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New Year, New Paid Leave Regulations

February 1, 2024
5 minute read

The start of the calendar year is known for bringing many new labor and employment laws, and 2024 is no exception. While the increased paid leave accrual requirement under California law, the addition of the Illinois Paid Leave for All Workers Act, and passage of Minnesota’s Earned Sick and Safe Time law have garnered significant attention and discussion over the past few months and likely ring a bell, you may have missed the passage of Chicago’s Paid Leave and Paid Sick Leave Ordinance, which passed with much less warning.

The Chicago Paid Leave and Paid Sick and Safe Leave Ordinance

On Nov. 9, 2023, Chicago quietly passed the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, which was initially set to go into effect on Dec. 31, 2023. The initial Chicago Ordinance required all employers (except for Chicago Public Schools, eff. 7/1/24) to provide employees who work in Chicago for at least two hours in any two week period with up to 40 hours of Paid Leave for any reason and up to 40 hours of Paid Sick and Safe Leave (Paid Sick Leave) per benefit year.

Following feedback and concern from the business community regarding the expansive definition of a “Covered Employee” as well as the expedited time period in which employers were required to understand and comply with the new requirements, the Chicago City Council voted to approve amendments to the Ordinance on Dec. 13, 2023—less than 30 days after its initial passage. Amongst other items, the most prominent modifications included:

  1. Changing the definition of “Covered Employee” from an individual that completes 2 hours of work in any two-week period to an employee who works a minimum of 80 hours in a 120 day period in the City of Chicago;
  2. Including a right to cure for employers before an employee has a private right of action against their employer for violating the ordinance (until July 1, 2025, employers will have the lesser of 16 days or one pay period to cure a violation of the ordinance); and
  3. Moving the required date of compliance from Dec. 31, 2023 to July 1, 2024.

Importantly, employers should note that the Ordinance still does not require that the employer maintains a physical presence in Chicago, only that the employee meets the definition of a “Covered Employee” set forth above. In addition to mandating a total of 80 hours of paid leave per benefit year, in comparison to Chicago’s previous sick leave ordinance, the updated Ordinance has a more generous accrual rate, requires carryover of up to 80 hours of Paid Sick Leave regardless of whether the employer “frontloads” the time, creates different obligations for small and medium employers, increases notice requirements, and more. While employers who offer paid leave benefits in an amount that meets the requirements of the new Ordinance may not have to provide a separate paid leave benefit, such employers will need to update their existing policies to ensure they are compliant with not only the amount of Paid Leave and Paid Sick Leave provided, but also the Ordinance’s notice, reasons for use, carryover, pay-out, and other requirements.

Furthermore, while the Ordinance differs significantly from the newly effective Illinois Paid Leave for All Workers Act (PLAWA, effective Jan. 1, 2024) (including more generous accrual, carryover, and increased notice requirements), it is important to note that employers within the City of Chicago are exempt from the PLAWA, which does not apply to employers covered by a municipal or county paid leave ordinance. However, Illinois employers that are not located in Chicago may be faced with implementing both the PLAWA and the new Chicago Paid Leave and Paid Sick Leave Ordinance, depending on where their employees physically work.

The speed in which the amendments were set forth appears to indicate Chicago employers’ general frustration with the quickly passed Ordinance (and seemingly the City’s willingness to listen to this frustration), which could result in further amendments and modifications prior to the July 1, 2024 compliance deadline. Moreover, while the amendments passed appear to be a step in a more reasonable direction, the Ordinance requirements remain aggressive and employee friendly. Specifically, the definition of “Covered Employee” and recently published guidance remains particularly burdensome, as “once [the threshold for working 80 hours in any 120-day period while physically present in the geographic boundaries of Chicago] is met, the [e]mployee shall remain a Covered Employee for the remainder of the time that the [e]mployee works for the [e]mployer.” As a result, even employers that rarely if ever conduct any business in Chicago and are located outside of Illinois will need to closely track remote employees’ whereabouts to ensure that they are not unknowingly failing to comply with the Ordinance.

Finally, in addition to the onerous accrual, use, and notice requirements, penalties for non-compliance can be costly (i.e., fines between $1,000 to $3,000 for each separate offense, with each day that a violation continues constituting a separate and distinct offense to which a separate fine shall apply). 

Conclusion

The growing frequency of paid sick leave laws serves as a reminder to employers to be mindful of both state and local laws that may apply to their employees. In particular, multi-jurisdictional employers and employers with remote employees are encouraged to contact labor and employment counsel to discuss applicable paid leave laws and/or how to bring a current paid time off and/or sick leave policy into compliance with new requirements.

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