Update: Chicago City Council voted to delay implementation among other changes.
Think you were up to date on the new laws for 2024? Think again.
On November 9, 2023, the Chicago City Council passed an ordinance granting workers up to 10 days paid leave. The new Ordinance was originally set to go into effect on January 1, 2024, however on December 13, 2023, the City Council voted to delay implementation for six months – until July 1, 2024 – among other changes. This new ordinance goes beyond the statewide paid leave policy taking effect next year that requires businesses to provide five days of paid leave — and makes Chicago’s ordinance one of the most expansive measures in the nation. What is the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance? Read on for a high-level review of this new requirement on Chicago employers.
Chicago Paid Leave and Paid Sick and Safe Leave Ordinance
The new Chicago Paid Leave and Paid Sick and Safe Leave Ordinance expands upon the original Chicago Sick Leave Ordinance by guaranteeing up to five days of paid time off in addition to the current requirement to provide five days of sick time for Chicago workers. This paid time off can be used for any reason or no reason, and employers cannot require an employee give a reason for the leave, though employers can set reasonable policies for its use including requiring reasonable notice for foreseeable (not more than 7 days) needs and requiring a reasonable preapproval process.
Who is an Employee under the new Chicago Paid Leave Ordinance?
The original version of the Ordinance provided that employees who, in any particular two-week period, perform at least 2 hours of compensated work while physically present within the geographic boundaries of Chicago, were considered “Covered Employees”. In addition to delaying the implementation of the Ordinance, the City Council also approved a measure requiring that employees work at least 80 hours within any 120-day period before the paid leave requirements kick in for them. Once a worker reaches that threshold, they would be covered by the paid leave requirements for as long as they work for the same employer. That provision was added to avoid having the paid leave rules apply to out-of-town workers who are only visiting Chicago to work at trade shows or conventions. Compensated work includes time spent traveling in the city for deliveries, sales calls, and other travel but does not include uncompensated commuting time.
What Does It Mean to “Frontload” Leave?
Most employers are familiar with using an accrual-based method for leave policies where employees accrue paid leave over the course of their work year. The Chicago Ordinance also allows for a method called “frontloading”. The Frontloading method makes all of the leave available to the employee up front, at the start of the new 12-month period – either a calendar year or on the employees work anniversary date. This is important to understand as the Ordinance sets out different obligations to employers based on whether the accrual method or the frontloading method is used.
Is Unused Paid Leave Required to be Paid Out on Separation of Employment?
It depends. The amount of pay out required depends on the size of business of the employer. The Ordinance breaks business down into the following categories:
- Small Employer: 50 or fewer Covered Employees*
- Medium Employer: 51 to 100 Covered Employees*
- Large Employer: 101+ Covered Employees*
* To calculate the number of Covered Employees for business that are members of a single unitary business group for Illinois income tax purposes, all Covered Employees of the business group are aggregated.
The amount of accrued but unused Paid Leave that must be paid out on separation (which includes if a Covered Employee is transferred to another business unit outside of Chicago) works like this:
- Small Employer: No payment for accrued but unused Paid Leave on separation is required.
- Medium Employer: Up to a maximum of 16 hours of accrued but unused Paid Leave is required in 2024 (but employers can choose to pay out more). From 2025 on, all accrued but unused Paid Leave must be paid out.
- Large Employer: all accrued but unused Paid Leave must be paid out.
Note that this requirement is limited to Paid Leave. Accrued by unused Sick Leave is still not required to be paid out on separation under the new Ordinance.
How Does Paid Leave Accrue?
If you choose to have your employees accrue paid leave rather than frontloading, then the Paid Leave accrues along with paid Sick leave. Under the new ordinance, for every 35 hours worked, a Covered Employee accrues at least one hour of Paid Leave and one hour of Paid Sick Leave up to a maximum of 40 hours each per year. Leave must accrue in full hour increments; no fractional increments are allowed under the Ordinance.
Does unused Paid Leave Roll Over from year to year?
Yes, if you chose to accrue leave, then at the end of the 12-month accrual period, a Covered Employee can carry over up to 16 unused hours of Paid Leave and 80 unused hours of Paid Sick Leave. However, if business policies prohibit the Covered Employee from using their time off, the Ordinance requires the employer to increase the amount of leave that can roll over accordingly. Alternatively, businesses can choose to frontload leave (meaning all leave is immediately available at the beginning of each 12-month period) then Paid Leave does not need to be carried over (though Sick Leave is still required to roll over).
Other Changes to the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance
In pushing back the expansion of paid leave, the City Council also agreed to delay a provision granting workers the right to sue employers over violations of the ordinance until July 1, 2025. In addition, between July 1, 2025 and July 1, 2026, employers would be given a 16-day “cure period” to fix any problems with paid leave requirements before a lawsuit could be filed.
Background Behind the Chicago Paid Leave Off Ordinance
The City Council is presenting the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance as the most progressive paid time off legislation at the municipal level in the United States. According to the press release issued on November 9, 2023, celebrating the ordinance’s passing:
“Today is a great day for the workers of Chicago, the businesses of Chicago, and the future of Chicago,” said Mayor Brandon Johnson. “This ordinance, accomplished through compromise and collaboration, is an important step on the path to revitalizing the economy of our great city. “Working families are the lifeblood of our city and I am proud that our city has delivered for them once again.” Research shows that paid sick time and paid time off reduce costs related to absenteeism and turnover for businesses. Workers with paid time off can stay in their jobs longer, earning higher wages they can then spend in their local communities. A lack of paid leave policies increasingly and disproportionately contributes to economic insecurity among lower-paid workers and their families.
This article is intended to be merely a high-level review of some key aspects of the new and Paid Leave and Paid Sick and Safe Leave Ordinance. The Ordinance goes into more detail and a full understanding is important for any employers of Chicago based employees.
If you have questions about the new Chicago Paid Leave and Paid Sick and Safe Leave Ordinance or other employment law needs, contact Navigant Law Group, LLC at (847) 253-8800 or email us at email@example.com.
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