Chicago Passes Expansive Paid Leave Ordinance

On November 9, 2023, the Chicago City Council passed a new Paid Leave and Paid Sick Leave Ordinance, which replaces the current Paid Sick Leave Ordinance, and grants up to 10 total days of paid time off per year to Chicago workers.

Under the current Paid Sick Leave Ordinance, employees accrued one hour of paid sick leave for every 40 hours worked, with a maximum of 40 hours earned per year. However, starting January 1, 2024, the new ordinance allows employees to accrue one hour of paid sick leave plus one hour of paid leave for every 35 hours worked, with a maximum of 40 hours of paid sick leave plus a maximum of 40 hours of paid leave earned per year.  

Under the new ordinance, employees can carry over up to 16 hours of accrued, unused paid leave and 80 hours of accrued, unused sick leave to the following benefit year. Employers can also elect to front-load 40 hours of paid sick leave plus 40 hours of paid leave at the beginning of each benefit year, which relieves employers of the requirement to carry over accrued paid leave hours or sick leave hours. If an employer provides unlimited paid time off under its policies, the employer can avoid many of the requirements under the new ordinance.

Paid leave under the ordinance may be used for any purpose, without any requirement that employees disclose the reason for which paid leave is being used. However, employers can establish reasonable policies for the use of the paid leave for any reason including by requiring that (i) an employee provide reasonable notice before using such leave or (ii) an employee obtain reasonable preapproval from their employer before using paid leave. Paid sick leave, on the other hand, is only available for specified purposes. If an employee’s paid sick leave is “reasonably foreseeable,” an employer can require up to seven-days’ notice before the sick leave is taken, but if the employee’s paid sick leave is not “reasonably foreseeable,” an employer can require that notice be provided as soon practicable.

New employees become eligible to start using paid sick leave on the 30th calendar day following commencement of their employment and paid leave on the 90th calendar day following commencement of their employment. An employer may also set a reasonable increment requirement, not to exceed four hours of paid leave or two hours of paid sick leave per day.

If an employee resigns, retires, is terminated by an employer or transferred outside of the City of Chicago, the amount of payout of sick leave or paid leave for any reason depends on the size of the employer. For example, employers with 50 or fewer employees will not be required to pay out any unused paid leave days.

Employers with Chicago employees and employers located in Chicago should prepare to revise their paid time off and sick leave policies and speak to employment counsel to consider a plan of action to comply with the city ordinance. This new Chicago ordinance has significant differences from both the previous Chicago sick leave ordinance and the new Illinois Paid Leave for All Workers Act, which is also set to go into effect on Jan. 1, 2024. Moreover, violating the ordinance could trigger fines of at least $1,000 and no more than $3,000 for each separate offense. For sick leave violations, a lawsuit can be brought starting December 31, 2023, however, Chicago employees cannot sue their employers under the ordinance for paid leave for any reason violations until January 1, 2025.

Employers must post a notice in a “conspicuous place” advising Chicago employees right to be paid under the ordinance and maintain certain records for paid time off leave for employees for at least five years. Employers must also provide employees with written notice of their rights under the ordinance along with their first paycheck and annually with a paycheck issued in July.