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July 1, 2024
More than six months after the Chicago City Council passed it, the Chicago Paid Leave and Paid Sick Leave Ordinance (the “Ordinance”) goes into effect today, July 1, 2024. The Ordinance expands upon pre-existing leave rights for Chicago employees.
Leave Entitlement
Specifically, the Ordinance provides that covered employees (individuals who have worked at least 80 hours within any 120-day period within the geographic boundaries of the City of Chicago) are entitled to accrue up to 40 hours of paid leave, which can be used for any reason, in a 12-month period. These hours are in addition to the previously available right to 40 hours of paid sick leave per 12-month period.
Carryover
The Ordinance further provides that employees can carry over up to 80 hours of paid sick leave and up to 16 hours of paid leave from one 12-month period to the next, to be added to the leave the employee will earn in the next 12-month period.
Pay and Benefits During Leave
Employees must receive their regular rate of pay, as well as the opportunity to continue their health care, during their leave. The regular rate of pay for nonexempt employees will be calculated by dividing the employee’s total wages (not including overtime, premium pay, tips, gratuities, or commissions) by total hours worked in full pay periods of the prior 90 days of employment.
Accrual Method
Subject to certain restrictions, employers can choose to frontload the employees’ entitlement to leave rather than accrue it over the course of 12 months. If it chooses to frontload, however, the employer must ensure that its employees clearly understand that they have access to all of the paid time at the beginning of the 12-month period.
Limits on Leave Entitlement
While the entitlement to leave under the Ordinance is broad, it is not without limits. An employer can require employees to obtain “reasonable preapproval” before using paid leave. A company that chooses to deny a request for leave must do so immediately, in writing, and include the rationale for the denial. In deciding to deny a request, the employer should consider factors such as: (1) whether granting the leave would significantly impact business operations; (2) whether the employer provides a need or service critical to the health, safety, or welfare of the people of Chicago; (3) whether similarly-situated employees are treated the same for the purposes of reviewing, approving, and denying paid leave; and (4) whether the employee has meaningful access to use all of their paid leave over the 12-month period.
Notice Requirements
Employees must have ample notice of their rights. In addition to a posting requirement, employers must give notice of the Ordinance to any new employees in their first paycheck or prior to the employee’s first day of employment and then annually thereafter. Moreover, employers must provide their written paid time off policy to covered employees in the employee’s primary language.
Impact on Collective Bargaining Agreements
While the Ordinance will have a significant impact on Chicago workers, it does not change the terms of sick leave or time off policies in valid collective bargaining agreements that are in effect as of July 1, 2024. Thereafter, however, the requirements of the Ordinance could be waived in a collective bargaining agreement, provided that the waiver is explicit.
Employer Takeaways
Chicago employers and employees should be sure that they understand their respective rights and responsibilities under the Ordinance, as it will have a significant impact on the working relationship going forward. You can review the Chicago Department of Business Affairs and Consumer Protection final rules interpreting the Ordinance here.
This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice. Always consult an attorney with specific legal issues.
