15 hours per week, 52 weeks per year. Employee A will accrue 19.5 hours of paid leave annually. (15 x 52 = 780 hours worked per year. 780/40 = 19.5 hours of paid leave).
The new proposed rules introduce another complication on this issue. Under the proposed rule, employees will accrue leave faster than the law requires. Accruals must be made on a fractional basis based on 15-minute work increments. For example, if an employee works 46 minutes, the employee will have access to leave accrued for a full hour; if the employee works 1h 1m, the employee will be considered to have worked 1h 15m. Unlike traditional rounding used for wage and hour laws, which might round up or round down, the proposed regulations require that employers always round up, regardless of where on the “dividing line” the time worked exists.
Additionally, employees who are exempt from the overtime requirements of the federal Fair Labor Standards Act are generally deemed to work 40 hours in each workweek for purposes of paid leave time accrual if they regularly work 40 or more hours in a workweek. If such employee’s regular workweek is less than 40 hours, their paid leave time accrues based on the number of hours in their regular workweek as previously explained in the example. For example, if the standard paid work week is 37.5 hours, and an employee works for 75 hours in a biweekly pay period, they will accrue 1.875 hours of paid leave.
Amy Rizzo:
When can employees start accruing paid leave?
Madeline Kelleher:
Under the Accrual Method, each employee’s paid leave begins accruing upon either the employee beginning employment in 2024 or on January 1, 2024, whichever is later. A few examples:
Example 1: Employee A has worked for their employer since 2019 but did not previously get paid leave. Employee A will begin accruing paid leave beginning January 1, 2024.
Example 2: Employee B has worked for their employer since 2019 and previously received paid leave. Employee B will begin accruing paid leave beginning January 1, 2024.
Example 3: Employee C begins employment on July 1, 2024. Employee C will begin accruing paid leave on the first day of employment (July 1, 2024).
Note that we will use these three examples a few times in this presentation.
Amy Rizzo:
When can employees start using earned accrued paid leave?
Madeline Kelleher:
After the Act takes effect, employees will be entitled to begin using accrued paid leave 90 days after the commencement of their employment or 90 days after January 1, 2024. As you can see, the same three examples to those we just went over are on the screen. Let’s go through them to see how this works:
Example 1: Employee A has worked for their employer since 2019 but did not previously get paid leave. Employee A will begin accruing paid leave beginning January 1, 2024 but must wait to begin using earned paid leave until March 31, 2024, 90 days later.
Example 2: Employee B has worked for their employer since 2019 and previously received paid leave. Employee B will begin accruing paid leave beginning January 1, 2024 but must wait to begin using earned paid leave until March 31, 2024, 90 days later.
Example 3: Employee C begins employment on July 1, 2024. Employee C begins accruing paid leave on the first day of employment (July 1, 2024), but must wait 90 days (until September 29, 2024) before using any accrued paid leave.
Amy Rizzo:
Can an employee carry over any accrued paid leave not used in the previous 12-month period?
Madeline Kelleher:
Under the Accrual Method, employers must allow employees to carry over all unused paid leave from one 12-month period to the next. When the Act was first passed, we thought it might be possible to cap total PLAWA Leave at 40 hours and suspend future accruals until the employee had less than 40 hours. In other words, new leave would simply top up the account to 40 hours. However, there is one potential catch. Notably, the proposed regulations indicate that “[e]mployers may establish a reasonable policy . . restricting employees’ ability to carry over more than 80 hours of unused paid leave.” At this point, the regulations do not provide any additional detail about the ability to impose a carryover cap. But , another spoiler alert, employers covered under the new Chicago Paid Leave Law will have different outcomes.
Amy Rizzo:
Can an employer institute a longer paid leave accrual introductory period than that under the Act?
Madeline Kelleher:
No. Paid leave must begin accruing no earlier than 90 days after their hire date or 90 days after January 1, 2024, whichever is later.
For example, an employer cannot continue a one-year post-employment introductory timeframe for paid leave to start accruing or being used by the employee.
Amy Rizzo:
Do employers have any flexibility in designating the 12-month paid leave accrual period?
Madeline Kelleher:
Yes. So, some employers already offer their employees paid leave and use a different 12-month period begin date other the first day of the year, such as employees’ work anniversary dates, the employer’s fiscal year or health plan year, or some other 12-month period.
Under the Act, the 12-month period may be any consecutive 12-month period designated by the employer in writing at the time of hire or upon notice prior to the change.
To use a different 12-month period, rather than starting over January 1, 2024, there are a few requirements:
1. The accrual period must cover 12 consecutive months;
2. The accrual rate must not be less than 1 hour of paid leave for every 40 hours worked;
3. The employer MUST provide written notice to its employees before January 1, 2024 (or at the time of hire after January 1, 2024) explaining that the employer is using a specific 12-month period for paid leave accrual; and
• The employer MUST provide its current employees with documentation of the balance of hours worked, paid leave accrued and taken, and the remaining paid leave balance at the time of notice of the change. Under the proposed rules, employers must report employee’s paid leave accrual and remaining balance on each paystub and provide these records to the employee upon request. Alternatively, employers may report the accrual and balance on the form that the employer normally uses to notify the employee of wage payments and deductions from wages. This will require close consultation with your payroll vendor.
Amy Rizzo:
So does this mean an employer can no longer frontload paid leave at the beginning of the year? (MFK)
Madeline Kelleher:
No. Employers can continue frontloading paid leave.
Under the Frontloading Method, employers can take the minimum 40 hours of annual paid leave and make it available to its employees on the first day of employment or the first day of their 12-month annual accrual period.
All employees still have a 90-day waiting period from January 1, 2024 or the first day of employment if hired in 2024 or later.
What’s more is that under the Frontloading Method, employers are not required to allow employees to carryover paid leave and may require employees to use all paid leave prior to the end of the benefit period or forfeit the unused paid leave.
Employers using the Frontloading Method must not forget to track the actual hours worked by each employee, because if an employee would have received more paid leave under the accrual method, the employer must provide that additional time.
Amy Rizzo:
Do employers have any flexibility in designating the 12-month paid leave period under the Frontloading Method?
Madeline Kelleher:
Yes. If an employer wishes to use a different 12-month period other than the beginning of the calendar year under the Frontloading Method, the employer must meet similar requirements as that under the Accrual Method:
1. The frontloading period must cover 12 consecutive months;
2. The frontloaded paid leave must be at least 40 hours;
3. The employer MUST provide written notice to its employees before January 1, 2024 (or at the time of hire after January 1, 2024) explaining that the employer is using a specific 12-month period for paid leave; and
4. The employer MUST provide its current employees with documentation of the balance of hours worked, paid leave taken and the remaining paid leave balance at the time of notice of the change.
Amy Rizzo:
Can employers set a minimum number of paid leave hours an employee can use a day?
Madeline Kelleher:
Yes. While employees may determine when they use leave and how much they choose to use of their reserves, employers may set a minimum leave increment of up to 2 hours per day. In other words, an employer may require that an employee use at least 2 hours of paid leave on any given single day.
For example, if an employee has a doctor appointment, but needs only 1 hour of paid leave, if the employer has set a minimum 2-hour paid leave requirement, the employee will use up 2 hours of paid leave for the doctor appointment, whether or not actually used.
Amy Rizzo:
Are there any notice or recordkeeping requirements under the Act?
Madeline Kelleher:
Yes. You probably won’t be surprised to learn that there are many requirements.
Under the Act, employers must satisfy the following notice requirements:
· Notice: Post an IDOL-provided notice in a conspicuous place on the work premises and include a copy of the notice in a written document, employee manual, or policy. The notice must be provided in English and any other language commonly spoken in the workplace.
· Policy: Provide a written policy that contains notice procedures for employees if required by the employer.
· Recordkeeping: Maintain accurate records showing hours worked, paid leave accrued and used, and remaining leave balance.
The proposed regulations require several additional requirements including the following:
· Access to Policy: Provide employees with the paid leave policy prior to or upon commencement of employment or within 90 days after the effective date of the Act. Employers that regularly communicate with employees by electronic means must provide the notice by the regular electronic method.
· Customized Employer Statement: Post a statement, written by the employer, summarizing the employer’s written policy and how an employee can obtain a copy of the document. The statement must be provided in English and any other language commonly spoken in the workplace.
· Paystub Requirement: Report employee’s paid leave accrual and remaining balance on each paystub and provide these records to the employee upon request. Alternatively, employers may report the accrual and balance on the form that the employer normally uses to notify the employee of wage payments and deductions from wages.
These records must be kept for at least 3 years and be available for inspection by the Illinois Department of Labor and, if an employer uses the Accrual Method, by the employee upon request.
Amy Rizzo:
Will paid leave provided under the Act be required to be paid out upon an employee’s termination, resignation, or retirement?
Madeline Kelleher:
It depends. If employers address PLAWA in a separate policy, accrued and unused PLAWA days do not have to be paid out at termination. However, PLAWA leave is provided under a broader PTO or Vacation account, it will have to be paid out on termination.
If the employer is obligated to pay an employee unused accrued paid leave upon termination, resignation or retirement, there are two considerations under the Paid Leave for All Workers Act:
1. First, if the employer elects to use the Frontloading Method and the employee uses all of their leave and then quits before the end of the 12-month period, the employer does not have to pay the employee any unused paid leave. Additionally, in this scenario, an employer may not make the employee repay paid leave time, as benefits that have already been provided may not be retroactively diminished.
2. Second, on the other hand, if the employer elects to use the Accrual Method and the employer lets an employee borrow against future accrual, meaning the employee’s paid leave balance goes negative, then the employee quits while the paid leave balance is negative, the employer may make an employee repay any and all borrowed accrued leave. This is ONLY if the employer includes a future accrual borrowing provision in the employer’s written paid leave policy that also allows for the employee’s repayment of borrowed accrued leave and the employee agrees to that policy in writing prior to taking any leave.
Amy Rizzo:
Andy, What about counties and cities that already have an ordinance regarding paid leave? Which one do employers have to follow?
Andy Boling:
The Act applies only to employers located in jurisdictions that have opted out of a local paid leave law or ordinance. The Act provides:
“The provisions of this Act shall not apply to any employer that is 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 to their employees, including paid sick leave or paid leave.”
For example, Cook County already has in place the Earned Sick Leave Ordinances. Under the provision of the Act I just read, the Cook County ordinance would override the Act, meaning that employers must follow only the obligations of the Cook County ordinance.
Thus, it is extremely important to know whether or not your local jurisdiction, whether it be a city or county, already has a paid sick leave or general paid leave ordinance or law in place.
Andy Boling:
Chicago Doubles Down on Paid Leave
On November 9, the On Nov. 9, 2023, the Chicago City Council passed the new Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, effective Dec. 31, 2023. The new ordinance substantially changes prior leave requirements for nearly all employers in the city of Chicago by July 1, 2024 and is one of the most expansive paid time-off (PTO) laws in the country. The law was originally set to go into effect on December 31, just weeks after implementation. However, just two days ago, on December 13, the Chicago City Council voted to delay the paid leave changes in the new Chicago Paid Leave and Paid Sick and Safe Leave Ordinance (the “Ordinance”) from January 1, 2024 to July 1, 2024. The City Council also approved amendments to the ordinance, which will be discussed later.
The New Chicago Paid Leave and Paid Sick and Safe Leave Ordinance
· The new ordinance will replace Chicago’s Paid Sick Leave Ordinance currently in effect. It applies to any employer who employs at least one employee, with substantive obligations differing according to whether an employer is “small” (50 or fewer), “medium” (51-100 employees) or neither. Originally, the law was exceptionally broad in scope. Covered employees included those who perform at least two hours of work in a two-week period for an employer while physically present within the city of Chicago and domestic workers. However, the amending ordinance now defines a covered employee as an individual who works at least 80 hours for an employer within any 120-day period while physically present within the geographic boundaries of the City. The amending ordinance also clarifies that once the 80-hour threshold is reached for coverage, the employee will remain a covered employee for the remainder of the time that the employee works for the employer.
Covered Employers and Employees
The Ordinance applies to all employers with employees in Illinois and expands the definition of coverage under prior versions of the Chicago Sick Leave Act.
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 July 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 and Front-Loading
Beginning July 1, 2024, or on their first day of employment, Chicago employees will be entitled to earn up to 40 hours of paid sick and safe leave and up to 40 hours of general paid leave, at a rate of one hour per every 35 hours worked and per 12-month period. An employee’s 12-month accrual period is measured from the date the employee begins to accrue leave, and both types of paid leave must accrue in hourly increments only. However, if an employer’s policy is more generous, the employer may credit the accrual time on a monthly basis. Employers may impose a 40-hour annual accrual cap for each type of leave, yet the ordinance does not provide that usage caps are permissible.
Employers also are permitted to front-load the full 40 hours of general paid leave and 40 hours of paid sick and safe leave to employees on the first day of their accrual period. Notably, while front-loading or an unlimited PTO policy relieves an employer of carryover obligations for general paid leave, paid sick and safe leave still must be carried over.
Permitted Usage and Restrictions Thereon
As with PLAWA, employees’ 40 hours of general paid leave can be taken for any reason and employers cannot require a reason for the leave or documentation to support it. In contrast, paid sick and safe leave is available only when an employee or the employee’s family member is ill or injured, or for the purpose of receiving professional care, including preventive care, diagnosis or treatment for medical, mental or behavioral issues, including substance use disorders; an employee or the employee’s family member is ordered to quarantine; the employee is obeying a stay-home or isolation order related to communicable disease; the employee or the employee’s family member is a victim of domestic violence; or the employee’s workplace or the school or place of care of the family member for whom the employee has to care is closed due to a public health emergency.
The ordinance also provides that employees must be permitted to choose to use general paid leave or paid sick and safe leave prior to using any other leave provided by the employer or by city, state or federal law. It is unclear whether the city is attempting to allow stacking of leave time with this provision, or whether more generous existing leave policies that otherwise meet the ordinance’s requirements would satisfy.
Employers may, however:
· Prohibit employees from taking any accrued general paid leave until after their 90th day of employment and any accrued paid sick and safe leave until after their 30th day of employment.
· Require up to seven days’ notice and reasonable preapproval to maintain continuity of operations before an employee takes general paid leave, unless an employer has an unlimited PTO policy, in which case, they may not require preapproval.
· Require up to seven days’ notice of foreseeable sick and safe leave (e.g., prescheduled appointments or court dates) and notice as soon as practicable of unforeseeable sick and safe leave.
· After an employee is absent for more than three consecutive workdays, require certification that the employee used sick or safe leave for a permissible reason. Acceptable forms of certification include documentation signed by a licensed healthcare provider; a police report; a court document; a signed statement from an attorney, a member of the clergy or a victim services advocate; or any other evidence that supports the safe leave, including a written statement from the employee or any other person who has knowledge of the circumstances.
Carryover and Payout
Employees who accrue leave time must be permitted to carry over up to 16 hours of unused general paid leave and 80 hours of unused sick and safe leave into the following year. Any additional unused accrued leave generally need not be carried over or paid out at the end of the 12-month accrual period.
However, any unused general paid leave must be paid out upon separation or when an employee is transferred outside the city of Chicago, while unused sick and safe leave need not be paid out. There are three exceptions to this rule:
1. Small employers are excused from this payout requirement entirely.
2. Medium employers need only pay out 16 hours of unused paid leave at separation through July 1, 2025, after which they too will need to pay out the full amount of any accrued but unused general paid leave at separation.
3. Employers with unlimited PTO policies must pay the monetary equivalent of 40 hours of paid time off minus the hours used by the employee in the 12 months prior to separation; however, if the employee used more than 40 hours in the 12-month period prior to the employee’s separation, then the employer is not required to pay out any accrued but unused general paid-leave time under the new city ordinance.
Additionally, if an employer sells, transfers or otherwise assigns the employer’s business, and existing employees continue to work in Chicago, these employees must be permitted to carry over their general paid leave and paid sick and safe leave to the new employer.
Record Retention and Notice Requirements
Therea are onerous record retention and notice requirements. [Employers also must maintain — for the longer of five years, or the duration of any claim or investigation — records of each employee’s name, address, hours worked, pay rate, wage agreement, number of paid time-off hours earned each year, the dates on which paid time-off hours were taken and paid, and any other records necessary to demonstrate compliance. Failure to preserve these records will result in a rebuttable presumption of violation.
The ordinance also imposes a variety of notice obligations on employers, including:
· Providing a copy of the records discussed above to an employee upon request.
· Issuing a written policy explaining the rate of paid leave and paid sick and safe leave accrual.The policy must be in the employee’s primary language.
· Posting a notice of employees’ rights under the ordinance, which the city plans to issue.
· Giving employees written notice of the paid time-off policy, including any notification requirements, at the onset of employment, within five calendar days before any change to the policy, and 14 days before any changes that affect right to final compensation for leave.
· Providing notice to any employees who have not been offered a work assignment for 60 days that they may request payout for accrued but unused paid-leave time.
· Providing information about leave accrual and usage each time an employee is paid.
· Providing written notice of employees’ rights under the ordinance with a first paycheck and annually with a paycheck issued within 30 days of July 1. The city also plans to issue a sample notice for this purpose.
· The amending ordinance requires that employers comply with the Ordinance’s recordkeeping requirements for employees whose regular work duties take place within the geographical boundaries of Chicago, even if those individuals do not meet the standard for a “covered employee” under the ordinance and consequently are not entitled to paid leave or paid sick leave.
Interaction With Existing Policies, Agreements and CBAs
• 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 July 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.
• Note that the City council amended the general Chicago Municipal Code such that Employers must provide workers with a 14-day notice of any changes to employment policies.
Enforcement and Potential Exposure
Employers may not count paid leave or paid sick or safe leave absences as an attendance violation, reduce the employee’s or the employee’s family’s health coverage during a permitted leave, or otherwise interfere with or retaliate against employees for taking leave permitted by the ordinance.
Furthermore, the city may investigate any employer it learns has entered into two or more settlements in a year related to the ordinance. Employers found to be noncompliant with the new ordinance could face fines between $1,000 and $3,000 for each separate offense, with a reduced penalty of between $500 and $1,000 for each notice violation. Notably, each day that a violation continues constitutes a separate and distinct offense for which there will be a separate fine.
Employees also may bring a private cause of action. The amendments require that an employee may only initiate a private civil action after both: (a) an alleged violation occurs; and (b) the payday for the next regular payroll period or 16 days after the alleged violation occurred passes, whichever is the shorter period. However, this prerequisite to filing a paid leave private civil action will sunset on July 1, 2026. The prerequisite does not apply to paid sick leave violations. Violating employers will be liable for damages equal to three times the full amount of any leave denied or lost, interest calculated at the prevailing rate, costs and attorney’s fees.
· Written Policy in Primary Language: The amending ordinance requires employers to provide their written paid time off policy to each of their covered employees in the employee’s primary language.
· Recordkeeping for Non-Covered Employees: The amending ordinance requires that employers comply with the Ordinance’s recordkeeping requirements for employees whose regular work duties take place within the geographical boundaries of Chicago, even if those individuals do not meet the standard for a “covered employee” under the ordinance and consequently are not entitled to paid leave or paid sick leave.
Amy Rizzo:
Madeline, What are the consequences of non-compliance with the Act?
Madeline Kelleher:
The Illinois Department of Labor is charged with administering and enforcing the Act. Employees may file complaints with the Illinois Department of Labor within 3 years of an alleged violation of the Act, and the Illinois Department of Labor may refer such violations to an administrative law judge to schedule a formal hearing.
Employers that violate the Act may also be subject to a civil suit by an affected employee for damages, including the amount of the actual underpayment, any other compensatory damages, and a penalty of $500 to $1,000. The Act further allows employees to recover appropriate equitable relief, as well as reasonable attorneys’ fees and expert witness fees. Additionally, employers will 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. There is a fear that PLAWA could evolve into a windfall for plaintiffs’ lawyers, much like the Illinois Biometric Privacy Act.
Amy Rizzo:
Madeline, can you sum up some next steps for our listeners?
Madeline Kelleher:
Winston Churchill—“Action this Day”
· Evaluate current vacation and leave policies and decide how to integrate Paid Leave (standalone policy and administered separately?) Especially important if you have unlimited vacation policy.
· Decide on accrual method—front load, accrual, or hybrid (i.e. accrual for part-time)
· Prepare notices in languages used by your employees and update employee handbooks
· Address management of employees based in Cook County/Chicago
· Decide what to do with non-IL employees
· Consult with your attorneys
· December 31 and July 1 for new Chicago Paid Sick Leave and Paid Leave
Amy Rizzo:
We have a little time for some questions that have come in – any we do not get to love will be followed up with offline.
Amy Rizzo:
Can an employer deny PLAWA Leave?
Andy Boling:
While Section 15(h) of the Act permits employers to implement prior notification requirements for employees requesting paid leave based on whether the need for leave is foreseeable or unforeseeable, the proposed rules provide that an employer cannot deny an employee’s request to use paid leave solely because the employee’s request does not meet the employer’s foreseeability requirements. They also state that an employer may restrict an employee’s use of paid leave to the employee’s regular workweek.
The proposed rules provide that the following factors are relevant when considering whether an employee’s request for paid leave may be denied based on operational needs:
· Whether the employer provides a need or service critical to the health, safety, or welfare of the people of Illinois;
· Whether similarly situated employees are treated the same for the purposes of reviewing, approving, and denying paid leave;
· Whether granting leave during a particular time period would significantly impact the business operations due to the employer’s size; and
· Whether the employee has adequate opportunity to use all paid leave time they are entitled to over a 12-month period
Amy Rizzo:
If an employee requests sick leave prior to using all 40 hours of paid leave, will the sick leave use up the paid leave?
Andy Boling:
Yes. Under the Act, paid sick leave is not in addition to paid leave.
Amy Rizzo:
Can an employer use the Accrual Method for specific employees and the Frontloading Method for other employees?
Andy Boling:
Yes. An employer can use different methods for different types of employees. For example, it could use the Frontloading Method for full-time employees and the Accrual Method for part-time, seasonal, and temporary employees.
Amy Rizzo:
Does an unlimited paid leave policy comply with the Act?
Madeline Kelleher:
Yes, as long as it meets the requirements of the Act. To determine whether a specific employer’s unlimited paid leave policy is compliant with the Act would require a fact-specific analysis. One factor would be whether the employees actually do, or have the ability to, take at least a full 40 hours in a year. Another factor would be whether the employees were paid their normal rate of pay for time they took off. The list goes on. It is important to have your unlimited paid leave policy reviewed by an attorney to ensure compliance with the Act.
Amy Rizzo:
Are schools required to comply with the Act?
Madeline Kelleher:
Public school districts organized under the School Code are exempt from the Act. A private school, not organized under the School Code, is not exempt from the Act and would have to comply.
Amy Rizzo:
Thank you panelists for once again supplying us with valuable and timely information. And thank you listeners for attending. You can contact our speakers directly if you need additional assistance; their contact info is on the screen.
That wraps up our series for 2023. Check your inbox or our social media pages for details on future webinars. Have a great rest of your day and a have a happy new year.
