On April 30, 2024, The City of Chicago Department of Business Affairs and Consumer Protection (BACP) published final regulations providing some clarity on the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance requirements, which are slated to take effect on July 1, 2024. As first outlined in an Insights article last year, the original effective date for this new leave law was December 31, 2024, but was quickly delayed until July 1, 2024, due to logistical requirements surrounding the implementation and enforcement of these sweeping regulations. The new Paid Leave and Paid Sick and Safe Leave Ordinance will require Chicago employers to provide employees with up to 40 hours of paid sick leave and up to 40 hours of paid leave for any reason. Experts agree that while the final regulations help, employers may still be left with questions. An outline of the major highlights from the regulations are as follows:
The Definition of a 12-Month Benefit Year or Period
The final regulations take a less rigid approach to the requirement that “[t]he 12-month period for a covered employee shall be calculated from the date the covered employee began to accrue Paid Leave and Paid Sick Leave.” Employers are now allowed to determine a 12-month benefit period of the employer’s preference to set for an employee to receive Paid Time Off and Paid Sick Leave benefits, provided that the established 12-month timeframe consist of consecutive months such as the tax year, the calendar year, or anniversary date of employee’s employment. The employer has the option to set different dates for each covered employee or require all covered employees to have benefits awarded on the same 12-month benefit cycle date, however the integrity of the leave regulations must be maintained.
The employer also has the option to front-load, or immediately grant covered employees at least 40 hours of paid leave or 40 hours of paid sick leave or both at the beginning of employment or the established benefit cycle year. If the employer grants covered employees 40 hours or more of paid leave “no later than 90 days after the covered employee began working for the employer, the employer is not required to provide additional paid leave (until the following benefit year or cycle). If an employer grants covered employees 40 hours (or more) of paid sick leave no later than 30 days after the covered employee began working for the employer, then the employer is not required to provide additional sick leave” until the following benefit year or cycle.
Carryover Required
The regulations now require that employees be allowed to carryover up to 80 hours of accrued and unused Paid Sick Leave and up to 16 hours of accrued and unused Paid Leave from one 12-month benefits period to the next. This carryover will be in addition to the Paid Sick Leave and Paid Leave the employee will earn in the subsequent 12-month benefit year. Furthermore, as mentioned above, employers may frontload at least 40 hours of Paid Leave and at least 40 hours of Paid Sick Leave on the first day of the 12-month benefit period. This frontloading method will absolve the employer from having to carryover paid leave hours but frontloading 40 hours of paid sick leave will NOT absolve the employer’s obligation to carryover the employee’s paid sick leave requirements from one benefit year cycle to the next.
Usage and Notification
Employers shall establish reasonable, written paid leave and paid sick leave policies, which include advance notice procedures and an outline of the reasons for potential leave request denials. Such policies should be made available in English and in any language that employees are literate and may be included in an employment handbook, a manual or separate document. Covered employees shall be allowed to use accrued paid leave by the 90th calendar day following the beginning of their employment and accrued paid sick leave by the 30th calendar day following the beginning of their employment, regardless of the size of the employer or the number of employees employed by the employer. If the employer allows for a more general or generous Paid Time Off policy, the employee shall be allowed to utilize all leave by the shorter 30th calendar day timeframe, rather than the 90th calendar day.
Employers are permitted to require that employees obtain “reasonable pre-approval” from the employer before using paid leave for “purposes of maintaining continuity of the employer operations.” A list of relevant factors are provided by the BACP to help employers evaluate operational needs. Reasonable notice required from employees for use of paid leave shall not exceed seven days. All denials of paid leave must be done in writing from the employer and must state the pre-established policy reasoning for the denial and be issued to the covered employee immediately upon the denial.
Employers must post the city created Notice poster, outlining the Paid Sick Leave and Paid Leave regulations which can be done through the employer’s usual course of communication and can include electronic dissemination or paper postings. In addition, as a part of the on-boarding process or prior to the commencement of employment, all new hires should be notified in writing of the employer’s Paid Leave and Paid Sick Leave policies.
Should an employer elect to frontload leave time, written notification of the policy including available time off should be provided to the employee at the commencement of the 12-month benefit period. Written notification is also required annually with a paycheck or stub issued within 30 days of July 1, every year, alerting employees to the employer’s Paid Sick Leave and Paid Leave policies.
Other regulation clarifications included in the new guidelines pertain to any changes to the employers’ paid leave policy notification requirements. Employers are required to provide at least five calendar days’ notice before implementing any notification requirement changes. Furthermore, employers now need to provide at least 14 days’ advance written notice to employees if a policy change will affect their right to final compensation for the paid leave under the payout requirements. Employers are also required to provided notification to employees of the availability of paid leave and paid sick leave as well as the employee’s use of the leave in an updated and reasonable manner, such as regular paystubs, payroll statements, an updated on-line portal or even providing a handwritten record of available time.
This is just an overview of the clarifications provided by Chicago’s BACP on the Paid Leave and Paid Sick and Safe Leave regulations. Employers are encouraged to review the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance as well as the prior Insights article for further information, including but not limited to payout requirements and how the new regulations interface with Collective Bargaining Agreements. Link to prior article?
PrestigePEO is here to help.
PrestigePEO is focused on supporting your business and will continue to monitor this new law and related regulations and litigation. If you have questions regarding the City of Chicago’s Paid Leave and Paid Sick and Safe Leave Ordinance regulations or the required Posting, please contact your HRBP for assistance.
