Banking and Business Monthly – November 2023

On November 9, 2023, the Chicago City Council passed the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance (“Chicago Ordinance”), which becomes effective on December 31, 2023. This new Chicago Ordinance replaces Chicago’s 2017 “Paid Sick Leave” Ordinance. This new ordinance is one of the most expansive paid time off laws in the country, entitling covered employees to 40 hours of paid sick leave per 12-month accrual period; and 40 hours of paid leave, to be used for any reason, per 12-month accrual period.

Scope of the Ordinance 

The Chicago Ordinance covers employees who, in any two weeks, perform at least two hours of work within the geographical boundaries of Chicago. As of now, the ordinance only applies to Chicago workers, not Cook County in its entirety, and the Cook County paid sick leave law will not be impacted. If an employer already has a policy that provides paid sick leave and paid time off to all covered employees in an amount and manner that meets or exceeds the ordinance, then no additional leave is required. Employees may not use their paid sick leave until they have completed 30 days of employment and may not use paid leave until they have completed 90 days of employment. 

The ordinance also exempts employees covered by a collective bargaining agreement in effect as of January 1, 2024, if the parties agree to waive compliance. The ordinance also does not apply to employees subject to coverage under the federal Railway Labor Act; students enrolled in and regularly attending classes in a university that is also the students’ employer on a temporary, part-time basis; or short-term employees, employed by an institution of higher education for less than two calendar quarters and who do not have a reasonable expectation of being rehired for a subsequent year.

Key Elements of the Ordinance 

• For every 35 hours worked, the covered employee accrues at least one hour of paid time off and one hour of sick paid leave, up to a cap of 40 hours of paid time off and 40 hours of paid sick leave per 12-month period.

• Employers may frontload up to 40 hours of paid sick leave and up to 40 hours of paid leave on the first day of the 12-month accrual period. If the full 40 hours of paid leave are frontloaded at the beginning of the 12-month accrual period, unused paid leave time does not carry over from one period to the next year.

• Employers must allow covered employees to start using accrued paid sick leave no later than on the 30th calendar day of the start of their employment, and use accrued paid time off no later than the 90th calendar day.

• Covered employees can carry over up to 16 hours of paid leave and 80 hours of paid sick leave. This means that an employee could be entitled to use up to 120 hours of paid sick leave and 56 hours of paid leave per year.

Further Obligations and Rights of Employers 

Employers must post a notice of employees’ rights under the Chicago Ordinance in a conspicuous place, at each of their facilities within the City of Chicago. The Department of Business Affairs and Consumer Protection will provide a sample notice before the end of 2023. Additionally, employers must provide a notice of employees’ rights on every covered employee’s first paycheck and on an annual basis. Each time wages are paid, employers must provide employees with written notification that includes the amount of Paid Sick Leave and Paid Leave available for use under the Chicago Ordinance, and the accrual rates for each. This notice must also contain the amount of leave accrued and the amount used since the last notification. 

Employers are not required to pay paid sick leave upon termination of employment or transfer outside of the geographic limits of Chicago. However, depending on an employer’s size, it may have to pay out unused, accrued paid leave:

• Small employers (1-50 covered employees): Not required to pay unused paid leave upon termination or transfer.

• Medium employers (51-100 covered employees): Required to pay up to 16 hours of paid leave upon termination of transfer through December 31, 2024. Starting on January 1, 2025, medium employers will be required to pay all unused paid leave upon termination or transfer. 

• Large employers (100+ covered employees): Must pay all unused paid leave upon termination or transfer. 

Employers may require up to seven days’ advance notice of a foreseeable need for leave. If the need for paid sick leave is unforeseeable, employers may instead require notice as soon as practicable. This requirement is waived if the employee is unable to give notice due to incapacitation. Employers may require certification that paid sick leave was used for a permissible reason only for absences of more than three consecutive workdays. Examples of reasonable documentation include documents signed by licensed healthcare providers, court documents, police reports, a signed statement from an attorney, etc. 

Consequences of Violation 

Employers proved to violate the Chicago Ordinance will be liable to covered employees for damages, including three times the full amount of any leave denied or lost due to the violation, as well as interest at the prevailing rate and reasonable attorney’s fees. Violating employers will also be subject to a $1,000-$3,000 fine for each separate offense. Additionally, employers will be subject to a $500 fine for the first notice or posting violation and $1,000 for each subsequent notice violation. Each day the violation continues is considered to be a separate offense. 

For further inquiries or questions, please contact me at smigala@lavellelaw.com or (847) 705-7555. Thanks go to Nathan Toy for his assistance with this month’s article.