Illinois requires paid leave for any reason starting in 2024 

April 11, 2023

Illinois recently became the third state — joining Maine and Nevada — to require employers provide employees accrued paid leave to use for any reason. Beginning Jan. 1, 2024, the Paid Leave for All Workers Act (2023 Pub. Act 102-1143, SB 208) will require at least one hour of paid leave for every 40 hours worked, capped at 40 hours per 12-month period. The Illinois Department of Labor (ILDOL) is responsible for adopting administrative and enforcement rules, along with providing a model notice.

The act applies to Illinois employers of any size, including most state and local government employers. However, the law excludes school districts organized under the School Code and park districts organized under the Park District Code. Nearly all employees — full-time and part-time — in Illinois are covered. Exclusions include temporary part-time student employees at state colleges and universities and short-term college or university employees (i.e., those employed for less than two consecutive calendar quarters and not expected to be rehired for the same service in the next calendar year).

Collective bargaining agreements (CBAs). The law does not apply to employees covered by a bona fide CBA who work in the construction industry or for a national and international parcel, document, and freight transportation service (including delivery and pickup). In all other cases, the law will not affect bona fide CBAs in effect on Jan. 1, 2024 (July 1, 2024 for state agencies), but CBAs after that date will have to explicitly waive the law’s requirements in clear and unambiguous terms.

Employees will be able to earn and use a minimum of 40 hours of paid leave during a 12-month period. Paid leave will accrue at a rate of one hour for every 40 hours worked and may be used for any purpose. Overtime-exempt employees will be deemed to work 40 hours each workweek, unless their regular workweek is fewer than 40 hours. Employees will not have to give a reason for the leave, and employers will not be able to require documentation or certification for the leave.

Employers will be able to set a reasonable minimum increment of two or fewer hours for leave use. Unused accrued paid leave at year-end will carry over to the next year, but employers will not have to provide more than 40 hours of paid leave in each 12-month period.

12-month period designation. Many of the act’s provisions are tied to a 12-month period designated by the employer. Examples include an employee’s work anniversary date, a calendar year, an employer’s fiscal year or health plan year, or some other 12-month period. Employers have flexibility in designating the 12-month period, as long as they meet all of these requirements:

• The period must cover 12 consecutive months.

• The employer must provide written notice of the 12-month period at hire (or on or before Jan. 1, 2024, for current employees).

• Changes to the 12-month period must not reduce the accrual rate, and employees must receive advance notice of the change. If a change is made, the employer must provide documentation of each employee’s hours worked, paid leave accrued and taken, and remaining balance.

Timing. Paid leave will begin accruing on the first day of employment or Jan. 1, 2024, whichever is later. Employees will be able to use paid leave 90 days after accruals begin. Employees will have the choice to use paid leave under this law before using any other leave provided by the employer or state law. In other words, the employer cannot require an employee to exhaust some other paid leave before using leave under this law. If a former employee is rehired within 12 months, all previously accrued but unused paid leave must be reinstated and made available for immediate use.

Frontloading. Instead of using the accrual method, employers may make the minimum hours (40 pro rata) of annual paid leave available on the first day of employment or the first day of the 12-month period. Employers that frontload paid leave won’t have to carry over unused amounts and may instead require forfeiture of unused leave before the end of the 12-month period.

Notice. Employees will be able to request leave in writing or orally in accordance with the employer’s reasonable notification requirements. Employers will be able to require up to seven calendar days’ notice for foreseeable leaves. For unforeseeable leaves, employees will have to provide notice as soon as practicable. Employers will have to give employees written documentation of any required notice procedures.

Pay. Employees will receive their hourly pay rate while on leave. Tipped and commissioned employees will be paid at least the minimum wage for the jurisdiction where they work. The act does not directly address how to calculate the hourly rate for salaried employees or whether to include various types of bonuses in the calculation. ILDOL guidance would be welcome. Employers will not have to pay out unused paid leave on employment separation unless the paid leave is credited to an employee’s paid time off (PTO) bank or vacation account, as required by the Illinois Wage Payment and Collection Act and rules.

The act prohibits employers from requiring employees to find a replacement to work while they are on paid leave. The law also bars employers from including paid leave in a no-fault attendance policy or otherwise making use of paid leave a negative factor in work evaluations or promotional considerations. Any adverse action, threat of adverse action or other form of retaliation against employees is prohibited for these activities:

• Exercising rights under the act

• Opposing impermissible employer practices

• Supporting another worker’s rights under the act.

Noncompliant employers could face civil penalties (see Enforcement and penalties below).

Health plan coverage continuation. Employers will have to maintain group health plan coverage for an employee on paid leave at the same level and conditions as when the employee was actively working. Employers will have to notify employees about their responsibility to pay the employee share of the premium while on leave, if required. Employers will likely continue benefit deductions through the normal payroll process. This requirement does not extend to nonhealth benefits like life insurance or retirement plans.

Employers subject to local ordinances requiring paid leave in effect on Jan. 1, 2024, will not have to comply with the act. At present, Chicago and Cook County generally require employers with at least one employee working at least two hours in a two-week period within the jurisdiction’s geographic boundaries to provide paid sick leave to covered employees. The exception appears to apply to all of an employer’s employees in the state, not just those employees working in Chicago and/or Cook County. Clarification from the ILDOL would be welcome.

Employers that are not subject to one or both of the local ordinances (or are in one of the approximately 100 municipalities that have opted out of the Cook County ordinance) will have to comply with the state paid leave law.

The act does not prohibit new local paid (sick or other) leave ordinances from taking effect but requires them to meet or exceed the act’s standards in terms of benefits, rights and remedies.

In addition to providing paid leave and designating the 12-month period, covered employers will have to comply with posting and recordkeeping requirements.

Poster. Employers will have to post an ILDOL-created notice in a conspicuous place at the workplace and include the notice in an employee manual or policy. The notice will summarize the act’s requirements and contain information about employees’ enforcement rights. Employers with a “significant number” of employees who do not speak or write in English will have to request non-English-language notices from ILDOL for posting. Employers likewise must supply a foreign-language notice on an employee’s request. The term “significant number” is undefined in the act; ILDOL clarification would be welcome.

Recordkeeping. Covered employers will have to keep records of each employee’s hours worked, paid leave accrued and taken, and paid leave balance for at least three years and the duration of any claim involving the employer’s failure to comply with the law. Employers will have to make records available to the ILDOL on request. In addition, employers will have to make the amount of an employee’s paid leave accrued or used available on the employee’s request.

Employees will have three years after an alleged violation to file a complaint with ILDOL. Noncompliant employers will face liability for actual underpayment, compensatory damages and a $500–$1,000 penalty. Employees will also be entitled to equitable relief like attorney’s fees, expert witness expenses and other costs.

The ILDOL has independent investigatory, penalty and subpoena powers. Notice failures will be subject to a $500 fine for a first violation and a $1,000 fine for subsequent violations. Other violations are subject to a $2,500 civil penalty for each separate offense.

Employers already offering at least 40 hours of discretionary paid leave will not have to provide additional paid leave to comply with the act. Employers should review the terms of existing paid leave programs to determine whether to take additional action. As part of this review, employers should decide whether to continue existing paid vacation or PTO policies that satisfy the act but require payout of unused PTO on employment separation or instead design a paid leave policy that complies with the act but does not require PTO payout on separation. Businesses with part-time workers who don’t qualify for the existing paid leave program will have to decide whether to offer a separate program or include part-time employees in the current plan.

Employers should watch for ILDOL guidance, particularly around these issues:

• The pay rate for employees on leave

• The non-English-language notice requirement

• The exception for employers subject to the Chicago and/or Cook County ordinances

• The act’s interaction with the state law prohibiting forfeiture of earned or accrued vacation

• Illinois Department of Labor (ILDOL)

• Paid Leave for All Workers Act (2023 Pub. Act 102-1143, SB 208)

• Illinois Wage Payment and Collection Act (820 IL Comp. Stat. 115/5)

• Earned vacations rules (56 Ill. Admin. Code 300.520)

• Vacation FAQs (ILDOL)

• Cook County Earned Sick Leave Ordinance interpretative and procedural rules (Cook County Commission on Human Rights, July 1, 2018)

• Cook County Earned Sick Leave Ordinance (Cook County Code of Ordinances §§. 42-1 et. seq.)

• Chicago Minimum Wage and Paid Sick Leave Rules supporting Chapter 1-24 of the Municipal Code of Chicago (Chicago Department of Labor, May 12, 2020)

• Chicago Minimum Wage and Paid Sick Leave Ordinance (Chicago Municipal Code Ch. 6-105)

• State laws limit vacation forfeitures (March 13, 2023)

• Roundup: State accrued paid leave mandates (April 29, 2022)

• Life, absence & disability management

^{Note: Mercer is not engaged in the practice of law, accounting or medicine. Any commentary in this article does not constitute and is not a substitute for legal, tax or medical advice. Readers of this article should consult a legal, tax or medical expert for advice on those matters.}