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On January 10, 2023, the Illinois General Assembly passed Senate Bill 208, the Paid Leave for All Workers Act. Although as of today Governor Pritzker has not yet signed the bill into law, he has issued a press release, announcing he is looking forward to signing the legislation. In short, when enacted the law will provide, with limited exceptions, employees who work in the State of Illinois with up to 40 hours of annual paid leave to be used whenever and however they want. The law would become effective January 1, 2024. Significant provisions of the Act include:
Covered Employers and Employees
Employees of almost all private and public employers are covered by the Act, whether they are full-time, part-time, temporary, or other designation. It’s easier to list who is not covered. Excluded employers are:
School districts organized under the Illinois School Code;
Park districts organized under the Illinois Park District Code; and
Employers covered by a municipal or county ordinance in effect on the effective date of the Act requiring employers to provide paid leave to their employees, including paid sick leave or paid leave.
Excluded employees include:
Employees working in the construction industry who are covered by a bona fide collective bargaining agreement;
Employees covered by a bona fide collective bargaining agreement with an employer that provides national and international parcel, document, and freight delivery and pickup services;
Employees covered under the federal Railroad Unemployment Insurance Act;
Student workers attending a college or university who work for the college or university on a temporary and less than full-time basis;
Short-term employees employed by an institution of higher education for less than two consecutive calendar quarters during a calendar year, and who do not have a reasonable expectation they will be rehired by the same employer for the same service in a subsequent calendar year.
Leave Benefit
Employees earn and can use one hour of paid leave per 40 hours worked. The Act caps leave at 40 hours in a calendar year, or other 12 month period designated by the employer. The Act notes that employers can provide more than 40 hours of leave if they choose to do so.
Accruing Leave. Employers can choose to have employees accrue leave as stated above. The accrual of leave starts on an employee’s first day of employment.
Employers using this accrual method must allow employees to carry over annually any unused paid leave; however, an employer need not provide more than 40 hours of paid leave for an employee in calendar year or other designated 12-month period unless the employer agrees to do so.
“Dropping in” Leave. Alternatively, employers can “drop in” or front load an employee’s entire leave benefit on the employee’s first day of employment or subsequent first day of the calendar year or other designated 12-month period. Employers who use this “drop in” method are not required to carryover unused paid leave, and all such unused paid leave can be forfeited.
Use of Leave
Employees have an unfettered right to use leave “for any reason of the employee's choosing.”An employee has the right to choose whether to use paid leave under the Act before using any other paid or unpaid leave provided by the employer or State law. Employees also have the right to decide how much paid leave they need to use; however, an employer may establish a minimum paid leave increment not to exceed two hours per day.
Although leave begins to accrue on the first day of employment, employers may choose to restrict employees from using paid leave until 90 days after the start of their employment.
Employee Notice
Employees may request paid leave either verbally or in writing in accordance with the “employer's reasonable paid leave policy notification requirements.” Such requirements may include seven days’ notice if the need for leave is foreseeable, or notice as soon as practicable if the need for is not foreseeable. An employer may not, however, require employees to provide a reason for the leave, nor require employees to provide documentation or certification in support of the leave.
Employer Notice
The Act imposes various notice requirements on employers. Those requiring employee notice when the employee’s need for leave is not foreseeable must provide a written policy containing procedures for how employees are to notify the employer.
The Act also directs the Department of Labor to prepare a notice or poster summarizing the requirements of the Act. Employers must post the notice and include it in an employer’s employee handbook.
Rate of Pay
Leave under the Act is paid at an employee’s “hourly rate of pay.” The hourly rate for employees customarily paid gratuities and commissions must be determined by including such gratuities and/or commissions, but must also be at least the full minimum wage for the jurisdiction where they are employed.
Payment on Termination
Payment for unused leave upon termination of employment is not required, unless an employer provides paid leave under the Act as part of its vacation or paid time off policy as described below.
Interaction with Other Paid Leave
Paid leave under the Act is separate from other paid leave an employer may offer, such as vacation, or paid time off. An employer may decide, however, to fulfill its obligations and offer paid leave as part of its vacation or paid time off policy (as long as those policies meet all other conditions for leave under the Act). In such cases, unused leave must be paid out upon termination like other vacation as required by the Illinois Wage Payment and Collection Act.
Implications
The Act does not require employers to provide a new category of leave, nor more paid leave than they are already providing. Many employers have paid vacation, personal, or sick leave policies granting paid time off similar to what will be required by the Act. Some careful editing of existing policies to bring current plans into compliance may be all that is necessary. In other circumstances, more significant revisions or a new policy may be advisable.
The Act will certainly impact employers who currently have no similar paid time off policy. They will need to develop plans and policies to meet the requirements of the Act.
Employers of part-time employees or short-term employees, and who currently exclude such employees from paid time off plans, will experience a more significant impact. Under the Act, these employees must accrue paid leave on the same one hour per 40 hours worked basis that applies to other employees.
STAFF MANAGEMENT, Inc. offers information on human resource and related topics. Materials presented are for informational purposes only. We address topics in a general manner that may not apply to individual circumstances. Consult your human resource or legal advisors for advice pertaining to your specific situation.
Samuel J. Castree, Jr., Senior Vice-President & General Counsel