Protecting Employers Since 1985

It’s Complicated/It’s Expensive: New City of Chicago Paid Leave and Sick Leave Ordinance

On November 9, 2023, the City of Chicago enacted the new Paid Leave and Sick Leave Ordinance to take effect on December 31, 2023.

What Employers are covered under the new law? Any employer with at least one employee, except employers under a collective  bargaining agreement on or before January 1, 2024. However, this exception can be waived by mutual agreement in the CBA.

Classification of Employers as to Paid Leave

  • Small – 50 or fewer employees
  • Medium – 51-100 employees
  •  Large – 100 or more employees.

Accrual of Paid Leave/Sick Leave:

  • Begins on January 1, 2024 or the first date of employment.
  • Leave for all employees in Chicago (full or part-time/seasonal/temporary workers) is earned at a rate of one hour of paid and sick leave for every 35 hours worked in 12 months. For each type of leave, employers may cap the leave at 40 hours paid.
  • Note: Employers can front load each type of leave. Carryover still required.

Waiting Period Before Leave: Employees may have waiting period of 90 days for paid leave and 30 days for sick leave.

Carry Over of Accrued Paid Leave/Paid Sick Leave:

  • Employees who accrue leave may carryover 16 hours of paid leave and 80 hours of paid sick leave.
  • If the business is sold, the new employer must permit carryover of each leave.

Pay Out of Accrued Paid Leave/Paid Sick Leave: Upon separation of employment or employee transfer outside of City of Chicago, balance of paid leave is to be paid but paid sick leave does not need to be paid out.

Exceptions to Pay Out:

  • Small employers – no pay out
  • Medium employers – only pay out 16 hours of paid leave at separation through 12/31/2024. After 12/31/2024, must pay out full balance of paid leave.
  • Unlimited PTO employees must pay out 40 hours of paid leave upon separation of employment. If an employee used more than 40 hours, the balance of paid leave is paid out.

Use of Paid Leave: Paid leave may be used for any reason. Employer can NOT require a reason or documentation.

Use of Paid Sick Leave. Paid sick leave may be used for:

  • Employee or family member illness or injury.
  • Receiving professional care (preventative, diagnosis, or treatment) for medical, mental, behavioral, or substance abuse.
  • Orders under quarantine stay – home/isolation for communicable disease.
  • Victim of domestic violence.
  • Closed workplace, school, place of care due to public health emergency.
  • After three consecutive workdays, the employer can require medical certification.

Notice for Use of Paid Leave/Paid Sick Leave: For Paid Leave the employer can ask for reasonable notice not to exceed seven days. Reasonable approval by the employer is to be given in order to maintain continuity of operations.

What must Employer do?

  • Post notice provided by the City of Chicago regarding the law.
  • Issue a written policy (i.e., employee handbook) to the employee explaining the laws.
  • Provide notice to the employee on their paystubs or online as to their accrual and balances of each type of leave.
  • Retain records for five years.
  • Be aware of potential fines, penalties, and violations.

Best Practice Recommendations for Employers:

  • Check with payroll 3rd party vendor as to a separate employee account for each type of paid leave.
  • Decide on the Company policy to comply with the law.
  • Decide on accrual method: front loaded OR accrual/pro rata based on hours worked.
  • Coordinate with Illinois Paid Leave for All Workers Act. Employees NOT working in Chicago or under the Cook County Sick Pay Ordinance are covered under the Illinois Paid Leave for All Workers Act.
  • Change Company policies in the employee handbook.

Questions? Contact attorney Anthony J. Caruso, Jr., in our St. Charles office by email or by phone at (630) 377-1554

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