How to Handle the Paid Leave for All Workers Act

by Michael Castaldo III

On March 13, 2023, Governor J.B. Pritzker signed into law Public Act 102-1143, which creates the Paid Leave for All Workers Act. This legislation guarantees Illinois employees a minimum of 40 hours of paid leave per year that may be used for any purpose, at their discretion. Illinois employers must ensure their leave practices meet or exceed the Act’s standards before it becomes effective on January 1, 2024.

Employers Covered by the Act

Almost all Illinois employers are covered by the Act, which expressly includes the State of Illinois and most units of local government. However, there are narrow exceptions for school districts, park districts, and those employers who are already subject to Cook County and Chicago’s local leave ordinances.

Employees Covered by the Act

All Illinois employees that work for “employers” in Illinois, including domestic workers, are entitled to the minimum paid leave benefits provided by the Act. However, there are exceptions for: (1) “employees” within the meaning of the federal Railroad Unemployment Insurance Act or the Railway Labor Act; (2) certain college students who work for their school; and (3) short-term employees who are employed by an institution of higher education for less than 2 consecutive calendar quarters during a calendar year and who do not have a reasonable expectation that they will be rehired by the same employer of the same service in a subsequent calendar year.

Collective Bargaining Agreements

The Act is not intended to affect the validity or change the terms of bona fide collective bargaining agreements in effect prior to its effective date. However, the Act’s requirements may be waived in contracts that become effective after January 1, 2024—but only if the waiver is set forth explicitly in clear and unambiguous terms.

Bad news for unionized employees in the construction and package delivery industries: the Act specifically carves out an exception for the application of this Act. Any paid leave benefits for employees in these industries covered by a collective bargaining agreement should be addressed at the bargaining table.

Accrual of Benefits

All covered employees, irrespective of their status, are entitled to accrue leave at a rate no less than 1 hour of paid leave time for every 40 hours worked. Paid leave under this Act shall begin to accrue at the commencement of employment or January 1, 2024, whichever date is later. However, employees are not entitled to accrue more than 40 hours unless the employer provides for more.

Use of Accrued Time

Employees have a right to start using their paid leave 90 days after they start their employment or January 1, 2024—whichever is later. The employee may use up to 40 hours of their paid leave time for any reason at their discretion and without fear of retaliation. The employee need only give written notice to the employer within certain timeframes. Notably, employees are not required to provide a reason or supporting documentation to the employer for the use of the paid leave. Employers can require employees to provide minimum notice of the leave, when practicable, and pursuant to any established procedures or policies not to exceed the maximum notice requirements provided in the Act. Employers may also set a minimum increment in which paid leave time under this Act may be used not to exceed 2-hour increments.

Carry-Over

Employees are entitled to carry over any unused paid leave to a subsequent consecutive 12-month period, as determined by the employer at the time of employment subject to the other requirements of the Act. Alternatively, the Act also permits an employer to “front-load” the minimum 40 hours of paid leave on the employee’s first day of employment or on the first day of the consecutive 12-month period, as opposed to require the accrual of hours. In this instance, an employer is not required to allow the carry-over of time to the next 12-month period, and the employer may require employees to use-it-or-lose-it before the end of the then current 12-month benefit period.

Payout of Accrued Time

Unused paid leave that is accrued under the Act does not entitle an employee to financial or other payment from an employer upon the employee’s termination, resignation, retirement, or other separation from employment, or at the end of the then current consecutive twelve-month benefit period, unless certain circumstances apply.

Interaction with Existing Paid Leave Policies

How the Act applies to employers’ existing policies is highly dependent on what paid leave policies are already in place. Generally, employers who already provide 40 or more hours of paid leave per year may not be required to make any changes to the existing procedures and policies if the accrual and use of such time is greater than what is required by the Act.

Penalties for Non-Compliance

The Act imposes some stiff penalties for non-compliance. An employer that violates the provisions of this Act or any rule adopted thereunder may be subject to a civil penalty of $2,500 for each separate offense.

Illinois employers that do not have a paid leave policy in place are encouraged to partner with counsel for assistance in crafting one that is compliant with the Act. If you have any questions regarding how the Paid Leave for All Workers Act might affect you or your company, please reach out to your attorneys at Ottosen DiNolfo.