At a Glance

On Nov. 9, 2023, the Chicago City Council passed the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, requiring Chicago employers to double the amount of paid time off employees currently receive. In addition to 40 hours of paid sick leave, Chicago employers must now provide an additional 40 hours of paid leave per year to be used for any purpose.

Background

Since 2017, Chicago employers have been required to provide employees with paid sick leave under the Chicago Paid Sick Leave Ordinance. Due to their adherence to this program, Chicago employers are exempt from having to comply with the Illinois Paid Leave for All Workers Act (the “PLAWA”), which goes into effect on Jan. 1, 2024. The PLAWA requires all Illinois employers that are not in municipalities with pre-existing paid sick leave or paid leave ordinances to provide up to 40 hours of paid leave that can be taken for any reason.

Similar to the PLAWA, the new Chicago ordinance will become effective on Jan. 1, 2024, and will require Chicago employers to provide paid leave that can be taken for any reason. However, the new ordinance places heavier burdens on small and large businesses alike, which are both covered under the ordinance. The only carve out for small businesses is that they do not have to pay employees their accrued paid time off upon separation or termination. Small companies that do not have to pay out accrued paid leave must be careful that they also comply with the Illinois Wage Payment and Collection Act. If an employer credits the leave to an employee’s paid time off bank account, they may be required to pay out this accrued paid time off. To mitigate any confusion, small employers should craft their policies to clearly state that paid leave is being provided pursuant to the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, which does not require the company to pay employees any accrued leave upon termination, resignation, retirement, or other separation from employment.

Businesses are also concerned that the high fines and the private cause of action will result in a substantial increase in litigation for them. Because of this concern, there is a proposed amendment that would create a 30-day cure period for employers to resolve any violations under this new ordinance before an employee could sue. The City Council will vote on this amendment at a later, undetermined time. Although this cure period would benefit businesses, the lack of additional carve-outs or exceptions in the new ordinance and the inclusion of new stringent requirements and high fines will still strain the resources of many businesses.

Specific Changes

Below is a list of the most significant changes to the paid leave requirements.

	Chicago Paid Sick Leave (old ordinance)	Chicago Paid Leave and Paid Sick and Safe Leave (new ordinance)
Accrual	One hour per every 40 hours worked up to 40 hours.	One hour per every 35 hours worked up to 40 hours of paid sick leave and 40 hours of paid leave.
Carry Over	One half of paid sick leave hours can be carried over between 12-month periods — up to 20 hours. If an employer is subject to the Family Medical Leave Act (FMLA), the covered employees may carry over an additional 40 hours of his or her unused accrued paid sick leave to use exclusively for FMLA-eligible purposes.	Up to 16 hours of paid leave and 80 hours of paid sick leave can be carried over between 12-month periods. It is unclear how or if this would be different for employers that are subject to FMLA.
Increments	Employers can set increments in which paid leave may be taken. These requirements must be included in a written minimum use policy.	Employers can require paid leave to be used in increments. However, they cannot set the increments to be more than four hours for paid leave and not more than two hours for paid sick leave.
Front Loading	To avoid carry-over requirements, an employer is permitted to grant 40 hours of paid sick leave on the employee’s first day of employment and then 60 hours at the beginning of each year if the employer is subject to FMLA.	Employers can provide employees with 40 hours of paid leave, paid sick leave, or both on the first day of employment or the first day of the 12-month accrual period. If an employer front loads, it does not have to carry over any time. It is unclear if this amount is different for employers that are subject to FMLA.
Pay Out	No pay out requirement.	Employers of any size are not required to pay out accrued paid sick leave. However, some employers are required to pay out accrued paid leave. Large employers — those with 100+ covered employees — must pay employees all of their accrued and unused paid leave up to 40 hours upon the employees’ separation. Medium employers — those with 51-100 employees — must pay employees their accrued and unused time off up to 16 hours upon the employees’ separation from Jan. 1, 2024, to Dec. 31, 2024. After Jan. 1, 2025, these employers must pay employees all of their accrued and unused paid leave up to 40 hours upon the employees’ separation. Small employers — those with 50 or fewer employees — are not required to pay employees for any accrued and unused time off.
Documentation and Notice	An employer can require a certification that the use of paid sick leave was authorized after three sick days in a row. A document signed by a licensed health care provider is sufficient. If reasonably foreseeable, an employer can require that employees give reasonable notice, not to exceed seven days, before sick leave is taken. If leave is not foreseeable, employees must give notice as soon as practicable.	Paid Leave: An employer cannot require that an employee provide a reason for taking paid leave and cannot require an employee to provide documentation regarding their paid leave. An employer can require that employees give reasonable notice, not to exceed seven days, before using paid leave. Paid Sick Leave: Employers can require a certification that the use of paid sick leave was authorized after three sick days in a row. A document signed by a licensed health care provider is sufficient. If reasonably foreseeable, an employer can require that employees give reasonable notice, not to exceed seven days, before sick leave is taken. If leave is not foreseeable, employees must give notice as soon as practicable
Violation/Penalty	Fine: For any violation of this ordinance, an employer will be fined no less than $500 and no more than $1,000 per violation. Private Cause of Action: An employee can bring a claim for a violation of this ordinance and may recover three times the amount of the unpaid sick time wrongfully denied or lost, along with interest and attorney fees.	Fine: For a violation of the notice provisions, requiring employers to post a notice of employees rights in a conspicuous location and include this notice in an employee’s first paycheck and annually thereafter, an employer will be fined $500 for the first violation and $1,000 for each subsequent violation. For any other violation, the employer will be fined no less than $1,000 and no more than $3,000. Any policy that does not comply with the requirements of the new ordinance, including the accrual or front-loading requirements, is in violation of the ordinance. Each day a violation continues constitutes a separate offense to which a separate fine applies. Private Cause of Action: An employee can bring a claim for a violation of this ordinance and may recover three times the amount of any leave wrongfully denied or lost, along with interest and attorney fees. A private cause of action for paid sick leave is available on Dec. 31, 2023. A private cause of action for paid leave is available on Jan. 1, 2025.

Next Steps for Employers

The new ordinance goes into effect Jan. 1, 2024. Given the short amount of time before the law becomes effective, it is imperative that employers review and update their policies to comply with the new ordinance. Rules will likely be promulgated in the next several weeks to provide more guidance for employers.

For more information, please contact a member of Taft’s Employment and Labor Relations practice group.