By: HUB's Absence Management Team

Legislative Update December 13, 2023: This piece has been updated to reflect the Chicago City Council's unanimous vote to delay the implementation of the Chicago Paid Leave and Paid Sick and Safe Leave ordinance.

On November 9, 2023, the Chicago City Council passed the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance (the Ordinance), expanding the amount of paid leave employers must provide to employees working in Chicago. The new law goes into effect on December 31, 2023.

Overview: Chicago’s New Paid Leave and Paid Sick and Safe Leave Ordinance

Chicago’s new Paid Leave and Paid Sick and Safe Leave Ordinance (the Ordinance) expands the amount of paid leave that must be provided to employees working in Chicago, becoming one of the most generous paid time off laws in the country. The Ordinance will replace Chicago’s existing Paid Sick Leave Ordinance (PSLO) that requires employers to provide at least five days (40 hours) of paid sick leave per year to employees working in Chicago.

Beginning December 31, 2023, employers will be required to provide twice as much paid leave to Chicago employees, increasing the requirement to ten days (80 hours) of paid leave per benefit year. The paid time off established by the Ordinance is comprised of two categories of paid leave, as follows:

  • Five days (40 hours) of paid sick and safe leave (Paid Sick Leave); and,
  • Five days (40 hours) of paid leave that may be used for any reason (Paid Leave) per benefit year.

Both types of leave will accrue one (1) hour of paid leave for every 35 hours worked, up to an annual maximum of 40 hours of each type of leave. Time is accrued in full hour increments; however, employers with more generous paid leave policies are permitted to maintain monthly accrual rates.

Employers may elect to frontload the full Paid Leave and Paid Sick Leave amounts at the beginning of each benefit year in lieu of using the accrual method.

Employers Subject to Ordinance Requirements and Employee Eligibility

The Ordinance applies to all employers (regardless of size) who have employees working in Chicago, covering all employees who perform at least two (2) hours of work in any two-week period while physically present within the City of Chicago. This greatly expands upon the current PSLO eligible employee definition, which only applies to those employees who work at least 80 hours in Chicago within any 120-day period.

Paid Leave Usage

Eligible Paid Leave Reasons and Usage Requirements

Employees may use leave balances designated as Paid Leave once they have completed 90 days of employment.

Paid Leave can be used for any reason or purpose and employers may not request or require documentation to substantiate their use of Paid Leave time they have available. Employers may, however, require employees to provide reasonable notice (up to seven days) and to obtain reasonable pre-approval of their Paid Leave usage.

Employers may decline requests for Paid Leave usage if their business needs cannot accommodate the time requested.

Minimum Increments

Employers are permitted to set reasonable minimum increments for usage of Paid Leave, so long as the minimum increment does not exceed four (4) hours.

Carry-over Requirements

Employers using the accrual method for providing Paid Leave must allow employees to carry over up to two days (16 hours) of unused accrued Paid Leave from one benefit year into the next.

Employers opting to frontload the full five days (40 hours) of Paid Leave at the start of each benefit year are not required to allow employees to carry over any unused time to the following year.

Payout of Unused Paid Leave at Termination or Transfer Outside of Chicago

The handling of unused Paid Leave balances at termination of employment or transfer outside of the geographic limits of Chicago depends upon the size of the employer:

  • Employers with more than 100 employees must payout unused Paid Leave accruals and/or balances to employees upon termination of employment.
  • Employers with between 51 and 100 employees will have a two-year phased requirement in respect to payout requirements:
    • Through December 31, 2024 – employers must pay out a maximum of two days (16 hours) of an employee’s unused Paid Leave at termination; and,
    • Beginning January 1, 2025 – employers must pay out a maximum of seven days (56 hours) of an employee’s unused Paid Leave at termination.
  • Employers with 50 or fewer employees will not be required to pay out unused paid leave to employees upon termination of employment.

Paid Sick Leave Usage

Eligible Paid Sick Leave Reasons and Usage Requirements

Employees may use leave designated as Paid Sick Leave under the Ordinance once they have completed 30 days of employment.

Paid Sick Leave may be used for the same reasons covered under the existing PSLO, as follows:

  • The employee is ill or injured, or for the purpose of receiving professional care, including preventative care, diagnosis, or treatment for medical, mental, or behavioral issues, including substance use disorders;
  • The employee’s family member is ill, injured, or ordered to quarantine, or the employee is caring for a family member receiving professional care, diagnosis, or treatment for medical, mental, or behavioral issues, including substance use disorders;
  • The employee or an employee’s family member is the victim of domestic violence, a sex offense, or trafficking;
  • The employee’s place of business is closed by order of a public official due to a public health emergency or the employee needs to care for a family member whose school, class, or place of care has been closed; or,
  • The employee is obeying an order issued by the mayor, the governor of Illinois, the Chicago Department of Public Health, or a treating health care provider, requiring the employee to:
    • Stay at home to minimize the transmission of a communicable disease;
    • Remain at home while sick or experiencing symptoms of a communicable disease;
    • Obey a quarantine order issued to the employee; or,
    • Obey an isolation order issued to the employee.

Employers may require documentation or certification substantiating that Paid Sick Leave was used for a covered reason for absences of more than three consecutive workdays.

Minimum Increments

Employers are permitted to set reasonable minimum increments for usage of Paid Sick Leave, so long as the minimum increment does not exceed two (2) hours.

Carry-over Requirements

Employers using the accrual method for providing Paid Sick Leave must allow employees to carry over up to ten days (80 hours) of accrued but unused Paid Leave days from one benefit year into the next.

Employers opting to frontload the full five days (40 hours) of Paid Sick Leave at the beginning of each benefit year are not exempt from carryover requirements and are still required to allow employees to carryover up to ten days (80 hours) of unused Paid Sick Leave from one benefit year to the next.

Payout of Unused Paid Sick Leave at Termination

Employers are not required to pay out unused Paid Sick Leave to employees upon separation of employment or transfer outside of the geographic limits of Chicago.

Employers with Unlimited PTO Policies

In lieu of using either the accrual or frontload methods, the Ordinance explicitly allows employers to use unlimited paid time off policies to comply with the Ordinance requirements. If an employer provides unlimited paid time off on the employee’s first date of employment, and continues such policy for each subsequent benefit year, no carryover of Paid Leave or Paid Sick Leave is required.

While employers with unlimited paid time off policies are exempt from carryover requirements, they are not exempt from the Paid Leave payout requirements upon termination from employment or transfer outside of the geographic limits of Chicago. The employer would calculate the amount to be paid out to the employee by subtracting any Paid Leave hours taken by an employee in the current benefit year from the five days (40 hours) annual requirement established by the Ordinance.

Policy and Notice Requirements

Written Policy Requirement

Starting December 31, 2023, employers are required to have a written policy and must provide written notice of the policy to employees working in Chicago at the start of employment and within five (5) calendar days before any changes are made to the policy. Employers must provide at least fourteen (14) days’ notice to employees if any changes will affect an employee’s final compensation.

Initial and Annual Notice of Employee Rights

The Ordinance requires employers to provide each employee a notice of their right to leave as established by the Ordinance with the employee’s first paycheck and annually thereafter with a paycheck issued within 30 days of July 1 of each year. A sample notice will be provided by the Department of Business Affairs and Consumer Protection.

Paystub Requirements

Employers are required to provide written notification to employees each pay period of the amount of Paid Leave and Paid Sick Leave available for use, accrual rates for each type of leave, the amount of each leave accrued since the last notification, and the amount of each leave used since the last notification was provided.

This information must be provided each time wages are paid, and this requirement may be satisfied by providing such information on employee paystubs or through an employer’s online system where employees are able to access their paid leave information.

Facility Posting Requirement

In addition to the individual employee and paystub notice requirements, employers must also post a notice within the workplace advising employees of their right to paid time off under the Ordinance. The notice must be posted in a conspicuous place at each facility within the geographic boundaries of Chicago. A model notice will be provided by the Department of Business Affairs and Consumer Protection.

Employers that do not maintain a business facility in Chicago are exempt from this posting requirement.

Next Steps

Employers with employees working in Chicago should review the policies, notices, recordkeeping, and other practices applicable to these employees and make any necessary revisions or additions to ensure compliance with all requirements of the Ordinance. Employers with employees working in Illinois (both within Chicago and outside of Chicago) will also need to ensure compliance with Illinois Paid Leave for All Workers Act that goes into effect January 1, 2024.

NOTICE OF DISCLAIMER
Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s specific circumstances. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your organization’s particular needs.