Navigating Compliance: Illinois Paid Leave for All Workers Act Coming January 2024

Hey there, employers! Today, we’re diving into the nitty-gritty details of the Illinois Paid Leave for All Workers Act. We know keeping with regulations can be a daunting task but fear not! This blog post is here to guide you through the ins and outs of this act, ensuring you stay compliant while taking care of your hardworking employees. 

The Illinois Paid Leave for All Workers Act Unveiled!   

Beginning on January 1, 2024, all employers, big and small, must offer paid time off to all their employees. This is a law we expect to see gain popularity across the country in the coming years and be adopted by other states. So how much time are employers required to provide employees? The short answer is up to 40 hours. Obviously, you can offer more if you would like, but if you’re here for the guidelines on what is required, let’s break it down.   Employers must be aware that the new act extends its coverage to a wide range of workers, including part-time, temporary, and seasonal employees.  

Carryover vs. Front-loading- The choice is yours. 

First, there are two separate ways an employer can decide to distribute PTO. The first is to frontload the 40 hours to the employee at the beginning of the year or at the start of employment. The second option is that the employer can set an accrual rate at a minimum of 1 hour accrued for every 40 hours of work until the employee accrues 40 hours within the year.   

If the employer frontloads PTO, the employer can enforce a “use it or lose it” policy. Meaning if the hours are not used by the end of the year, they are gone. On the other hand, an employer who sets an accrual rate must allow the unused hours to roll over into the next plan year, allowing those hours to never expire.   

Regardless of how the employer chooses to distribute PTO, the employee starts accruing hours from the first day of employment but must wait until they hit 90 days before they are allowed to use any of the time.   

If at any time, the employee separates from the company for any reason, unused time does not have to be paid out to the employee. Now, if that employee chooses to come back, and separation has been less than 12 months, the employer is to reinstate the previously accrued and unused time to be available to the employee at the beginning of re-employment.   

Notice and Recordkeeping Requirements 

Written notice of the requirements must be posted in an area of the workplace that is easily visible to employees and must be in the employee handbook. The law states that employers can write their policy to require employees to take a minimum of two hours of leave at one time and provide a 7-day notice for leave that is considered foreseeable. Employers cannot require employees to provide documentation to use PTO.   

Recordkeeping is key here. Employers will need to keep a record of each employee’s hours worked, paid leave accrued and taken, and the remaining paid leave balance for at least three years. Upon request, employers should be prepared to provide employees with an updated and accurate PTO balance.  

Existing Policies 

If employers use their existing vacation or PTO policy to fulfill their Paid Leave requirements, unused time must be paid out when an employee leaves employment (as required for vacation and paid time off under the state law). 

If your company has an existing policy that meets or provides the minimum amount of leave required by the Act (40 hours) in a 12-month period and your employees can in fact take that amount of leave for any reason of their choosing, you do not need to modify the terms of your policy.     

Penalties Alert for Non-compliance 

An employee may file a complaint with the department alleging violation of the Act by completing and submitting a form provided by the DOL and submitting supporting documentation.  

Employees have up to 3 years to file a complaint with the Illinois Department of Labor. Additionally, employers might also have to pay attorney fees and other legal costs. 

If an employer violates any provision of the Act, then the employer can be subject to a civil penalty of up to $2,500 per offense.  

An employer that violates this Act is liable to any affected employee for damages in the form of the actual underpayment, compensatory damages, and a penalty of not less than $500 and no more than $1,000.

Now What? 

Here are some action items to keep you in compliance. 

• Provide written notice to employees by March 31, 2024, or upon hire, whichever is later. 
• Add a Paid Leave policy to your handbook or, if you already have a vacation leave or PTO policy that you want to use to comply with the law, review it, and update as needed. 
• Include the Paid Leave poster from the Illinois Department of Labor. 

Frequently Asked Questions (FAQ’s) that we are hearing from our customers in the state of Illinois. 

#1- My company already offers employees 40+ hours of paid leave. Does my policy need to comply with the other requirements of the Act? (See Section 20(b) of PLAWA) 

If your company has an existing policy that meets or provides the minimum amount of leave required by the Act (40 hours) in a 12-month period and your employees can in fact take that amount of leave for any reason of their choosing, you do not need to modify the terms of your policy.     

IDOL expects to further clarify how existing policies meet expectations of the law in rulemaking.  

 #2. Can I deny an employee’s use of paid leave under this law? (Put differently, is an employee allowed to take leave under this Act in any circumstance? 

Nothing in the Act prohibits an employer from adopting a policy that establishes some parameters for taking leave, and limited reasons the employer may deny leave for operational necessity. Any such policy must be communicated to employees, applied equally to all employees, and conform with other applicable state and federal laws.   

IDOL will seek to provide further clarity regarding this issue in rulemaking. 

#3. Does an unlimited PTO Policy comply with the Act? 

To determine whether a specific employer’s unlimited PTO policy is compliant with this Act would require a fact-specific analysis upon complaint or formal investigation. One factor the Department would consider in such an analysis would be whether the employee in question actually did, or had the ability to, take 40 hours of paid leave in a year for any reason.  Another factor would be whether the employees were paid their regular rate of pay for the time they took off. This is not an exhaustive list of factors the Department may consider in whether an unlimited PTO complies with the Act. 

#4. Can an employer pay out accrued time at the end of the year, rather than having it carry over? 

Under the Act, employers are not obligated to pay out unused accrued leave, however, employees are entitled to carry over that accrued leave to the next 12-month period. An employer may enact a policy that provides for pay out of accrued paid leave at the end of the 12-month period. However, both the employer and individual employee need to agree to this in writing each year. 

At HireLevel, we can keep your business in compliance with PTO tracking through our leave management software. How will you track accruals? Do you have a system that can keep you in compliance when it comes to record keeping for each employee for at least 3 years? Our timekeeping software can turn time-consuming processes into streamlined, efficient, and compliant business practices that will allow you to focus on the important items that need your attention the most. We will be with you every step of the way to ensure your correct time-tracking policies are set up during implementation to get you off to a great start. 

Contact us today for the most up to date employer FAQ and to schedule a consultation with our team! 

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