Chicago Updates Paid Leave Ordinance
UPDATE: Please see here for the most up to date information on Chicago’s Paid Leave Ordinance and its effective date.
Effective December 31, 2023, employers with employees working in Chicago, Illinois must comply with the Paid Leave and Paid Sick and Safe Leave ordinance. While Chicago has an ordinance requiring paid sick leave in place, the new ordinance updates the terms of paid sick leave and now requires the accrual of additional paid leave that can be used for any reason. Employers with staff working in the City of Chicago would be well served to review the requirements of the ordinance to determine if they need to update their existing leave policies.
Covered Employers and Employees
The ordinance applies to any employer with at least one employee, but only covered employees can accrue and use paid leave and paid sick and safe leave. A covered employee is any person, who in a particular two-week period, performs at least 2 hours of work while physically present in the geographic boundaries of Chicago. This includes compensated time spent traveling in Chicago.
Accrual of Leave
Starting on 1/1/24 or their first day of employment, whichever is later, employees must accrue:
- 1 hour of paid leave and 1 hour of paid sick leave for every 35 worked, up to 40 hours of each type of leave in a 12-month period starting on the date the employee can begin to accrue leave.
Instead of requiring employees to accrue leave, employers are allowed to frontload 40 hours of paid leave and 40 hours of paid sick and safe leave on the first day of employment or the 12-month period.
Employees are able to carryover 16 hours of unused paid leave and 80 hours of unused paid sick and safe leave from one 12-month period to another. Employers who front-load leave do not need to carryover any unused paid leave. Employers must have a written policy explaining the accrual rate for paid leave and paid sick and safe leave.
An employer does not need to grant additional paid leave or paid sick and safe leave if the employer already provides paid leave and paid sick and safe leave in an amount and a manner that meets or exceeds the ordinance requirements. This includes employer policies that grant unlimited time off.
Use of Leave
Paid leave may be used for any reason of the employee’s choosing. An employer can establish reasonable leave policies for the use of paid leave including requiring reasonable notice at most 7 days before the leave and requiring pre-approval of leave to maintain employer operations.
Paid sick and safe leave can be used when:
- an employee is ill/injured or receiving professional care;
- an employee’s family member is ill/injured or receiving professional care;
- an employee or employee’s family member is a victim of domestic abuse, sex offenses, or human trafficking;
- an employee’s place of business is closed due to a public health emergency,
- an employee must care for a family member whose school, class, or place of care has been closed due to a public health emergency; and
- an employee is ordered to isolate at home due to risk of spreading communicable disease
If the need to use paid sick and safe leave is reasonably foreseeable, an employer can require a 7-day notice. If the need for paid sick and safe leave is unforeseeable, notice may be required as soon as practicable.
Employees must be allowed to use paid sick and safe leave starting 30 days after employment and must be allowed to use paid leave starting 90 days after employment. An employer can require that paid leave be used in minimum increments of 4 hours and that paid sick and safe leave be used in minimum increments of 2 hours.
Payout Provisions
The ordinance requires unused paid leave to be paid out when an employee terminates employment or ceases to be a covered employee due to be being transferred out of Chicago’s boundaries. Payout is not required for unused paid sick and safe leave.
- Small employers (50 or fewer covered employees) are not required to pay out unused paid leave.
- Medium employers (51 to 100 covered employees) are only required to pay out a maximum of 16 hours of unused paid leave until December 31, 2024, after which they must pay out all unused paid leave.
- Employers with 101 or more covered employees must pay out all unused paid.
Employers who offer unlimited time off are required to pay out the equivalent of 40 hours of paid leave minus the amount of paid leave used by the employee in the last 12-month period.
Notice and Recordkeeping Requirements
The ordinance creates the below notice and recordkeeping requirements:
- Post a notice in each facility located within Chicago’s boundaries that explains covered employees’ right to paid leave and paid sick and safe leave;
- Provide covered employees a notice with their first paycheck and annually with a paycheck issued within 30 days of July 1 that explains employee’s rights under the paid leave and paid sick and safe leave ordinance;
- Provide employees with the amount of paid leave and paid sick and safe leave in writing each time an employee is paid;
- Provide employees with a written notice of the paid time off policy when the employee begins employment; and
- Retain records relating to each covered employee for 5 years.
The City of Chicago is creating model notices to be used for the first two disclosures detailed above.
Key Takeaways:
Employers with employees that work in Chicago should carefully review the new leave requirements under the Paid Leave and Paid Sick and Safe Leave ordinance. Employers should verify that their existing leave policies comply with the ordinance’s requirements and should make necessary updates to those policies to ensure compliance with the ordinance on December 31, 2023.
The information provided is a summary of laws and regulations relating to employee benefit plan compliance. This information should not be construed as legal advice. In all cases, employers should consult with their own legal counsel.
