The Illinois legislature kicked off the new year with the passage of Senate Bill 208 (SB208), also known as the Paid Leave for All Workers Act (the “Act”). Illinois Governor Pritzker issued a statement indicating his intention to sign the Act into law. Once signed into law by the Governor, the Act will require all covered Illinois employers to provide paid leave to covered employees for any purpose effective January 1, 2024. Accordingly, Illinois is expected to become the third state to require paid leave for any reason.

Starting January 1, 2024, Illinois employees will be entitled to earn and use a minimum of 40 hours of paid leave (or a pro rata number of hours) during a twelve-month period as designated by the employer. It is up to the employer whether or not to frontload the entire 40 hours of leave on the first day of employment or the first day of a designated twelve-month period, or have employees accrue leave at the rate of one hour of paid leave for every 40 hours worked, up to a minimum 40 hours of paid leave or more if the employer chooses to provide more than 40 hours of paid leave.

Under the Act, exempt employees are deemed to have worked 40 hours in each workweek for purposes of accrual, unless their regular workweek is less than 40 hours. Paid leave starts to accrue on the employee’s first day of work, or January 1, 2024, whichever is later. Employers may require employees to wait until the later of 90 days from their start date, or 90 days from January 1, 2024, to use leave under the Act. Employees can determine how much paid leave to use, but the employer can set a reasonable minimum increment not to exceed two hours. If an employee’s shift length is less than two hours, the minimum increment of use must be the length of the employee’s scheduled shift.

Employers who choose to frontload and provide employees a minimum 40 hours of paid leave under the Act on their first day of employment, or the first day of the designated twelve-month period, are not required to carry over an employee’s unused paid leave into the next twelve-month period. If the leave is frontloaded, employers may require employees to “use-or-lose” all paid leave before the end of the twelve-month period or forfeit the unused paid leave. Under the accrual method, accrued but unused leave must carry over into the next twelve-month period under the Act. However, employers will not be required to provide an employee more than 40 hours of paid leave for use in the designated 12-month period.

Employers are expressly prohibited from requiring employees to give a reason for taking leave, or requiring documentation or certification of the need for leave. However, if the need for leave is foreseeable, employers can require employees to give up to seven calendar days’ notice of such leave if the employer provides employees with a written policy describing such notice procedure and requirement. When leave is not foreseeable, employees must provide notice as soon as possible.

Upon termination, separation, resignation, or retirement of an employee, employers will not be required to pay out unused paid leave, provided the employer has not credited leave to an employee’s paid time off bank or employee vacation account. If an employee is rehired within twelve months of the separation by the same employer, the employee’s earned paid leave under the Act must be restored.

The Act prohibits Illinois employers from interfering with, restraining, denying, changing scheduled work days or hours to avoid paid leave, or disciplining an employee for exercising any right under the Act.

Remedies

The Act authorizes the Illinois Department of Labor (IDOL) to administer and enforce the Act and provides for the imposition of civil penalties. The Act also authorizes individuals to file civil actions with respect to violations within three years of the alleged violation. Employers found to be in violation of the Act are subject to actual damages, compensatory damages, attorneys’ fees/costs, and civil penalties, as well as equitable relief.

Employers Covered under the Act

The Act covers all employers in Illinois (including state and local government) except for school districts, park districts, and employers covered by municipal or county ordinances in effect before January 1, 2024 that provide for paid leave or paid sick leave. However, after January 1, 2024, any municipal or county ordinance enacted or amended will be required to comply with the Act or provide greater protections to employees.

The Act covers all employees in Illinois, except for employees covered by a collective bargaining agreements, employees subject to the Railway Labor Act, short-term employees of higher education institutions, and students employed on a part-time, temporary basis by the college or university they attend. After January 2024, the Act’s requirements can only be waived in a bona fide collective bargaining agreement if the agreement contains a clear and unambiguous waiver.

Additional Requirements for Covered Employers

Posting. Employers must post in a conspicuous place a notice (to be prepared by the IDOL) summarizing the requirements of the Act, as well as information on filing a charge. Such information must also be provided to employees in a written document, such as an employee handbook or policy manual, 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.

Records. Employers must also create and maintain records documenting hours worked, paid leave accrued and taken, and remaining paid leave balances for each employee, for at least three years. Employers must allow the IDOL access to such records. Upon request from an employee, employers must provide notice of the amount of leave accrued or used. Employers will be subject to a penalty of $2,500 per offense of the Act’s recordkeeping requirements.

How Covered Employers Should Prepare for 2024

 All signs indicate the Act will be signed into law, therefore, covered employers in Illinois should start preparing now by reviewing the paid leave policies currently in place. Employers with any type of paid leave policy providing at least 40 hours of paid leave are not required to modify their policy, so long as the employee, at their discretion, can take paid leave for any reason. Consider drafting an Illinois leave policy specifically tailored to the Act, and review any retaliation, attendance, and discipline policies currently in place to prevent potential retaliation against employees for taking leave under the Act.

If you have any questions regarding the issues raised in this client alert, please contact your Labor and Employment counsel at Smith, Gambrell & Russell, LLP.