Yesterday, Illinois Governor Pritzker signed into law the “Paid Leave for All Workers Act,” which will allow most Illinois employees up to 40 hours of paid leave per year, for any purpose, starting on January 1, 2024. This will represent a sea change for many employers in the state. While a number of states in recent years have begun to require paid leave for illnesses or other specific reasons, Illinois will become just the third state, after Maine and Nevada, to adopt paid leave that can be used for any reason.

Key provisions of the new law are summarized below.

Covered Employers

Private employers are covered under the Act if considered an “employer” under the Illinois Wage Payment and Collection Act. The State of Illinois, state or local government or government agencies, and political subdivisions of the State or local government also are covered by the Act.

School districts and park districts are generally excluded from coverage. The Act also does not cover employers that are covered by a municipal or county paid leave ordinance, like the Chicago Minimum Wage and Paid Sick Leave Ordinance or the Cook County Earned Sick Leave Ordinance.

Covered Employees

All employees (including domestic workers) are covered under the Act, except for some narrow exceptions.

Part-time student workers at a college or university, short-term employees of an institution of higher education, and employees covered by the Railroad Unemployment Insurance Act or Railway Labor Act are not covered by the Act. Employees in the construction industry, or working for an employer that “provides services nationally and internationally of delivery, pickup, and transportation of parcels, documents, and freight,” who are covered by a collective bargaining agreement are also not covered by the Act.

Employees who are covered by a collective bargaining agreement (CBA) on January 1, 2024, also will be excluded from the Act’s coverage for the duration of that CBA. For collective bargaining agreements reached after January 1, 2024, the CBA must explicitly waive the Act’s requirements in order for the employees to remain excluded from coverage under the Act.

Accrual and Use

Employees accrue one hour of paid leave for every 40 hours worked, and up to 40 hours of paid leave in a 12-month period, or a pro rata amount for part time employees or employees starting in the middle of the designated 12-month period. Fair Labor Standards Act (FLSA) overtime-exempt employees are treated as working 40 hours per week, unless their weekly schedule provides for fewer weekly hours.

The first 12-month accrual period will begin on January 1, 2024, but employers are not bound by a calendar year accrual. An employer can set its own 12-month period for accrual and use so long as it provides advance written notice to employees and, for new hires, designates the period in writing at the time of hire.

Employees can begin taking paid leave 90 days after hire, or on March 31, 2024, whichever is later. Paid leave may be taken by an employee for “any reason of the employee’s choosing.” Employees do not need to provide their employer with a reason for leave and cannot be required to provide documentation supporting the need for leave. An employee may choose to use paid leave prior to using other forms of leave provided by their employer or required by law. Employers can designate a minimum increment for use of leave, so long as the minimum increment does not exceed two hours.

Paid leave is paid at the employee’s regular hourly rate of pay. An employer is required to provide at least minimum wage for paid leave hours, even for employees who typically rely on tips or commissions as a portion of compensation.

Notice

Employers can institute reasonable notice requirements for employees seeking to take paid leave, but must provide employees with a written policy with the procedural requirements for providing notice. If leave is foreseeable, the employer can require the employee to provide seven calendar days’ notice before the leave is to begin. If the leave is not foreseeable, the employer can require the employee to provide notice “as soon as is practicable after the employee is aware of the necessity of the leave.” An employer cannot require an employee to find someone to cover their work as a condition of taking paid leave.

Carryover and Pay Out

At the end of the designated 12-month period, an employee’s accrued but unused paid leave will carry over into the following year. However, an employee’s carrying over paid leave from one 12-month period to the next will not impact the 40-hour usage cap, unless the employer elects otherwise.

Accrued but unused paid leave does not need to be paid out upon the end of the 12-month period or upon separation from employment. If an employee separates from employment and returns within a 12-month period, the employee is entitled to the accrued but unused paid leave left behind at the time of separation.

Frontloading and Existing Leave Policies

If, at the start of the designated 12-month period or the time of hire, an employer provides employees with a bank of their entire annual paid leave (40 hours for full-time employees, or a pro rata share for part-time employees or employees starting in the middle of a benefit year), the employer can forego the accrual and carryover requirements. Essentially, if an employer decides to frontload the 40 hours of leave at the start of the leave year, there is no need to calculate accrual based on hours worked or to carry unused hours over from year-to-year. The 40 hours will be sufficient to meet the Act’s requirements.

If an employer currently provides paid leave that meets or exceeds the requirements of the Act (i.e., provides at least 40 hours per year that can be taken for any reason), the employer need not modify its paid leave policies. Although leave that is specifically designated as paid leave is not required to be paid out at termination, the use of an existing leave policy to meet the Act’s requirements does not nullify Illinois’s requirement that earned but unused vacation be paid out at termination.

Recordkeeping and Posting

Employers are required to create and preserve for three years records documenting each employee’s (i) hours worked, (ii) paid leave accrued and taken, and (iii) remaining paid leave balance. Employers must provide access to the information upon request by an employee or the Illinois Department of Labor (IDOL).

The IDOL will produce a notice summarizing the requirements of the Act, which must be posted with other workplace posters and notices. If an employer has an employee handbook or written leave policy, the notice must be included in the policy or handbook. If a “significant portion” of an employer’s workforce is not literate in English, the employer is required to notify the IDOL, which will produce a notice in the appropriate language. “Significant portion” is not defined in the Act.

Anti-Retaliation

The Act prohibits employers from retaliating against an employee for taking or attempting to take paid leave under the Act, opposing practices the employee believes to be in violation of the Act, or supporting the rights of others under the Act. The Act also prohibits consideration of an employee’s use of paid leave as a negative factor in an employment action.

Remedies for Violations

Complaints alleging violations of the Act can be filed with the IDOL within three years of the alleged violation. A finding of a violation could result in damages to the employee equaling actual underpayment, compensatory damages, a penalty of between $500 and $1,000, and equitable relief. A violation could also result in civil penalties of $2,500 per offense, to go to a Paid Leave for All Workers Fund designed to fund enforcement of the Act.