The City Council of Chicago has passed an ordinance that provides both paid sick leave (PSL) and paid time off (PTO) to most Chicago employees, representing one of the most generous leave laws anywhere in the country. The ordinance, which takes effect on December 31, 2023, will replace the current Chicago PSL ordinance. A previous alert on PSL in Chicago is copied below for reference.

Coverage

• The PSL/PTO ordinance applies to all employers with employees in Illinois.
• All employees who work at least two hours within the city of Chicago – including any paid time spent traveling within or through Chicago – are covered by the ordinance. Domestic workers are covered regardless of whether they are employees or independent contractors.

Benefit Accrual and Use  

• Leave under the ordinance will begin to accrue on 1/1/24 for current employees, or on the first date of employment for employees hired after the effective date.
• PSL and PTO will accrue simultaneously at a rate of one hour of each type of leave per 35 hours worked, up to 40 hours of each type of leave per 12-month period. The new ordinance differs on this point from the previous PSL ordinance, which applied an accrual rate of one hour of leave per 40 hours worked.
• Leave for hourly employees must accrue in increments of one hour, with no fractional accrual allowed; exempt employees are assumed to work 40 hours per week unless normally scheduled for fewer than 40 hours, in which case they accrue leave based on the number of hours they are normally scheduled to work in a week.
• The accrual year will be calculated from the date the employee begins to accrue PSL and PTO (January 1, 2024 for current employees, first date of employment for employees hired after the effective date of the ordinance).
• If an employer offers more generous benefits than the ordinance requires, leave may accrue on a monthly basis.
• New employees may use accrued PSL on the 30^th calendar day, and PTO on the 90^th calendar day, of their employment.
• Leave may be taken in increments; the minimum increment for PTO is four hours, while the minimum increment for PSL is two hours.
• PTO under the ordinance may be used for any reason, and employers may not require employees to provide a reason or documentation.
• Employers may require reasonable notice (defined as no more than 7 days’ advance notice) when need for PTO is foreseeable, and may require employees to obtain reasonable approval for PTO use in order to ensure continuity of operations.

Front-Loading and Carryover

• At the end of each year, employees may carry over up to 16 hours of PTO and up to 80 hours of PSL. If leave was denied to an employee who followed all applicable employer policy for requesting and using leave, then the amount of leave denied must be added to the amount of leave that would otherwise carry over.
• Employers may avoid PTO accrual and carryover requirements by front-loading the full amount of leave (40 hours) on the first day of employment and first day of each subsequent 12-month accrual period. If leave is front-loaded, carryover of PTO is not required; however, while PSL can be front-loaded in lieu of accrual, front-loading does not eliminate the requirement to allow up to 80 hours of unused PSL to carry over from year to year.
• The ordinance is silent on an annual cap on leave use. Employees who accrue leave could accrue up to 56 hours of PTO by their second benefit year and up to 120 hours of PSL by their third benefit year, all of which would be available for their use at any time.
• Employers are not required to pay employees for accrued, unused leave in excess of the allowed carryover amounts.

Payout of Unused Leave

• Employers are generally required to pay employees the monetary equivalent of a portion of their accrued, unused PTO upon separation from employment or transfer outside the geographic limits of Chicago.
• The amount of PTO to be paid out depends on employer size. For the purpose of determining employer size, only employees working within the geographic boundaries of Chicago (those covered by the ordinance) are counted:
  • Small employers: 1-50 covered employees; no payout of PTO required
  • Medium employers: 51-100 covered employees; payout of up to 16 hours of PTO required through 12/31/24, payout of all unused PTO required on or after 1/1/25
  • Large employers: >100 covered employees: payout of all unused PTO required
• Employers must notify employees in writing that they may request payout of their accrued PTO if no work assignment has been offered for at least 60 days.
• There are no payout requirements for PSL.

Unlimited PTO Policies

• The ordinance includes explicit language allowing employers to use unlimited paid time off policies in place of leave accrual and carryover, as long as unlimited PTO is available as of the first day of employment.
• Employers that use an unlimited PTO policy for compliance with the ordinance may not require any preapproval for PTO use.
• An employer with an unlimited PTO policy will be required to pay out up to 40 hours of PTO, less any PTO used in the previous 12 months, when an employee terminates employment or transfers outside of Chicago.

Notice/Posting Requirements and Prohibitions

• Employers must provide notice of employees’ rights under the ordinance with each employee’s first paycheck with the employer, as well as the first paycheck of each subsequent year.
• Employers must also post notice in a conspicuous location at each worksite within the geographic boundaries of Chicago. A model notice will be provided by the Department of Business Affairs and Consumer Protection.
• Notice must be provided in any non-English language spoken by a significant portion of an employer’s employees.
• With each payment of wages, employers must also provide employees with a written accounting of PSL and PTO accrual rates, benefits available for use, and benefits accrued and used since the last pay period. Employers that use monthly accrual may provide notification on a monthly basis. This information may be provided by any reasonable means chosen by the employer.
• Employers must provide employees with written policies with respect to PSL and PTO administration, including accrual rates and any notification requirements, at the start of employment. Any changes to employers’ policies must be communicated in writing at least five days in advance of the effective date, or at least 14 days in advance if an employee’s final compensation will be impacted.
• Records related to PSL and PTO must be retained for the greater of five years or the duration of any claim, civil action, or investigation, and must be provided to employees upon request.
• Employers may not count PTO as an absence that triggers an adverse action against an employee, nor can an employer require an employee to find their own replacement when taking time off under the ordinance.

Transition from Previous Ordinance

• Unlike the previous ordinance, the new ordinance does not include a requirement that covered employees work at least 80 hours within a 120-day period in order to be eligible for PSL or PTO.
• Any earned, unused PSL under the current ordinance must be converted to PSL under the new ordinance at the end of 2023.
• Rules are expected to be promulgated by the Office of Labor Standards to further define the new ordinance’s requirements and restrictions for use of PTO.
• Covered reasons and employee notice requirements for use of PSL will not change under the new ordinance.
• Since the ordinance takes effect on 12/31/23, one day before the effective date of the Illinois Paid Leave for All Workers Act, the ordinance is not pre-empted by the state law. Chicago employees will only be covered by the Chicago ordinance.
• Cook County is also in the process of amending its PSL ordinance to bring it more in line with the state PTO law, which takes effect January 1, 2024 and excludes Chicago and parts of Cook County.

Chicago PSL Ordinance Amendments (originally sent August, 2021)

The City of Chicago has amended its 2017 Paid Sick Leave (PSL) ordinance, expanding the list of allowed reasons for leave and adding a new wage theft provision. The PSL ordinance requires employers to provide virtually all Chicago employees with up to 40 hours pf PSL in each 12-month period.

PSL Covered Reasons for Leave

• Employees may use PSL for the following reasons:
  • The employee, or employee’s family member is experiencing illness, injury, or medical treatment, including treatment of behavioral health or substance use disorders
  • The employee needs to care for a family member who has been ordered to quarantine
  • The employee, or employee’s family member, is a victim of domestic violence, sex offense, or human trafficking
  • The employee’s place of work, or employee’s family member’s place of care, is closed due to a public health emergency
• The amendment also adds pandemic-related reasons for using PSL under the ordinance. Employees may use PSL when the Illinois governor, Chicago Department of Public Health, or a healthcare provider treating the employee requires the employee to
  • remain at home to reduce transmission of a communicable disease
  • remain at home due to symptoms or diagnosis of a communicable disease
  • obey an isolation or quarantine order issued to the employee
• Changes to the covered reasons for leave became effective August 1, 2021.

Wage Theft Penalties

• The amendments to the PSL ordinance add pay for PSL to the existing list of items for which employees may bring wage theft claims against their employers when timely payment is not received. This change became effective July 5, 2021.
• Claims for wage theft may either be filed with the Office of Labor Standards or in state court. Employers found to have violated the PSLO will be liable for any underpayment as well as an additional penalty (currently 5% of the underpayment per month it remains unpaid).
• The amended PSL ordinance requires employers to post and distribute to employees a revised notice that includes information about how to seek redress for wage theft for unpaid PSL. A revised model notice poster will be provided by the Commissioner of Business Affairs and Consumer Protection.