The Illinois legislature recently passed the Paid Leave for All Workers (PLFAW) Act, which will require most Illinois employers to provide their employees working in Illinois with up to 40 hours of paid leave they can take for any reason during a designated 12-month period. Once signed by Governor Pritzker, the PLFAW Act will become effective on January 1, 2024.
Below are questions and answers addressing important provisions under the PLFAW Act.
Q: Which Illinois “employers” will be covered under and subject to the PLFAW Act?
A: The PLFAW Act adopts an expansive definition of employer, which includes private sector employers regardless of size (e.g., one or more employees) and the state and units of local governments, or any state or local governmental agency. However, Illinois school districts organized under the Illinois School Code and Illinois park districts organized under the Illinois Park District Code are not included in the definition of “employer” under the PLFAW Act.
Importantly, the PLFAW Act does not apply to employers who currently are covered by a municipal or county ordinance that is in effect as of January 1, 2024, and which requires the employer to provide any form of paid leave to their employees, including paid sick leave or other paid leave. Thus, for example, employers located in Chicago who are subject to the Chicago Paid Sick Leave Ordinance will be exempt from complying with the PLFAW Act. Similarly, employers located in suburban Cook County municipalities that did not opt out of the Cook County Earned Sick Leave Ordinance and are providing paid sick leave in compliance with that ordinance will be exempt from complying with the PLFAW Act. Notably, however, it appears that those employers located in a suburban Cook County municipality that lawfully preempted the Cook County Earned Sick Leave Ordinance and did opt out likely will be subject to the PLFAW Act.
Q: Who is a covered employee under the PLFAW Act?
A: All employees (i.e., full time, part time, temporary, short term, exempt, non-exempt) working in Illinois, except:
- employees as defined in the federal Railroad Unemployment Insurance Act (45 U.S.C. 351 et seq.) or the Railway Labor Act;
- a student enrolled in and regularly attending classes in a college or university that is also the student’s employer, and who is employed on a temporary basis at less than full time at the college or university (this exclusion applies only to work performed for that college or university);
- a short-term employee who is employed by an institution of higher education for less than two consecutive calendar quarters during a calendar year and who does not have a reasonable expectation that they will be rehired by the same employer of the same service in a subsequent calendar year;
- employees working in the construction industry covered by a bona fide collective bargaining agreement; and
- employees covered by a bona fide collective bargaining agreement with an employer that provides national or international services of delivery, pickup, and transportation of parcels, documents, and freight.
Q: How much paid leave is covered employers required to provide covered employees under the PLFAW Act?
A: Employees are entitled to earn and use up to a minimum of 40 hours of paid leave, or a pro rata number of hours of paid leave, during a 12-month period the employer designates in writing (e.g., employee handbook).
Employers have the option to frontload by providing the entire 40 hours in a lump sum on the first day of employment or the first day of a designated 12-month period. Or, employers can have employees accrue paid leave at the rate of one hour of paid leave for every 40 hours worked, up to a minimum of 40 hours of paid leave, or such greater amount if the employer chooses to provide more than 40 hours of paid leave under the PLFAW Act. Employees properly classified as exempt from the overtime requirements of the Fair Labor Standards Act are considered to work 40 hours in each workweek for purposes of paid leave accrual, unless their regular workweek is less than 40 hours. Paid leave begins to accrue on the employee’s first day of employment, or on January 1, 2024, whichever date is later. However, employers can require that employees wait the later of 90 days from their start date, or 90 days from January 1, 2024, to begin using earned paid leave provided under the PLFAW Act.
While employees can determine how much paid leave they need to use, employers may set a reasonable minimum increment for the use of paid leave not to exceed two hours per day.
But for employees subject to a collective bargaining agreement (see below), an employer cannot enter into an agreement with an employee to waive the employee’s rights under the PLFAW Act, and any such waiver is void.
Q: What rate of pay will the PLFAW require employers to use to calculate paid leave?
A: Employers will be required to pay employees their standard hourly rate of pay for paid leave provided under the PLFAW Act. Employees who are paid gratuities or commissions as part of their wages must be paid at least the applicable full minimum wage in the jurisdiction in which they are employed when paid leave is taken. That applicable full minimum wage will be treated as the employee’s regular rate of pay for purposes of the PLFAW Act.
Q: Are there specific reasons that employees will be able use paid leave under the PLFAW Act?
A: No, employees will be able use earned paid leave for any reason. Indeed, unlike the Chicago Paid Sick Leave Ordinance and the Cook County Earned Sick Leave Ordinance, which both delineate the specific reasons on which employees can take paid sick leave, the PLFAW Act has no such limitations. Employees will be able use paid leave provided under the PLFAW Act for “any reason of the employee’s choosing.” In fact, under the PLFAW Act, employees will not be required to provide their employers with any reason for the need to use paid leave, and employers cannot require that employees provide documentation or certification as proof or in support of the need for the paid leave.
Q: Will employees be required to provide their employees with advanced notice of the need to use paid leave, and in what manner will they be required to request leave?
A: If the need for leave is foreseeable, employers may require that employees provide up to seven calendar days’ notice before the date the leave is scheduled to begin. If the need for leave is not foreseeable, employees will be required to provide notice as soon as is practicable after the employee becomes aware of the necessity for the leave. The employers’ notice requirements, as well as whether the employer will permit employees to provide notice orally and/or in writing, must be memorialized in a written policy (e.g. stand-alone policy or in an employee handbook or policy manual. That policy must be provided to the employee on the employee’s first day of employment, or on January 1, 2024, whichever is later.
Importantly, as a condition of granting an employee’s request to use paid leave under the PLFAW Act, employers cannot require that the employee search for or find a replacement to cover the hours during which the employee will be using paid leave. Employers also will be prohibited from interfering with, denying or changing an employee’s work days or hours to avoid providing paid leave under the PLFAW Act.
Q: Under the PLFAW Act, at the end of designated 12-month period, will an employee be permitted to carry over any unused but accrued paid leave into the next 12-month period?
A: Those employers that choose to frontload and provide employees at least 40 hours of paid leave under the PLFAW Act on their first day of employment, or the first day of the designated 12-month period, will not be required to carry over an employee’s unused paid leave into the next 12-month period. Employers may require employees to use all paid leave prior to the end of the 12-month period or forfeit the unused paid leave (i.e. “use it or lose it”). Conversely, if an employer chooses to use the accrual method to comply with the PLFAW Act, then that employer will be permitted to carry over into the next 12-month period accrued but unused earned paid leave under the PLFAW Act. However, under the PLFAW Act, employers will not be required to provide an employee more than 40 hours of paid leave for use in the designated 12-month period.
Q: Under the PLFAW Act, upon separation of employment, will employers be required to pay employees for unused paid leave?
A: Employers are not required to pay employees accrued but unused paid leave provided under the PLFAW Act upon the employee’s termination, resignation, retirement, or other separation from employment (or at the end of the designated 12-month period), provided that the employer has not credited PLFAW Act leave to an employee’s paid time off bank or employee vacation account. If an employee is rehired within 12 months of the separation by the same employer, the employee’s earned paid leave under the PLFAW must be restored.
Q: When it goes into effect, will the PLFAW Act supersede collective bargaining agreements already in place that govern paid leave?
A: The PLFAW Act does not affect the validity or change the terms of any bona fide collective bargaining agreements (CBA) already in effect on January 1, 2024, addressing paid leave. For CBAs entered into after January 1, 2024, the parties may agree to waive the requirements under the PLFAW Act, but only if the waiver is set forth in clear and unambiguous terms.
Q: On or before January 1, 2024, will employers need to revise their existing paid leave policies if they already provide, at least, or more than, 40 hours of paid leave?
A: If an employer already has in place any type of paid leave policy that provides at least 40 hours of paid leave, the PLFAW Act states that an employer is not required to modify the policy, provided that the policy offers an employee the option, at the employee’s discretion, to take paid leave for any reason.
For example, if an employer offers paid leave only as part of its vacation policy and provides at least 40 hours of vacation time, but the policy only permits the employee to use the hours for vacation, on or before January 1, 2024, the policy will need to be revised to permit employees to use any or all of those 40 hours for “any reason of the employee’s choosing.”
Q: What, if any records, will the PLFAW Act require employers to maintain and for how long?
A: The PLFAW Act will require employers to create records documenting hours worked, paid leave accrued and taken, and remaining paid leave balances for each employee, maintain such records for at least three years, and allow the Illinois Department of Labor (IDOL) access to the records “at reasonable times during business hours to monitor compliance with the PLFAW Act.” Upon an employee’s request, employers that provide paid leave under the PLFAW Act on an accrual basis must provide notice of the amount of leave accrued or used. Failure to comply with the recordkeeping requirements will subject employers to a penalty of $2,500 per offense.
Q: What, if any, posting requirements will the PLFAW Act require of employers?
A: Employers will be required to post in a conspicuous place where other notices are customarily posted a notice that the IDOL will prepare, summarizing the requirements of the PLFAW Act, which also provides information on filing a charge. Separately, that information also must be provided to employees in a written document, written employee handbook or policy manual. This must occur on the employee’s start date, or 90 days after January 1, 2024, whichever is later. Employers that have workforces comprising a significant portion of workers who do not read or understand English will be required to request a notice in the appropriate language from the IDOL. Employers will be subject to a penalty of $500 for the first violation and $1,000 for each subsequent violation of this posting requirement.
Q: What, if any, remedies will be available to employees who believe their employer has violated their rights under the PLFAW Act?
A: The PLFAW Act will prohibit employers from taking adverse action against employees for (a): exercising or attempting to exercise their rights under the PLFAW Act; (b) opposing practices the employee believes to be in violation of the PLFAW Act; or (c) supporting others’ exercise of their rights under the PLFAW Act.
In addition, the PLFAW Act will prohibit employers from considering the use of paid leave under the PLFAW Act as a negative factor in any employment action that involves evaluating, promoting, disciplining or counting paid leave under a no-fault attendance policy.
The IDOL is responsible for administering and enforcing the PLFAW Act. Employees may file complaints with the IDOL within three years of the alleged violation. Employers found to violate the PLFAW Act are liable to affected employees for actual damages (i.e. the amount of the underpayment), compensatory damages, attorneys’ fees/costs, expert witness fees and civil penalties of not less than $500 and not more than $1,000.
We will continue to monitor and report on developments with to the PLFAW Act and provide any updates as they become available. Employers with questions about how this affects them may contact a member of Greensfelder’s Employment & Labor practice group to discuss.