Expensive changes in the law for employers in Chicago are upon us. On July 1, 2024, a Chicago Ordinance will take effect doubling and expediting the rate at which Chicago employees accrue paid time off. This comes at the same time the Federal Department of Labor is reducing the number of employees who qualify for exempt status under the Fair Labor Standards Act, thereby increasing the number of employees who qualify for overtime.
Illinois currently has a law called Paid Leave for All Workers Act (“PLAWA”).” All Illinois employees who qualify under the Illinois law should be accruing one hour of “Paid Time Off” for every 40 hours worked, up to 40 hours of Paid Time Off each year. The Illinois law took effect on January 1, 2024. Cook County also adopted a similar ordinance requiring paid leave.
Chicago has now adopted its own paid leave ordinance called “Chicago Paid Leave and Paid Sick and Safe Leave Ordinance,” which will take effect on July 1, 2024.
Starting on July 1, employees working in Chicago will begin accruing both “Paid Leave” and “Paid Sick Leave” at a rate that compounds more quickly and at double the amount of paid leave required under the Illinois law.
The easiest way to think of this is as “buckets” of paid leave. Under Illinois’ Paid Leave for All Workers Act, the employee was entitled to one bucket of paid leave – for both personal and sick time. Under Chicago’s Paid Leave and Sick and Safe Leave Ordinance, there are two buckets of paid leave: Paid Leave and Paid Sick Leave. Both must be awarded and properly accounted for.
Chicago Paid Leave
Under the new Chicago Ordinance, employees accrue one hour of “Paid Leave” for every 35 hours worked (up to 40 hours in a 12 month period). This Paid Leave can be used for any reason (but the requested days may be denied by the Employer with some restrictions.) Under the Chicago Ordinance, Paid Leave can be used by the employee 90 days after July 1, 2024, or 90 days after the first day of employment, whichever is later.
Chicago Paid Sick Leave
Under the new Chicago Ordinance, employees also accrue one hour of “Paid Sick Leave” for every 35 hours worked (up to 40 hours in a 12 month period). Sick Leave can be used for the employee or to care for a family member recovering from illness. It can also be used to address domestic violence and public health emergencies. Under the Chicago Ordinance, Sick Leave can be used 30 days after July 1, 2024, or 30 days after the start of employment, whichever occurs later.
The Chicago Ordinance is more expansive in benefits and protections for employees than the Illinois law, so the Chicago Ordinance will govern paid time off beginning on July 1, 2024.
Chicago employees will still be entitled to paid leave earned and unused at the accrual rate of one hour per 40 hours of Paid Time Off between January 1, 2024 and June 30, 2024 but on July 1, 2024 employees will begin to accrue one hour of “Paid Leave” and one hour of “Paid Sick Leave” for every 35 hours worked.
Both Illinois’ Paid Leave for All Workers Act and the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance permit employers to “front-load” their paid time off, but employers should review their policies to verify that these “front-loaded” policies meet or exceed the legal requirements.
Best Practices
Employers should not wait until July 1, 2024 to review how this Chicago Ordinance affects their company’s payroll.
- Employers should review the labels and description of paid time off they provide to their employees (vacation, paid leave, personal days etc.) to verify that they meet or exceed the Illinois’ Paid Leave for All Workers Act and the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance.
- Employers should amend their handbooks to reflect these new rules surrounding paid leave.
- Employers should contact their accounting or payroll departments or third-party accounting payroll venders to verify that their paid time off policies satisfy the new Chicago Ordinance.
- Employers should regularly involve their attorneys in drafting new policies or redrafting old policies to verify that they are in compliance with federal, state and local laws.
There is no “one size fits all” solution for your payroll practices. Some employers may benefit from front- loading paid time off, but still need to be aware of the carryover rules with frontloading.
McKenna Storer acts as “on demand” corporate counsel to several small to midsized companies to address their employment and commercial needs.
If you have any questions, or need assistance with your handbooks or review your current classification standards, please contact Kristin Tauras at ktauras@mckenna-law.com.
If you have any questions or concerns regarding your business transactions or structure, please reach out to Andrew Bratzel at abratzel@mckenna-law.com.
McKenna Storer has been serving its clients for more than 66 years. We are open and available for consultations at both our Chicago and Woodstock locations. Please follow us on or our LinkedIn, Twitter or Facebook pages.