City of Chicago Expands Paid Leave for Employees in New Ordinance

The new ordinance, which goes into effect on December 31, 2023, broadly applies to all employers that employ at least one eligible employee. This ordinance will not interfere with the rights of employees currently covered under valid collective bargaining agreements.

Quick Hits

• The Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, which is an expansion of the current ordinance, will take effect on December 31, 2023.
• The ordinance requires covered employers to provide eligible employees with forty hours of paid leave and forty hours of paid sick leave within a twelve-month period.
• Employers may adopt reasonable policies requiring prior notice, not to exceed seven days, of use for both paid leave and paid sick leave, where applicable. Employers may also reasonably require preapproval for the use of paid leave.

Paid Leave and Paid Sick Leave

Under the ordinance, employees who, in any two-week period, perform at least two hours of work while physically present within the geographic boundaries of the City of Chicago are eligible to accrue paid leave and paid sick leave. An eligible employee may use paid leave for any reason of the employee’s choosing, subject to the terms of an employer’s reasonable paid leave policy, as discussed below. An eligible employee may use paid sick leave for when the employee, or the employee’s family member, is ill, injured, receiving professional care, or for several other circumstances as defined by the ordinance.

Paid leave under the ordinance may either be accrued by an eligible employee or front-loaded by the employer. An eligible employee must accrue at least one hour of paid leave and one hour of paid sick leave for every thirty-five hours worked, only to be accrued in one-hour increments. For each twelve-month period, an eligible employee may accrue up to forty hours of paid leave and forty hours of paid sick leave. If an employer opts to front-load paid leave, it must grant eligible employees forty hours of paid leave and forty hours of paid sick leave at the beginning of the twelve-month period. At the end of the eligible employee’s twelve-month period, the employee must be allowed to carry over a maximum of sixteen hours of paid leave and eighty hours of paid sick leave to the following twelve-month period. Alternatively, an employer policy that grants eligible employees unlimited time off to be used for any reason would comply with the ordinance.

Unused Paid Leave at Termination of Employment

Generally, at an eligible employee’s termination of employment, retirement, or other separation from the employer, the employee is entitled to all unused, accrued paid leave. Employment contracts or other employer policies cannot provide for forfeiture of accrued paid leave. However, “small” employers, or employers with fewer than fifty employees, are not required to distribute unused paid leave upon an employee’s separation. The payout of paid leave for “medium employers,” or employers with fifty-one to one hundred eligible employees, is limited to sixteen hours until January 1, 2025. After this date, these employers are required to pay the full monetary amount of unused paid leave. Employers are not required to pay out unused paid sick leave.

Reasonable Policies for Use of Paid Leave and Paid Sick Leave

Although eligible employees have the right to use paid leave for any reason, an employer may adopt a reasonable paid leave policy to require an eligible employee to give reasonable notice, not to exceed seven days, before using paid leave and obtain reasonable preapproval from the employer before using paid leave. An employer may also require eligible employees to provide up to seven days’ notice for using paid sick leave if the leave is reasonably foreseeable. An employer must provide eligible employees with written notice of this policy at the commencement of employment and within five calendar days of any future revision to the policy. In addition, employers need to provide written notice fourteen days in advance of any future revision that alters an eligible employee’s right to final compensation.

Employer Notice Obligations

Employers have several obligations to provide employees with notice of their rights under the ordinance. Employers with eligible employees must post a general notice advising eligible employees of their rights to paid leave and paid sick leave. The City of Chicago will circulate a form notice that satisfies the posting requirements at a future date. For employers with a significant number of eligible employees who are not literate in English, a notice in the appropriate language must also be posted. In addition, an employer must provide individual notice to each eligible employee about employee rights under the ordinance. This notice must be provided with the first paycheck issued to the employee and with a paycheck each year issued within thirty days of July 1. The City of Chicago will also circulate a form notice to satisfy the requirements of the individual notice at a future date.

In addition, an employer must provide an eligible employee with the employee’s balance of paid leave and paid sick leave each time that wages are paid, if the employee accrues leave. Employers that provide employees paid leave and paid sick leave on a monthly basis may update employees each month in accordance with the credit. This notice must include the following information: the accrued paid leave and paid sick leave since the last notice, the amount of paid leave and paid sick leave taken since the last notice, and any paid leave and paid sick leave available for use.

Penalties

Any employer that violates the paid leave and paid sick leave provisions of the ordinance may be fined between $1,000 and $3,000 for each separate offense. For violations of the notice-posting requirement, employers may be fined $500 for the first violation and up to $1,000 for subsequent offenses. In addition, employers may be liable to the employee for a violation of the ordinance for “damages equal to three times the full amount of any leave denied or lost by reason of the violation, and the interest on that amount calculated at the prevailing rate; together with costs and reasonable attorney’s fees.” Private causes of action under the ordinance will be available to recover damages for violations of the ordinance’s paid sick leave provisions, starting on December 31, 2023, and for violations of the ordinance’s paid leave provisions, starting on January 1, 2025.

Key Takeaways

Before December 31, 2023, employers with eligible employees may want to review their existing leave policies to ensure employees are, at a minimum, accruing one hour of paid leave and paid sick leave every thirty-five hours worked and ensure that requirements imposed for use of leave are reasonable under the ordinance.

The Chicago office of Ogletree Deakins will continue to monitor and report on developments with respect to the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance and will post updates on the firm’s Illinois and Leaves of Absence blogs as additional information becomes available.

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