- Illinois Department of Labor has published final regulations
implementing the Illinois Paid Leave for All Workers Act, which, as
of January 1, 2024, requires most Illinois employers to provide up
to 40 hours of paid leave per year for any purpose. - The final regulations affirm a broad carveout for existing
policies that provide 40 hours of paid leave (or a prorated
equivalent) to be used for any reason. - They also confirm that setting a carryover cap for the paid
leave bank is permitted.
The Illinois Department of Labor (IDOL) has published the final regulations interpreting the Illinois Paid Leave for All Workers Act (the
“Act”) which took effect four months earlier on January
1, 2024. The final regulations took effect immediately on April 30,
2024. In the regulations, IDOL has backed off from some of the
positions taken in the initial set of proposed regulations from November
2023, but has re-affirmed other interpretations of the Act. The
regulations also include a number of examples to help clarify the
meaning and impact of these rules. Since it is likely that Illinois
employers already made compliance decisions for January 1, they
should revisit their policies and procedures to ensure that their
selected approaches are still warranted in light of the final
regulations.
Qualifying Pre-Existing Paid Leave Policies
The Act includes broad carveout language for employers with
pre-existing paid leave policies that provided employees at least
40 hours of paid leave (or the prorated equivalent) and offered
employees the option, at their discretion, to take paid leave for
any reason. If an employer’s policy meets these qualifications,
the Act indicates that the employer would not need to modify its
paid time off policy to comply with the Act. 820 ILCS
192/20(b).
The proposed regulations suggested that, to be considered a
qualifying pre-existing policy, it needed to provide at least
40 hours of paid leave to “all” employees. In the
final version of the regulations, however, IDOL has clarified that
the policy must satisfy the minimum amount of leave
required by the Act. The impact here is twofold. First, a policy
could qualify as a pre-existing paid leave policy even though
part-time or temporary employees do not receive at least 40 hours
of paid leave per year, so long as the amount of time that they do
receive satisfies the proration requirements of the Act (one hour
for every 40 hours worked). Second, to maximize flexibility, an
employer can lawfully maintain two paid leave policies – a
pre-existing PTO policy for a portion of its workforce, and a
statutory leave benefit for the PTO-ineligible employees.
The final regulations stipulate that a pre-existing policy must
have been enacted prior to January 1, 2024, and have been in effect
on January 1, 2024, to qualify. However, employers may modify their
pre-existing policies after January 1 so long as they still provide
the minimum amount of time required by the law. The final
regulations do not seem to contemplate any ability for employers to
retroactively adjust their policies now that they have the benefit
of this guidance.
The final regulations included examples on pre-existing paid
leave policies that shed additional light for employers on the
scope of this carveout. Key takeaways from those examples
include:
- The paid leave benefit can be called “vacation” so
long as the time is usable for any reason.
- A policy that requires advance notice and manager pre-approval
would still qualify so long as the leave could be taken for any
reason.
- A paid sick time policy could qualify so long as the employer
modified the policy prior to January 1, 2024, to allow use of the
paid sick time for any reason.
Accrual and Carryover of Paid Leave
Employers will be relieved to see an adjustment in the final
regulations on the issues of both accrual and carryover.
The Act requires that paid leave accrue at a rate of one hour
for every 40 hours worked.
Per the proposed regulations, the calculation must be made on a
fractional basis based on 15-minute work increments. For example,
if an employee worked 75 hours in a biweekly pay period, they would
accrue 1.875 hours of paid leave. However, the proposed regulations
required that work periods of fewer than 15 minutes be rounded up
to 15 minutes, meaning that employees would have accrued leave
faster than the Act requires. While IDOL reaffirmed the requirement
for fractional accrual in the final regulations, it has resolved
the rounding issue, clarifying that “work periods must be
counted on a minute-by-minute basis or may be rounded up to the
next 15 minutes. An employer may not round down time
worked.”
If an employer provides paid leave to employees by accruing the
time (compared to frontloading), the Act requires carryover of
accrued but unused leave from one 12-month period to the next.
However, the Act was silent on whether employers could ever impose
a carryover cap. The final regulations confirm that a 40-hour
carryover cap can be imposed by employers through a valid written
policy (consistent with the other provisions of the Act and final
regulations). (Employers should, however, make note of the policy
requirements highlighted below.)
Frontloading Paid Leave
Employers frontloading paid leave in lieu of accrual also
received some welcome news through the final regulations:
- The frontload grant can be reduced for part-time employees at a
pro rata amount consistent with the employee’s anticipated work
schedule for that year; and
- The frontload grant can be reduced for mid-year hires at a pro
rata amount consistent with the employee’s anticipated work
schedule for that year.
When calculating the pro rata amount, employers should ensure
that the number of hours is not less than what the employee would
be entitled to earn at a rate of one hour for every 40 hours
worked, during the time period at issue.
The Act was unclear as to whether frontloading a prorated amount
of hours for part-time employees would alleviate the need to carry
over unused time from one 12-month period to the next. The final
regulations still do not resolve the issue, and instead simply
state: “Employees who receive frontloaded paid leave at the
beginning of the 12-month period, in accordance with Section
200.220, are not entitled to carry over paid leave time from one
12-month period to the next unless the employer allows them to
carry their paid leave time over. See Section 15(c) of the
Act.”
The final regulations confirm that the employer may provide some
of its employees paid leave in the form of frontloading, and other
employees paid leave via accrual.
Using Paid Leave
Under the Act, employees can determine how much paid leave they
want to use, except that employers may set a minimum increment of
at least two hours per day. The proposed regulations originally
indicated that employees could use their paid leave in minimum
intervals of one hour, so long as they used at least two hours in a
single workday. In the final regulations, IDOL removed the
provision about one-hour minimum intervals of leave
but did retain the example on point, suggesting
that this remains their interpretation of the law:
Example: Employee C’s children’s before and after school
care is canceled. Employee C’s employer requires a minimum
usage of two hours of paid leave per day. Employee C may take one
hour of paid leave in the morning and one hour of paid leave in the
afternoon to do drop-off and pick-up.
Not only are employees entitled to determine how much time they
need to use to cover the absence, but the final regulations
reaffirm that it is the employee’s choice whether and when to
apply paid leave to an absence in the first instance.
Example: Employee A has accrued a sufficient number of hours
under the Act to take a paid leave day. Employer A has scheduled a
business closure for a major holiday. In the past, Employer A has
allowed employees to choose whether to go unpaid for that holiday,
or to use paid leave time available to them. Employer A may not
require Employee A to use their accrued paid leave hours for the
holiday closure.
Employers should note that – if the employee has more than
one type of leave available to cover an absence – IDOL
directs that the employer “should” confirm and document
which category of leave the employee wishes to draw from.
Limited Situations in Which Paid Leave Requests Can Be
Denied
The final regulations have also modified the terms and
conditions under which employers can deny an employee’s request
for paid leave. The proposed regulations outlined a standard where
the permissibility of the denial hinged on relevant factors like
whether the employer provides a need or service critical to the
health, safety, or welfare of the people of Illinois and whether
granting leave during a particular time period would significantly
impact the business operations due to the employer’s size. The
final regulations adopt an approach that leaves more discretion to
the employer. An employer may now deny a request for paid leave if
all of the following conditions are met:
- The employer’s policy for considering leave requests under
the Act, including any basis for denial under this Section is
disclosed to the employee, in writing, consistent with this
Section; and - The employer’s paid leave policy establishes certain
limited circumstances in which paid leave may be denied in order to
meet the employer’s operational needs for the requested time
period; and - As a matter of fact, the employer’s policy is consistently
applied to similarly situated employees and does not effectively
deny an employee adequate opportunity to use all paid leave time
they are entitled to over a 12-month period.
Initially, IDOL proposed that an employer must provide to the
employee and maintain a record of each request that was denied and
the reason for the denial. Instead of this employee notification
requirement, the final regulations incorporate into an
employer’s recordkeeping requirements an obligation to maintain
records of all requests by an employee to use paid leave that were
denied.
Rate of Pay
Under the Act, “[e]mployees shall be paid their hourly rate
of pay for paid leave.” In its proposed regulations, for
some employees, IDOL intended to require a “regular
rate of pay” calculation. IDOL has removed all references to
“regular rate” in the final regulations, which now track
the Act nearly verbatim, confirming that employees are paid their
hourly rate of pay when taking paid leave time.
Employer Notice Requirements
Under the Act, employers must satisfy the following notice
requirements:
- Notice/Workplace Poster: Post an IDOL-provided
notice in a conspicuous place on the work premises and include a
copy of the notice in a written document, employee manual, or
policy. Per the final regulations, the notice must be provided in
English and, if a “significant percentage” of workers are
not literate in English, in any other language commonly spoken in
the workplace.
- Define 12-Month Period: Designate in writing
to the employee at time of hire the 12-month period used for paid
leave.
- Policy: Provide a written policy if the
employer imposes terms and conditions on employees’ use of paid
leave (such as notice requirements). Per the final regulations, the
policy must be made available in English and in any additional
language commonly spoken by the employer’s workforce.
- Certain Changes to Employer’s Leave
Policy:
- Communicate in writing a change to an employee’s
requirement to notify the employer before taking paid leave time
within five calendar days after the change. - Notify employees in writing of any changes to the 12-month
period. The notification must also include documentation of the
balance of hours worked, paid leave accrued and taken, and the
remaining paid leave balance. - Notify employees in writing of any changes to the
employer’s leave policies that affect an employee’s right
to final compensation for such leave.
- Communicate in writing a change to an employee’s
The final regulations create several other notice obligations
for employers:
- Notice that PTO Policy Used for Compliance: If
an employer chooses to credit the paid leave provided for under the
Act to an existing paid leave allowance provided by the employer,
such policy must be communicated to the employee within 30 days
after the start of employment or of the effective date of the
policy.
- Initial Notice of Frontloading: If an employer
chooses to frontload paid leave in lieu of accrual, the employer
must give written notice to the employee informing the employee of
how many paid leave hours that employee is receiving on or before
the first day of initial employment or on or before the first day
of the initial 12-month period. The rules do not clarify whether
this notice requirement can be satisfied vis à vis providing
the employer’s written paid leave policy, or if it requires
affirmative notification to the employee of their particular
frontloaded benefits.
- Other Changes to Employer Policy: If an
employer changes its paid leave policy, it must notify the employee
of the updated paid leave policy as soon as practical.
- If the changes relate to a switch from frontloading to accrual,
the employer must give at least 30 days’ notice prior to the
end of the 12-month period. - If an employer changes the amount of frontloaded leave that
will be provided, the employer must give written notice to the
employee informing the employee of how many paid leave hours that
employee is receiving on or before the initial 12-month
period.
- If the changes relate to a switch from frontloading to accrual,
Finally, it is important to note the absence of regulations on
the following topics, which were included in the initially proposed
regulations:
- Paystub Reporting Requirement Nixed: The final
regulations do not contain any paystub reporting requirements. As
originally proposed, the regulations would have required employers
to report employee’s paid leave accrual and remaining balance
on each paystub and provide these records to the employee
upon request. However, IDOL has stricken any indication that the
balance tracking must be actively reported to employees before the
records are requested.
- Customized Notice Requirement Abandoned: The
proposed regulations initially proposed a requirement that
employers post “[a] statement, written by the employer,
summarizing the employer’s written paid leave manual, handbook,
or policy, if the employer has one, including how an employee may
receive a copy of such document.” This language has been
stricken from the final regulations, and the posting requirements
have reverted to the IDOL-issued notice, as outlined above.
Next Steps
Because the final regulations took effect immediately on April
30, 2024, employers should prioritize evaluating whether any
further adjustments are needed to their paid time off policies in
Illinois.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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