Banking and Business Monthly – February 2023

On January 10, 2023, the Illinois legislature passed Senate Bill 208, known as the Paid Leave for All Workers Act (“Act”). The legislation has been sent to Governor Pritzker, who said he is looking forward to signing it. Once signed, beginning January 1, 2024, the Act would require nearly all Illinois employers to provide employees with up to 40 hours of paid leave per 12-month period, to be used for any purpose.

Covered Employers and Employees

The Act applies to most employers in Illinois, including state and local governments (except school districts and park districts), with a few limited exceptions. Among the exceptions are employers covered by a municipal or county ordinance that requires employers to provide any form of paid leave to their employees, such as the Chicago Paid Sick Leave and Cook County Earned Sick Leave Ordinances.

The Act 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.

Regarding CBAs generally, the Act does not cover employees if the CBA is in effect on January 1, 2024. After that date, the Act’s paid leave requirements will apply unless the CBA contains a clear and unambiguous waiver.

Amount of Leave

Employees are entitled to earn and use up to a minimum of 40 hours of paid leave per 12-month period (which can be any 12-month period designated by the employer at the time of hire, such as a calendar year or a year that begins with the employee’s hire date). Employers can either (a) require accrual over time (and permit “carryover”), or (b) can frontload the leave (and require “use it or lose it”). Each choice is described below.

For employers opting for the accrual method, employees accrue 1 hour of paid leave for every 40 hours worked, up to 40 hours of paid leave during the designated 12-month period. Exempt employees generally earn 1 hour of paid leave per week. Employees must be permitted to “carryover” accrued but unused leave into the next 12-month period. However, employers are not required to permit employees to use more than 40 hours of paid leave during any one 12-month period. Employers must provide notice of the amount of leave accrued or used upon employee request. For employers electing to front load the leave, avoid carryover and require employees to “use it or lose it,” employers can make available the 40 hours of paid leave on the first day of the 12-month period.

Using Paid Leave

Employees may use their paid leave after they have completed 90 calendar days of employment or March 31, 2024, whichever is later. Employees can be required to use leave in reasonable minimum increments of no more than 2 hours per day. Significantly, the Act allows employees to use paid leave for any reason of their choosing. Employers would be unable to require employees to provide a reason for the leave or documentation or certification as proof of the leave. Regarding notice to be provided by employees to employers, the Act distinguishes between foreseeable and unforeseeable leave. Employers may require employees to provide 7 calendar days’ notice before the foreseeable leave is to begin. For unforeseeable leave, employees can be required to provide notice as soon as is practicable after the employee is aware of the need for leave.

No Payout On Termination

Importantly, employers are not required to pay out accrued leave under the Act upon employment termination. Compare this to other accrued and unused PTO or vacation time, which must be paid out on termination of employment. Thus, an employer may wish to track the Act’s leave separately from leave under a vacation or PTO policy, in order to reduce the risk that employees would be entitled to a payout of unused leave accrued under the Act upon termination of employment. Further guidance from the Illinois Department of Labor (“IDOL”) is expected on this issue before the Act’s effective date.

As a result of the Act, employers should (1) determine whether the Act applies to them and their employees, (2) watch the IDOL for its publication of notice posters and other guidance, and (3) compare current leave policies with the Act’s requirements, including adopting or modifying a paid leave policy consistent with the Act and which also resolves those matters which the Act leaves to employers. For further inquiries or questions, please contact me at smigala@lavellelaw.com or at (847) 705-7555.