The Chicago Department of Business Affairs and Consumer Protection published final rules with respect to the city’s Paid Leave and Paid Sick and Safe Leave Ordinance. The ordinance, which provides eligible employees with up to 40 hours of paid time off (PTO) and 40 hours of paid sick and safe leave (PSL) annually, will take effect on July 1, 2024.

Accrual and Carryover

• In contrast to the requirements originally outlined in the ordinance, employers may establish a 12-month period of their choosing in order to administer PTO/PSL. The benefit year must be based on a consecutive 12-month period such as the employee’s employment anniversary, the calendar year, or a fiscal or tax year.
• The final rules confirm that any leave carried over is available in addition to the PSL and PTO the employee will accrue in the following year.
• While employers may front-load both PSL and PTO, only front-loading of PTO relieves employers from the obligation to allow leave to carry over. Up to 80 hours of unused PSL must carry over from one year to the next regardless of whether PSL is front-loaded.

Denial of Leave Requests

• The rules outline specific factors employers should consider when denying leave requests in order to maintain continuity of business operations. Employers should evaluate whether
  • an absence would cause significant impact to business operations
  • the employee’s work is critical to the health, safety, or welfare of the people of Chicago
  • similarly situated employees receive the same treatment when reviewing leave requests
  • whether the employee will have reasonable access to all of their paid leave during the benefit year
• The rules allow for some use of blackout dates as a permissible restriction as long as employees continue to have a reasonable ability to utilize their paid time off during the benefit year. The rules cite blacking out certain days of the week as an example of an over-restrictive policy.
• Paid leave request denials must be provided in writing and must include the rationale for the denial, based on pre-established employer policy. Denials must be issued to the employee immediately following the request.
• Employers may restrict PSL and PTO use to the employee’s regular work week. In other words, employees may be restricted from using their PSL or PTO during weekends or mandatory overtime shifts.

Other Employer Requirements

• The Chicago ordinance does not allow for any exemptions for an employer’s pre-existing paid leave policy. Employers that already have more generous paid leave policies in place must amend them to comply with all requirements of the Chicago ordinance.
• Rate of pay for non-exempt employees is to be calculated by dividing total wages by total hours worked in full pay periods over the previous 90 days of employment, not including overtime, premium pay, tips or gratuities, or commissions.
• Employers must provide notice of employees’ rights under the ordinance in the following ways:
  • Post the city-created notice through the method the employer typically uses for such notices, including posting in any language spoken by at least 5% or more of employees if not literate in English
  • Include notice of an employee’s rights under the ordinance with the employee’s first paycheck that is subject to the ordinance, or prior to commencement of employment
  • Provide the employer’s PTO and PSL policies in writing at commencement of employment
  • Annually provide notice of availability of any front-loaded hours at the start of the benefit year
  • Annually provide notice of employees’ rights under the ordinance within 30 days of July 1 of each year, on paper or electronically through the employer’s normal internal communication channels
  • Establish and publish, in a manual/handbook or as a separate document, reasonable written PSL and PTO policies, including advance notice requirements and procedures and any basis for leave request denials
  • Provide advance notice to employees before leave policy changes are made (at least five calendar days for notification requirement changes and at least 14 days for changes that may impact an employee’s right to final compensation at termination of employment)
  • Notify employees of their available PTO and PSL (with paystubs/pay statements, online, or in a hand-written record)