Getting to Know the New Chicago Paid Leave and Paid Sick and Safe Leave Ordinance

The Chicago City Council recently passed the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, effective July 1, 2024. The new ordinance requires all Chicago employers to provide employees with 40 hours of paid leave and 40 hours of paid sick leave within a 12-month period. The new ordinance supersedes the current Chicago paid leave ordinance and is currently one of the most comprehensive paid leave laws in the country.

Accrual and Carryover

Starting July 1, 2024, any eligible employee who performs at least 2 hours of work in a 2-week period while physically present in Chicago will be eligible for the new leave benefits. Under the amended ordinance, employees will accrue 1 hour of Paid Time Off (PTO) and 1 hour of Paid Sick Leave (PSL) for every 35 hours worked. Exempt employees will be presumed to work 40 hours per week unless their regular schedule dictates fewer hours.

If an employer requires employees to accrue paid leave, then employees must be allowed to carry over up to 80 hours of unused PSL and 16 hours of unused PTO for use in the following year. Currently, the ordinance does not permit employers to cap accrual amounts, meaning employees could potentially accrue and use up to 176 hours of paid leave. Additionally, employers must provide “meaningful” access to these paid leave benefits and increase the carryover amount if they do not.

Employers may opt out of the accrual and carryover obligation by frontloading the leave at the beginning of the year or offering “unlimited” time off, provided that the leave can be used for any reason and complies with the ordinance’s notice provisions.

Payments at Separation

Unlike the new Illinois paid leave law, this ordinance requires employers to pay separated employees the monetary equivalent of all unused and accrued PTO. There is no requirement to pay for earned but unused PSL. The ordinance distinguishes between small, medium, and large employers:

  • Small Employers (1 – 50 Employees) are not required to pay any PTO upon separation.
  • Medium Employers (50-100 Employees) must pay only 16 hours of PTO until July 1, 2025. Thereafter, they are required to pay all unused and earned PTO.
  • Large Employers (100+ Employees) must pay separated employees for all unused and earned PTO.

A change in work location (e.g., moving out of the city of Chicago) that results in an employee no longer being covered under this ordinance is considered a separation, necessitating a payout. The ordinance does not specify if a payout is required if an employee continues working for the same employer and retains accrued benefits.

Notice and Documentation

Employers may adopt reasonable policies requiring the employee to provide prior notice, not to exceed seven days, for PTO and PSL.  Employers may also require reasonable preapproval for the use of paid leave. Consistent with the new Illinois paid sick leave law, PTO can be taken without supporting documentation. However, employers may require employees taking more than 2 consecutive days of PSL to provide documentation. Generally, PSL may be used for personal illness, domestic violence incidents, public health emergencies, or to care for others in similar situations.

Employers must have a written policy for PTO and PSL under the ordinance, provided to employees at the start of employment and 5 days before any policy change. Additionally, employers must post a notice and inform employees of their paid leave rights with their first paycheck and annually with a paycheck issued within 30 days of July 1 each year.

Employers must also include the balance of an employee’s PTO and PSL on each paycheck or through a similar record-keeping system that shows the amount of leave used and accrued since the last notification, and any unused time available.

Enforcement

Violations of the notice provisions will incur penalties:

  • $500 for first-time offenses.
  • $1,000 for each subsequent violation.

Each day of violation is treated as a separate offense. Employers violating other provisions face fines between $1,000 and $3,000 per violation.

In addition to fines, employers may face private lawsuits or recovery actions by the City of Chicago. Impacted employees are entitled to 3 times the full amount of any denied, lost, or unpaid leave, plus interest and reasonable attorneys’ fees.

Key Takeaways

These changes significantly impact all employers in Chicago. Employers must update their leave policies and ensure compliance with the paid leave requirements. The City of Chicago Office of Labor Standards is also expected to continue issuing guidance over the coming months, so it is important to monitor the Office of Labor Standards website for new updates.

Walker Lawrence, who chairs Levin Ginsburg’s employment law practice, has extensive experience in employment law and corporate counseling. For questions about these changes, contact Walker at wlawrence@levinginburg.com, Mitchell Chaban at mchaban@levinginsburg.com, or Camila Kaplunov at ckaplunov@levinginsburg.com. They can also be reached at 312-368-0100.