On March 13, 2023, Governor J.B. Pritzker signed the Paid Leave for All Workers Act in Illinois, introducing a series of new requirements that will reshape the paid leave landscape in our state.
Starting January 1, 2024, this legislation will usher in substantial changes to paid leave regulations, affecting the policies of nearly all employers. We understand the significance of these alterations and their potential implications for your business. To help ensure compliance, we are providing you with information on key components of the new Paid Leave requirements. We also recommend keeping a close watch on the forthcoming guidance from the Illinois Department of Labor.
Coverage:
- The Act applies to all employers in Illinois, including individuals, partnerships, corporations, and employment and labor placement agencies.
- It includes the State of Illinois, local governments, agencies, and political subdivisions as "employers."
- The Act generally covers all individuals working in Illinois, except independent contractors and state/federal government employees.
- Certain exemptions apply, such as employees covered by the federal Railroad Unemployment Insurance Act or the Railway Labor Act, temporary college or university student employees, certain short-term employees of higher education institutions, and construction industry employees under a bona fide collective bargaining agreement.
Leave Requirements:
- Employees are entitled to use paid leave "for any reason of their choosing."
- This law applies to all full-time and part-time employees.
- Starting January 1, 2024, or after 90 days of employment (whichever is later), covered employees must accrue at least one hour of paid leave for every 40 hours worked, up to 40 hours of paid leave per 12-month period.
- Eligible employees may decide when and how much leave they use, but employers can set a minimum leave increment of up to two hours per day.
Carryover and Front-loading:
- Employers can choose between an accrual system or a front-loading system.
- The accrual system allows leave to gradually build to a minimum of 40 hours over a 12-month period, with carryover of unused leave.
- The front-loading system provides employees with 40 hours of paid leave at the start of the 12-month period, without carryover (employers may enforce "use it or lose it" policies).
Pay Requirements:
- Employees must be paid their normal hourly rate during paid leave.
- Employees paid gratuities or commissions will receive at least the minimum wage in their jurisdiction of employment.
- Employers are not required to pay out unused paid leave upon separation unless credited to an employee's paid time off or vacation banks.
Notice and Recordkeeping Requirements:
- Employers must post notice of the Act's requirements in a conspicuous place and include it in the employee handbook (if applicable).
- Employers should maintain records of hours worked, accrued and taken paid leave, and remaining paid leave balance for at least three years.
- Any changes to paid leave policy notification requirements must be communicated to employees within five calendar days.
Enforcement and Remedies:
- The Illinois Department of Labor (IDOL) is responsible for administering and enforcing the Act.
- Employees can file complaints with the IDOL within three years of an alleged violation.
- Employers may face civil suits by affected employees for damages and penalties ranging from $500 to $1,000 per violation.
- Employers could also be subject to a $2,500 civil penalty for each separate offense.
If you have any questions, please feel free to contact us at Porte Brown for more information.
