Under the new law, covered employees accrue one hour of paid leave for every 40 hours worked, for up to a total of 40 hours earned in any designated 12-month period

On March 13, 2023, Illinois Governor J.B. Pritzker signed the Paid Leave for All Workers Act (PLFAW Act), which requires Illinois employers to provide covered employees up to 40 hours of annual paid time off beginning January 1, 2024. Championed by supporters as requiring employer-provided paid time off for any reason, Illinois becomes just the third state with a mandatory paid leave law, joining Nevada and Maine. The Illinois Legislature also is considering additional new employer obligations.

What Is the PLFAW Act?

Under the new law, covered employees accrue one hour of paid leave for every 40 hours worked, for up to a total of 40 hours earned in any designated 12-month period. Employers may also satisfy the paid time off requirement by granting, or “frontloading,” all 40 hours of paid leave at the beginning of the designated benefit year. Employees must be permitted to carry over up to 40 hours of unused paid leave to the next benefit year, except where an employer frontloads the full 40 hours.

Coverage

The PLFAW Act applies to nearly all private employers and their employees in Illinois, regardless of size. It does not apply to:

• School district or park district employers;
• Students employed on a temporary, part-time basis by the college or university in which they are enrolled;
• Certain short-term employees of higher education institutions;
• Employees covered by collective bargaining agreements in the construction or national or international delivery or transportation industries;
• Federal railroad employees; and
• Employers covered by municipal or county paid leave ordinances in effect on January 1, 2024 (e.g., Chicago, certain municipalities in Cook County).

The PLFAW Act requirements also may be waived in collective bargaining agreements entered into after July 1, 2024, by including a clear and unambiguous waiver.

Notice and Use Procedures

Employers may limit the right to use paid leave until after an employee reaches 90 calendar days of service, or March 31, 2024, whichever comes later. Employers also may require employees to provide notice up to seven days in advance of using paid leave. However, if the need for leave is unforeseeable, the PLFAW Act only requires that employees provide notice as soon as practicable. Employers may establish a minimum increment of use, which cannot exceed two hours or the duration of an employee’s shift, whichever is shorter. Unlike other leave laws, employers may not require employees to provide a reason, certification or documentation to support the request for paid leave under the PLFAW Act. Employers also may not require employees to find a replacement to cover their PLFAW paid leave. An employer’s notice requirements or other use procedures, as well as any subsequent changes, also must be outlined in written company policy.

Payment

Employees must receive their regular hourly rate of pay when using PLFAW paid leave. Employers may exclude commissions or gratuities from the paid leave rate, so long as the paid rate is at least minimum wage. Upon termination, the PLFAW Act does not require that employers compensate employees for unused PLFAW leave. This is a departure from the Illinois Wage Payment and Collection Act, which requires employers to pay out earned but unused vacation or paid time off. To take advantage of this provision, employers must maintain employees’ PLFAW paid leave balances separately from other vacation or PTO balances. Any earned but unused PLFAW paid leave time must be reinstated where a company rehires an employee within 12 months of their termination.

Notice and Recordkeeping Requirements

The PLFAW Act also imposes notice and recordkeeping requirements on covered employers. Covered employers must post a multilingual notice (where appropriate for the workforce) that will be available from the Illinois Department of Labor (IDOL) in their workspaces and include in their employee handbook or a written policy. Additionally, covered employers must retain records related to employees’ paid leave accrual and use for three years, and make those records available upon request by the IDOL. Employers also must provide PLFAW paid leave balances to employees upon request.

No Retaliation and Enforcement Actions

Employers may not retaliate against any employee for exercising rights available under the PLFAW Act, for opposing an employer’s practices or for supporting another employee’s exercise of PLFAW Act rights. Employers also may not consider an employee’s use of PLFAW paid leave as a negative factor in making any employment decisions. Any violations of the PLFAW Act must be filed with the IDOL within three years of the alleged violation. An employer’s liability for violations can include the employee’s lost wages, compensatory damages, penalties of $500 to $1,000 per violation, as well as attorneys’ fees and costs. The IDOL also may pursue enforcement actions against employers, which may include additional civil penalties of $2,500 per offense.

Next Steps

Illinois employers should begin reviewing their existing PTO, vacation and paid sick leave policies to determine whether they satisfy the PLFAW Act and, if not, amend or supplement those policies and related procedures prior to January 1, 2024. An employer’s existing policy that provides employees with at least 40 hours of paid time off to use for any reason may satisfy the PLFAW Act, but many typical limitations on use (e.g., advance notice, documentation for longer absences, providing reason for leave, etc.) may need to be amended.

Other Proposed Bills That May Impact Illinois Employers in 2023 and Beyond

SB 173

This bill would amend the Right to Privacy in the Workplace Act. Employers who electronically monitor their employees would be required to give prior written notice of the types of electronic monitoring that may be used, unless the employer has reasonable grounds to believe the employee is violating the law or company policy and that electronic monitoring will produce evidence of this misconduct. Under the proposed amendment, types of monitoring for which notice to the employee would be required include both audio and video recordings, as well as GPS or other movement tracking devices, computer keylogging programs and other software that takes activity screenshots or webcam photos, etc.

HB 1530 and SB 1234

Recently introduced in both chambers, this legislation would create the Family and Medical Leave Insurance (FMLI) Program effective January 1, 2024. Under the FMLI Program, eligible employees would collect family and medical leave insurance benefits under an employer-funded, state-administered program that would operate similarly to the state unemployment compensation benefits program. If passed, the FMLI Program would begin a phase-in period with employer funding to be collected beginning January 1, 2025, at an anticipated employer contribution rate of 0.78 percent total employee wages reported to the state. Employee claims for benefits would be accepted and processed after funding has been established. If passed, Illinois would become the 10th state to establish a paid family and medical leave insurance benefits program.

HB 2244

This bill would amend the Illinois Human Rights Act to prohibit employers from making employment decisions on the basis of an individual’s weight and size. The proposed amendment would also establish that a company providing services to the public (e.g., as a public accommodation) that denies services to a person on the basis of the individual’s weight or size would be committing a civil rights violation.

HB 1604

This bill would amend the Day and Temporary Labor Services Act to provide that a day or temporary laborer who is assigned to work at a third-party client for more than one week must be paid no less than the average pay rate and equivalent benefits as the client-employer’s directly hired employees performing the same work.

Duane Morris will monitor the above bills’ status between now and the end of the legislative session, and continue to provide analysis and insight through our Alerts.

For More Information

If you have any questions about this Alert or have specific questions and concerns related to your operations, please contact Daniel O. Canales, Jennifer Long, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.