Amendments to New Chicago Paid Leave and Paid Sick and Safe Leave Ordinance Extend Deadlines, But Employers Still Need to Act Now To Ensure Compliance

In November 2023, the City of Chicago adopted the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance (the “Ordinance”), which, among other things, dramatically expands the amount of paid leave that employers in the city must provide their workers each year. With employees allowed up to 80 hours of paid leave every 12 months, the Ordinance is twice as generous as the Illinois Paid Leave For All Workers Act that Gov. JB Pritzker signed into law in March of last year.

The Ordinance, and the significant obligations it imposes on employers, was initially scheduled to take effect on December 31, 2023. However, the City Council passed several substantive amendments to the Ordinance in December 2023, including delaying its effective date until July 1, 2024. The current Chicago Paid Sick Leave Ordinance remains in effect through that date.

While the additional time to understand and prepare for compliance with the Ordinance’s requirements is undoubtedly welcome for employers, it doesn’t mean that they should sit on their hands for the next several months. Now is the time to review and update their policies and practices to ensure that they are ready for this dramatic change in the Chicago employment landscape. While the following includes some broad outlines of the Ordinance’s requirements, all Chicago employers should consult with experienced counsel to reduce or avoid the potentially hefty costs imposed for non-compliance.

40 Hours of Paid Leave For Any Reason + 40 Hours of Paid Sick Leave

As the cumbersome name of the Ordinance indicates, there are two separate types of paid leave that Covered Employees are now entitled to:

• Paid Leave: Paid Leave represents hours that a Covered Employee accrues and can use to take paid time off for any reason of the Covered Employee’s choosing. An employer may not require a Covered Employee to provide a reason for the use of Paid Leave and may not require them to provide documentation or certification as proof or in support of the use of Paid Leave.
• Paid Sick Leave: Paid Sick Leave is paid time away from work that a Covered Employee may use when:
  • They are ill or injured or need to attend a medical appointment or receive other care
  • A member of the employee’s family is sick or injured,
  • The employee needs to care for a family member receiving medical care, treatment, diagnosis, or preventative care.
  • The employee needs to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency (e.g., COVID-19-related closures).
  • A family member of the employee is the victim of domestic violence or a sex offense.

An employer may require a note from the employee confirming that they used their Paid Leave for a permissible purpose if they use such leave three consecutive workdays in a row.

For every 35 hours worked in the City of Chicago, a Covered Employee accrues one hour of Paid Leave AND one hour of Paid Sick Leave. A Covered Employee may accrue up to 40 hours of Paid Leave and up to 40 hours of Paid Sick Leave in any 12-month period unless the employer sets a higher limit. The 12-month period starts when a Covered Employee first starts to accrue Paid Leave and Paid Sick Leave.

Accrual for Paid Leave begins upon the start of employment or July 1, 2024, whichever is later. Accrual for Paid Sick Leave also starts July 1, 2024, or the start of employment, whichever is later.

Covered Employees and Employers

Any entity or person who employs at least one employee must comply with the Ordinance. In other words, every employer in Chicago.

However, only an employee who performs at least 80 hours of work for a covered employer within any 120-day period while physically present within the geographic boundaries of Chicago is considered a Covered Employee. Once an employee reaches that threshold, they remain a Covered Employee for the remainder of the time that they work for the employer. Additionally, under the Ordinance, there is no distinction between part-time, full-time, or seasonal employees.

At this time, it is also understood that an employer located outside of Chicago but employing remote employees working from home in the City of Chicago would still be subject to this Ordinance for those employees.

Carryover and Frontloading

Employers must allow employees to carry over up to 16 hours of unused Paid Leave and up to 80 hours of unused Paid Sick Leave into the following Benefit Year.

Many employers have opted to use a mechanism called “frontloading” where the employer provides all Paid Leave and/or Paid Sick Leave up front to the employee at the start of the Benefit Year as compared to having it accrue each week. This practice is specifically permitted under the Ordinance. This practice is particularly favored in the retail sector since employers want to encourage employees to use time off at the beginning of the Benefit Year before the company’s busy season.

Other employees opt to use frontloading since they want to limit the hours that can be carried over into the next Benefit Year. The City of Chicago has issued conflicting guidance on this topic. The Ordinance expressly states that if an employer frontloads Paid Leave, they do not need to allow carryover of unused Paid Leave. The Ordinance is silent about the impact of frontloading Paid Sick Leave. The Proposed Rules (guidance from the enforcing department within Chicago) state that frontloading avoids the need to carry over both Paid Leave and Paid Sick Leave. We won’t have clear direction on this until the Ordinance goes into effect. In the meantime, the conservative approach is to allow carryover of Paid Sick Leave even if the employer uses frontloading.

Payment of Accrued Paid Leave Upon Termination or Separation

The amendments also modified which employers must pay out accrued Paid Leave upon termination or separation of employment and when they must do so. Employers are not required to pay out unused Paid Sick Leave. Small employers (1-50 Covered Employees) are exempt from this requirement. Large employers (100+ Covered Employees) must pay out up to 56 hours of Paid Leave. Medium-sized employers (51-100 Covered Employees) must only pay out up to 16 hours of accrued Paid Leave until July 1, 2025. After that date, such employers must pay out up to 56 hours of Paid Leave.

Employer Notification and Recordkeeping Requirements

Employers must notify all Covered Employees of their paid leave policies and rights under the Ordinance, including posting and distributing a notice of rights, providing Covered Employees with a written policy regarding paid leave policies in the employee’s primary language, and other obligations.

Employers must also keep, for five years, detailed and accurate records regarding each employee’s hours worked, pay rate, number of paid time off hours earned for each year, and the dates on which Paid Leave hours were taken and paid. A failure to maintain this information creates a rebuttable presumption that the employer has violated the Ordinance.

Private Right of Action and Penalties

The Ordinance establishes a private right of action for employees who claim their rights to Paid Leave have been violated.

In addition to lawsuits by aggrieved employees, employers that violate the statute face the possibility of significant fines for each violation, including “damages equal to three times the full amount of any leave denied or lost by reason of the violation, and the interest on that amount calculated at the prevailing rate; together with costs and reasonable attorney’s fees.” 

As noted, these are only the fundamentals of the new Ordinance, and many other details and nuances require employers’ attention as well. Additionally, the Chicago City Council continues to release additional guidance that will further inform how employers should prepare for the effective date of the Ordinance. Employers should consult with an employment law attorney to understand their specific obligations and establish or update their paid leave policies to ensure compliance before the July 1, 2024 effective date. Please contact the employment law attorneys at Latimer LeVay Fyock for assistance.