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Illinois Legislature Passes Paid Leave for All Workers Act Providing Annual Paid Leave Which May be Used for any Reason

On January 10, 2023, the Illinois Legislature passed the Paid Leave for All Workers Act (the “Act”).  This Act is awaiting Governor Pritzker’s signing, but he has clearly indicated strong support of the Act and his intent to sign the Act into law. 

This Act will not go into effect until January 1, 2024.  There is, therefore, no immediate need to change any policies. 

This Act will not apply to employers who are covered by municipal and county ordinances in effect as of January 1, 2024 that provide for paid leave (such as the Chicago and Cook County paid sick leave ordinances), unless the employer or its employees are exempt under the local ordinances, in which case the Act may apply.     

This law is quite similar to the Chicago and Cook County paid sick leave laws ordinances except that the Act provides paid leave not just for illness, but for any reason necessitating the leave.  Employee notification is required after the effective date of the Act, by posting or inclusion in a handbook; penalties may be imposed for lack of compliance.

Highlights of the Act include the following:

Coverage and Scope

  • Applies to all Illinois employers regardless of size (except for school districts organized under the School Code and park districts organized under the Park District Code);
  • Applies to all Illinois employees (with some narrow exceptions for railroad workers and certain students working for universities).  Legitimate independent contractors (under the specific definition provided under the Illinois Wage Payment and Collection Act) are not covered by the Act;
  • Collective bargaining agreements may waive the requirements of the Act in most circumstances; and,
  • Act will be liberally construed in favor of employees.

Terms of Paid Leave Entitlement, Accrual and Amount

  • Unlike the paid sick leave ordinances, this paid leave under the Act may be taken for “any reason of the employee’s choosing” and the employee need not provide the employer with a reason for the leave;
  • All employees are entitled to earn and use up to a minimum of 40 hours of paid leave during any 12-month period;
  • The paid leave will accrue at the rate of one hour for every 40 hours worked.  Overtime exempt employees under the Fair Labor Standards Act (“Exempt Employees”) are deemed to work 40 hours in any workweek whether they actually worked that amount or not unless the exempt employee’s workweek is regularly less than 40 hours, in which case leave accrues on the basis of that workweek;
  • Employers may require that employees use the paid leave at increments of no less than 2 hours (this will assist employers with staffing and administrative issues);
  • Paid leave must be paid at the employee’s regular hourly rate, and tipped employee’s earning a reduced tipped wage, must be paid at the full minimum wage;
  • Employers may require that notice of the leave be given 7 days in advance where the leave is foreseeable;
  • Unused paid leave under the Act may be carried over to the next year except that the employer is not required to allow employees to use more than 40 hours of leave in a 12 month period;
  • Paid leave starts to accrue immediately upon employment.  However, the employer is not required to allow the employee to use the paid leave for the first 90 days of their employment; and
  • Unlike earned and unused vacation and personal time off, employers are not required to pay out accrued and unused paid leave under the Act upon an employee’s termination.

Enforcement, Damages and Penalties

  • Not surprisingly, retaliation against employees for exercising their rights under the Act is prohibited;
  • Employees may file a complaint for violation of this Act with the Department of Labor and if successful in establishing their claim, will be entitled to payment of the amount of paid leave they should have received, compensatory damage, (which will hopefully be clarified by the Department of Labor in regulations), penalties of at least $500 but no more than $1,000, equitable relief including attorney’s fees, expert witness fees and costs; and
  • Civil penalties will be imposed by the Department of Labor in the amount of $2,500 for each separate offense.  Hopefully, “each separate offense”  will be clarified by the Department of Labor since this type of language is frequently the source of dispute and litigation.  

Please note that employers do not need to change their policies until January 1, 2024.  This notification is offered to assist employers who may wish to incorporate paid leave when revising vacation and PTO policies this year and to otherwise use in connection with labor cost forecasting.   Employers should check with their employment counsel toward the end of this year to ensure that the Act has not been amended. 

Questions? Contact Attorney Jennifer Adams Murphy in our St. Charles office

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