On Jan. 10, 2023, the Illinois legislature passed the Paid Leave for All Workers Act (the “Act”), S.B. 208. Governor J.B. Pritzker is expected to sign the Act into law soon. The Act will go into effect on Jan. 1, 2024. Once this new law goes into effect, Illinois will be one of only a few states, including Maine and Nevada, that mandate employers offer paid leave for any reason (or no reason). This article addresses some highlights from the new law and key information for employers to understand.

Details about the Leave

• Amount: Under the Act, an employee who works in Illinois is entitled to up to 40 hours of paid leave for a 12-month period. The paid leave accrues at a rate of one hour of paid leave for every 40 hours worked. Employees who work less than 40 hours per week accrue their paid leave based on their regular workweeks.
• Employee Choice: Employees can take their accrued paid leave for any reason they choose. Employers cannot require employees to provide a reason. Similarly, employers cannot require employees to provide documentation as proof or to justify the paid leave. This provision in the Act also appears to bar employers from requiring employees to provide documentation establishing that their use of paid leave was unforeseeable.
• Existing Paid Leave Policies: Employers who already provide a paid leave policy that meets the minimum requirements of the Act do not need to modify their existing policy as long as the existing policy provides that the employee may take paid leave for any reason.
• Frontloading: Employers can choose to provide a lump sum of the 40 hours of paid leave (or pro rata amount earned in one year) at the beginning of the 12-month period. Employers that frontload can require their employees to use all of their paid leave by the end of the 12-month period or forfeit any remaining time. Otherwise, employees would be permitted to carry over unused accrued paid leave time into the next 12-month period under the Act. Employers are only required to provide up to 40 hours in each 12-month period.
• Minimum Increments: Employees are generally free to determine the amount of paid leave to use at one time, but employers can set a reasonable minimum increment, as long as the minimum increment does not exceed two hours per day.
• 12-month Period: The employer can designate any 12-month period in writing at the time of hiring an employee. However, if the employer subsequently adjusts the 12-month period, it must provide notice to the employee in writing and it cannot negatively affect the employee’s eligible accrual rate and available paid leave. If the employer adjusts the 12-month period, it must also provide the employee with documentation of the hours worked, paid leave accrued and taken, and the remaining paid leave balance.
• Waivers: Any agreements by an individual employee to waive his or her rights under the Act are void as against public policy.
• However, the Act does not affect the validity of or change the terms of any collective bargaining agreements in effect on Jan. 1, 2024. Any collective bargaining agreements that go into effect after Jan. 1, 2024, can waive the requirements of the Act only if the waiver is set forth explicitly in clear and unambiguous terms.

Employee Notice Requirements

• Employee Request: An employer must provide paid leave to an employee upon an oral or written request.
• Employer Paid Leave Policy Notification Requirements: Notwithstanding the requirement outlined above, an employer can maintain a reasonable paid leave policy notification requirement as long as it complies with the following requirements:
• If the leave is foreseeable, the employer may require the employee to provide seven calendar days’ notice before the date the leave is expected to begin.
• If the leave is not foreseeable, the employer can require the employee to provide notice as soon as practicable after the employee is aware of the necessity of the paid leave. An employer with this requirement must provide a written policy outlining the procedures for the employees to follow to provide notice.
• An employer cannot require an employee taking paid leave to search for or find a replacement worker to cover the hours they are on paid leave.

Who is Covered?

The Illinois General Assembly stresses in the Act that the provisions should be “liberally construed in favor of providing workers with the greatest amount of paid time off from work and employment security.” The Act adopts the same meaning of “employee” as the Illinois Wage Payment and Collection Act, with the addition of domestic workers.

Accordingly, this Act covers a broad range of employees and only excludes employees covered by the federal Railroad Unemployment Insurance Act or Railway Labor Act, certain higher education employees, and certain independent contractors. The Act also does not apply to employees covered by a bonafide collective bargaining agreement in the construction industry and the logistics industry where the employer offers national and international delivery, pickup, and transportation of parcels, documents, and freight. Employees with unique requirements include:

• State and municipal employees: Employees of the state of Illinois and local governments are required to comply with the Act unless they are bound by a municipal or county ordinance that requires them to provide their employees with any form of paid leave. The municipal or county ordinance must be in effect by Jan. 1, 2024, for this exception to apply.
• If a municipal or county employer enacts or amends a local ordinance that provides paid leave after Jan. 1, 2024, the employer will only be exempt from the Act if the benefits provided for under the ordinance are greater than or equal to the rights afforded under the Act.
• Domestic Workers: Under the Act, a domestic worker is a person who performs housekeeping, house cleaning, home management, nanny services, caregiving, laundering, cooking, companion services, chauffeuring, and household services in a private home. This also includes independent contractors, sole proprietors, and partnerships. Domestic workers performing housekeeping, house cleaning, home management, nanny services, laundering, cooking, chauffeuring, and household services in a private home qualify for the up to 40 hours of paid leave each 12-month period as long as they are working eight hours per week or more in the aggregate each week (even if for different employers/households). If this is the case, it appears that each employer will be jointly responsible for the accrued paid leave.
• If an employer requires evidence of hours worked to confirm that the domestic worker has worked or is scheduled to work for eight hours or more in the aggregate for a given week, a signed statement by the domestic worker stating this will suffice. An employer cannot require more than one signed statement from the domestic worker each calendar quarter. The employer is also required to give the domestic worker written notice of this request and allow no fewer than seven days or until the next scheduled workday, whichever is greater, for the domestic worker to comply. The employer also cannot deny paid leave pending submission of the signed statement.
• Employees customarily and usually paid gratuities or commissions: The Act requires employees to be paid their hourly rate of pay during their paid leave. However, the Act also addresses paid leave for employees in Illinois who work in occupations where the base pay is less than minimum wage because they customarily and usually receive gratuities or commissions. In this case, the employer must pay at least the full minimum wage in the jurisdiction where the employees work during their paid leave.
• Temporary and part-time workers: The Act also applies to temporary and part-time workers. All employees will receive one hour of paid leave for every 40 hours worked.
• Out-of-State Employers: Out-of-State employers with employees working remotely in Illinois should consult with their labor and employment counsel to determine if they are covered by the Act. There are nuances associated with remote workers that are case specific and hopefully, will be addressed by the Illinois Department of Labor.

Requirements for Handling Unused Paid Leave

• Separation: The Act does not require employers to reimburse employees for any unused paid leave upon retirement, separation, termination, or resignation, unless the paid leave under the Act is credited to an employee’s paid time off bank or employee vacation account.
• Similarly, the Act does not require employers to reimburse employees for any unused paid leave at the end of a benefit year.
• Transfers: If an employee is transferred to another division, entity, or location of the same employer, the employee is entitled to all paid leave accrued prior to the transfer.
• Re-Hire: If an employee separates from the employer and is re-hired within 12 months, the employer must reinstate any previously accrued paid leave that the employee did not use.

Key Dates

• Accrual Commencement: An employee’s paid leave begins to accrue at the commencement of their employment or on Jan. 1, 2024, whichever is later.
• Use of Leave: Employees are entitled to begin using their accrued paid leave 90 days following the commencement of their employment or March 31, 2024, whichever is later.

Employer Notice Requirements

• The Illinois Department of Labor (the “Department”) will prepare and distribute a notice, which will summarize the requirements of the Act.
• Employers must post these notices in a conspicuous place on the premises where the employer customarily posts notices to employees.
• If the workforce has a significant number of workers who are not literate in English, the employer must notify the Department, which will prepare a notice in the appropriate language.
• Employer can also proactively request notices in other languages from the Department.

Anti-Retaliation

• Protected Conduct. The Act prohibits employers from retaliating against employees who engage in protected conduct. This includes taking action or threatening to take action against employees for exercising their rights afforded by the act or opposing a practice they believe is a violation of the Act. The Act also prohibits retaliation against employees who support others who exercise their rights under the Act.
• Effect on Employment Actions. Employers cannot take an adverse employment action (including evaluations, promotion decisions, and discipline) against an employee because that employee used paid leave provided under the Act.
• Impact on No-Fault Attendance Policies. The Act also prohibits employers from counting paid leave under a No-Fault attendance policy.