Illinois Set to Become Third State to Mandate Paid Leave for Any Reason

​After a "gut and replace" of Illinois Senate Bill 208 at the beginning of the 2023 legislative session, the Paid Leave for All Workers Act passed both houses of the legislature on Jan. 10. The legislation has been sent to the governor, who said he is looking forward to signing it.

Once signed, beginning Jan. 1, 2024, the legislation would require nearly all covered Illinois employers to provide covered employees up to 40 hours of paid leave per year to be used for any purpose. This would make Illinois the third state with a mandatory paid time off law, following Nevada and Maine.

The legislation applies to all employers in Illinois, including state and local government. It does not, however, cover school districts organized under the School Code or park districts organized under the Park District Code.

The legislation covers all employees, with the following exceptions:

• Employees covered under the federal Railroad Unemployment Insurance Act or the Railway Labor Act.
• Temporary college or university student-employees.
• Certain short-term employees of an institution of higher learning.
• Employees working in the construction industry who are covered by a bona fide collective bargaining agreement (CBA).
• Employees who are covered by a bona fide CBA with an employer that provides services nationally and internationally of delivery, pickup, and transportation of parcels, documents, and freight.

It does not apply to employees covered by a valid CBA in effect on Jan. 1, 2024. Following that date, the requirements of the legislation can be waived in a bona fide CBA if the waiver is set forth explicitly in the agreement in clear and unambiguous terms.

Accrual, Carryover, and Frontloading

On Jan. 1, 2024, or when employment begins, covered employees will accrue one hour of paid leave for every 40 hours worked. Exempt employees are presumed to work 40 hours per workweek unless their regular workweek is less than 40 hours, in which case paid leave accrues based on that regular workweek.

Employees can accrue up to 40 hours in a 12-month period. A 12-month period may be any 12-month period designated by the employer in writing at the time of hire. Employees may carry over up to 40 hours of paid leave from one 12-month period to the next.

In lieu of accruing time, employers may choose to grant (or "frontload") 40 hours of paid leave on the first day of the 12-month period. If the full 40 hours is frontloaded, carryover from year to year is not required, and any unused leave will be forfeited at the end of the 12-month period.

Employees cannot use their paid leave until they have completed 90 calendar days of employment, or March 31, 2024, whichever is later.

Employers may require up to seven days' advance notice of a foreseeable need for paid leave. If leave is unforeseeable, employees need only provide notice as soon as practicable. An employer that requires advance notice for unforeseeable absences must adopt a written policy that contains procedures for the employee to provide notice.

Unlike most paid leave laws, the new legislation expressly prohibits employers from requiring documentation or certification to support an employee's need for leave.

Using Leave

Employers may set a reasonable minimum increment of use for paid leave, but it cannot be more than two hours. If an employee's shift length is less than two hours, the minimum increment of use will be the length of the employee's scheduled shift.

Employees must receive their hourly rate of pay when using paid leave, which does not include commissions or gratuities. However, an employee's hourly rate of pay for leave cannot drop below the applicable minimum wage.

Unless an employer is using a more generous paid time off policy for compliance, they are not required to pay employees for unused paid leave time upon separation from employment.

Unused time must be reinstated and made available for use if the employee is rehired within 12 months of separation. Presumably, these reinstatement requirements would not apply in the event that unused paid leave is paid out upon separation from employment, but the legislation does not address this issue. Employees transferring to a separate division, entity, or location will retain their accrued paid leave time.

Employers may use other types of paid leave policies to satisfy their obligation to provide paid leave under the new legislation. An employer is not required to modify its policy, if it satisfies the minimum amount of leave required under the legislation, and the employee is permitted to take paid leave for any reason.

If an employer does use another type of vacation bank to satisfy its obligations under the legislation, any unused leave must be paid out upon separation from employment, consistent with the requirements under the Illinois Wage Payment and Collection Act.

Notice and Recordkeeping Requirements

Employers must post a notice to be provided by the Illinois Department of Labor (IDOL) in a conspicuous place on the employer's premises and include a copy of the notice in a written document, or written employee manual or policy. If the employer's workforce includes a significant portion of non-English speakers, it will be required to post a notice in this language, a model of which will be provided by the IDOL.

Employers must maintain accurate records for each employee, showing the employee's hours worked, paid leave accrued and used, and remaining paid leave balance. Records must be retained for at least three years and must be available for inspection by the IDOL. While an employee's paid leave accruals need not be reported on a paystub, employers must provide this information to an employee upon request.

An employer cannot require that an employee seek or find a replacement worker to cover the hours during which the employee uses paid leave. The legislation contains broad anti-discrimination and retaliation provisions, and it explicitly prohibits consideration of the use of paid leave as a negative factor in any employment action that involves evaluating, promoting, disciplining, or counting paid leave under a no-fault attendance policy.

The IDOL will be tasked with the administration and enforcement of the legislation. Employees may file a complaint with the IDOL within three years of an alleged violation. There does not appear to be a private right of action for employees.

Violations would make the employer liable to the affected employee for damages in the form of actual underpayment, compensatory damages, and a penalty of at least $500 but no more than $1,000. Affected employees will also be entitled to equitable relief including attorney's fees, reasonable expert witness fees, and other legal costs. Additionally, violators will be subject to a $2,500 civil penalty for each separate offense. For violating the notice/posting requirements, employers will be subject to a $500 civil penalty for the first audit violation and $1,000 civil penalty for each subsequent audit violation.

The introduction of mandatory paid leave on a statewide level will be a significant shift for Illinois employers. We expect additional guidance to be forthcoming from the IDOL prior to the law's Jan. 1, 2024 effective date. However, employers should start analyzing their compliance strategy with respect to usage of existing paid leave policies.

Stephanie Mills-Gallan is an attorney with Littler in Milwaukee. Jeff Nowak, and Meg Karnig are attorneys with Littler in Chicago. © 2023. All rights reserved. Reprinted with permission.