Paid Leave for All Workers Act Now Effective

by Ericka J. Thomas and Brian Johnston

Illinois recently enacted a sweeping paid leave law that experts call the nation’s strongest state policy yet. The Paid Leave for All Workers Act (“PLAWA”) entitles all employees in Illinois (with limited exceptions) to accrue up to 40 hours of paid time off annually for any purpose. The Act became effective on January 1, 2024. This Article discusses the Act and your new obligations.

PLAWA stipulates that all employees, including those working full-time, part-time, or seasonally, are eligible to accrue up to 40 hours of paid leave per year. Notably, the Act applies to most employers in Illinois, with exceptions including federal government employers, public school districts, and public park districts. As such, the Act applies to units of local government.

Employers have the option to allow employees to accrue paid leave, with a minimum accrual of one hour of paid leave for every 40 hours worked, or to provide the full 40 hours of paid leave at the start of employment (front load) or a designated 12-month period. The Act has specific rules regarding the carryover and use of paid leave. If an employer decides to use the accrual method, then hours accrued shall carry over to the next year. However, an employee may only use up to 40 hours in one given year unless the employer allows for more. Employers that choose to front load employees do not have to carry over or bank into the next year.

Significantly, this leave is usable for any purpose, and employees are not required to tell their employers why they are taking PLAWA leave. Nor are employers permitted to insist on justification or documentation for the leave. An employer shall not require an employee to search for or locate a replacement worker to cover the employee’s use of paid leave time. The Act also allows employees to choose whether to use paid leave under the Act before other types of leave. Employers may require notice for foreseeable leave and immediate notice for unforeseen circumstances, as per their written policies. Employers may enact reasonable policies that establish circumstances in which the employer may deny an employee’s request due to operational necessity. This must be in the employers’ written employee handbook and distributed to all employees.

The Act does have an exception for collective bargaining units. Employees under an existing collective bargaining agreement are considered “grandfathered in” until it expires. Thereafter, PLAWA will apply unless the parties waive the Act’s benefits in their new contract. The Illinois Department of Labor has proposed a rule, with some limitations, that permits employees covered under a collective bargaining agreement to negotiate minimum standards of paid leave meeting or exceeding what is required by the Act.

Importantly, the Act does not require employers to pay for unused paid leave upon an employee’s termination, except where the leave is added or combined with vacation or PTO. Employers are restricted from imposing certain conditions on the use of paid leave, such as demanding reasons or documentation for leave, requiring employees to find replacements during their leave, or retaliating against employees for using their rights under the Act. Employers may also establish a policy that requires a minimum of 2 hours to be used at a time but cannot place any other requirements upon usage. The Illinois Department of Labor’s Proposed Rules on the Act also require that if an employee takes leave under the Act, then the employer must continue to provide the same health plan coverage for the employee and the employee’s family during the duration of the paid leave time.

Now that PLAWA is effective, here’s what you must be doing:

1. Frontload 40 Hours of Leave or Begin PLAWA Leave Accruals: Beginning January 1, 2024, employees are entitled to begin accruing PLAWA leave at a rate of 1 hour per every 40 worked. You must have a protocol in place for tracking this accrual, unless it is decided to frontload 40 hours of leave.
2. Display the Required Notice: Under the Act, employers must display a notice prepared by the Department of Labor that outlines the Act’s requirements and informs employees about their rights and complaint filing processes.
3. Keep Records: Employers are also mandated to keep records of hours worked, paid leave accrued and taken, and leave balances for a minimum of three years.
4. Consider Revising Policies: Employers with existing vacation or PTO policies that comply with or exceed the Act’s requirements can apply these policies towards meeting the Act’s obligations, provided they clearly state this in their policies. The Act may also prompt changes to existing leave policies. Therefore, we recommend reviewing your standing policies on paid leave accordingly.

Failure to act in accordance with the Act may be met with penalties. In cases where employees feel their rights under the Act have been violated, they can file a complaint with the Department of Labor within three years of the alleged violation. Employers found in violation of the Act may be liable for various penalties and legal costs. Additionally, employers who violate the Act face civil penalties of up to $2,500 per offense.

Therefore, we recommend strict compliance with the Act. If a question of compliance under the Paid Leave for All Workers Act arises, please contact your legal counsel for clarification and guidance.