The Illinois Department of Labor has finalized regulations implementing the Illinois Paid Leave for All Workers Act (PLAWA). The final regulations, which took effect immediately upon publication April 30, 2024, include some changes from the original proposed regulations. A previous alert on PLAWA is copied below for reference.

Pre-Existing Leave Policies

• Employers with pre-existing leave policies that offer paid time off (PTO) do not need to modify their existing policies to comply with the provisions of PLAWA if their policies meet the following qualifications:
  • Provide at least 40 hours (or the prorated equivalent) of paid leave
  • Allow employees to take PTO for any reason, at the employees’ discretion
• Employers’ leave policies must have been enacted prior to, and in effect on, January 1, 2024 in order to be considered pre-existing. However, employers may modify their pre-existing leave policies as long as they continue to meet the minimum amount of leave required under PLAWA and its final regulations.
• The regulations include several examples that illustrate the following points:
  • Policies that require advance notice and manager pre-approval may qualify as compliant with PLAWA, as long as PTO may be used for any reason.
  • Leave may be referred to by terms other than “paid leave” or “PTO” as long as the time off can be used for any reason, the plan was modified to reflect this prior to January 1, 2024, and the plan otherwise complies with PLAWA requirements and regulations.

Leave Accrual and Front-Loading

• Leave is to accrue on a fractional basis in 15-minute work increments. Whereas the proposed regulations would have required employers to always round up to the next 15-minute increment – resulting in an accrual rate faster than that specified in the law – the final regulations state that hours worked may be counted minute-by-minute or rounded up, but may not be rounded down.
• Employers that allow leave to accrue must also allow leave to carry over to the next year. The final regulations confirm that employers may impose a 40-hour carryover cap through a valid written policy.
• Employers that front-load leave may prorate leave allotments for part-time employees and mid-year hires, consistent with their anticipated work schedules. Employees whose front-loaded leave is prorated must not receive less leave than what they would have been entitled to had leave accrued at the 1:40 rate.
• Employers may frontload leave for some employees and allow it to accrue for others.

Employer Rights and Obligations

• Employers may deny requests for leave if all of the following conditions are met:
  • The employer’s leave request policy, including any basis for denial of leave requests, is provided to the employee in writing
  • The leave policy establishes certain limited circumstances in which leave requests may be denied in order to meet the employer’s operational needs during the time period of the request
  • The employer’s policy is applied consistently to similarly situated employees and does not effectively deny employees adequate opportunity to use the leave to which they are entitled in a 12-month period
• Employers must maintain records of all denied leave requests.
• Employers have the following obligations with respect to employee notification:
  • Post a notice, provided by the Illinois Department of Labor (IDOL), in a conspicuous place on the work premises, in English and in any language commonly spoken in the workplace if a significant percentage of workers are not literate in English
  • Include a copy of the IDOL notice in a written document, manual, or policy
  • Define the 12-month period used for administering leave, and designate it in writing for employees at the time of hire
  • Provide a written policy for any terms or conditions (e.g., employee notice requirements) placed on leave use
  • Provide written notice to employees when changes are made to the employer’s leave policy
  • Provide written notice to employees if PTO under Illinois law is to be credited to an existing employer-provided PTO policy
  • If front-loading leave, provide employees with a written notification of the leave hours to which they are entitled, on or before the start of the 12-month period to which the front-loaded leave applies

Changes from Proposed Regulations

• The final regulations do not include any requirement for employers to report employees’ paid leave accrued, used, and remaining with each payroll. 
• Employers are not required to post a customized statement summarizing their paid leave policies; posting requirements are limited to the IDOL-issued notice.

IL Proposed Paid Leave Rules (originally released December 2023)

The Illinois Department of Labor (IDOL) has published proposed rules regarding the Illinois Paid Leave for All Workers Act (PLAWA), which will not be finalized until after PLAWA becomes effective January 1, 2024. Additionally, IDOL released FAQs that clarified how employers’ existing paid leave policies could satisfy the requirements of PLAWA.

Proposed Regulations

• Pre-existing leave policies: An employer with a bona fide leave policy enacted prior to January 1, 2024, which allows employees to take at least 40 hours of leave for any reason, will not need to change their leave policy to satisfy PLAWA requirements – even if the PTO policy does not align with other PLAWA provisions, such as advance notice, carryover, or use increments.
• Accrual and carryover:
  • The proposed regulations specify that leave must accrue on a fractional basis, in 15-minute increments, with time worked always rounded up to the nearest 15 minutes. In other words, an employee who works one hour and one minute would be considered to have worked 1.25 hours for the purpose of calculating accrued leave.
  • PLAWA includes a provision stating that “all” accrued, unused leave must carry over to the following year. The proposed regulations state that employers may establish a reasonable policy restricting carryover to 80 hours of unused paid leave, but do not provide additional detail about how a carryover cap may be imposed.
• Front-loaded leave:
  • The proposed regulations allow for proration of front-loaded leave for new hires and part-time employees. The front-loaded leave must be equal to or greater than what the employee would accrue in the timeframe the front-loaded leave is intended to cover.
  • Under the proposed regulations, employers may choose to front-load leave for some employees and not others, as long as they do not differentiate in a way that is discriminatory.
• Paid Leave Accrual: PLAWA allows employers to set a minimum use increment of two hours of paid leave, but the regulations state that employees may use their paid leave in one-hour increments thereafter. In other words, employees may use three hours of paid leave, but may not use only one hour.
• Paid Leave Use: While the regulations reiterate that employees may choose to use their leave at their discretion, they also allow for employers to deny leave requests due to “operational necessity” if the employer maintains a written policy outlining how leave requests will be considered and on what basis they will be denied. Employers must provide employees with a record of each denied request and the denial reason. Relevant factors for consideration when denying leave include
  • whether the employer provides a need or service critical to the health, safety, or welfare of the people of Illinois
  • whether similarly situated employees are treated the same for the purposes of reviewing, approving, and denying paid leave
  • whether granting leave during a particular time period would significantly impact the business operations due to the employer’s size
  • whether the employee has adequate opportunity to use all paid leave time they are entitled to over a 12-month period
• Remote employees: The proposed regulations provide a definition of “employee” that helps to clarify coverage for employees working remotely. An employee is covered under PLAWA if they
  • work for an employer based or headquartered in Illinois, and primarily perform their work in Illinois
  • primarily perform work in Illinois, for am employer with substantial business in the state
  • primarily work, and reside, in Illinois
• Notice Requirements: In addition to the notice requirements in PLAWA, the proposed regulations add several other employer obligations. Employers must:  
  • provide employees with a paid leave policy within 90 days after January 1, 2024 for existing employees, or before or upon commencement of employment for new employees hired after the PLAWA effective date
  • post a summary, in English and in any other language commonly spoken in the workplace, of the employer’s leave policy and how an employee can obtain a copy of it
  • provide an accounting of each employee’s paid leave accrual and use with each payroll and at the employee’s request
• Rate of pay: Employees must be paid their average rate of pay; however, employees who customarily receive gratuities or commissions as part of their remuneration must be paid the applicable minimum wage in the jurisdiction in which they are employed, at minimum.