On November 9, 2023, the Chicago City Council passed the new Chicago Paid Leave and Paid Sick and Safe Leave Ordinance which will replace the existing Paid Sick Leave Ordinance. The ordinance, which takes effect December 31, 2023, creates two separate categories for required paid time off, 40 hours of paid leave and 40 hours of paid sick leave and safe leave.

The ordinance applies to all employers employing at least one employee who works in Chicago. Certain exemptions apply such as for valid collective bargaining agreements.

A covered employee is one who, in any two-week period, performs at least two hours of work while physically present within the geographic boundaries of the city.

Paid leave and paid sick and safe leave can be provided by accrual or as an alternative to accrual frontloaded as more fully described in the table below.

Unlimited PTO Policies

Employers may choose to provide a covered employee on the first day of employment or the first day of the 12-month period, unlimited hours of paid time off that may be used for any reason. Upon termination or transfer out of Chicago, payout equivalent of up to 40 hours minus time used in the prior 12 months must be made.

Employer’s existing PTO policy

If an employer has a policy that grants paid leave or paid sick leave in an amount and manner that meets or exceeds the requirements of the Ordinance, the employer is not required to provide additional paid leave or paid sick leave.

If an employer’s current paid sick leave policy does not comply with the requirements of the new ordinance, any paid sick leave the employee is entitled to roll over from one 12-month period to the next must be transferred to paid sick leave under the new Ordinance.

Health coverage

During the period a covered employee takes paid leave or paid sick leave, the employer shall maintain health coverage at the same level and conditions of coverage that would have been provided if the covered employee had not taken leave.

Employer notice and record keeping

Employers are subject to the following notice and posting requirements:

• Starting December 31, 2023, employers are required to have a written policy and must provide written notice of the policy to employees working in Chicago at the start of employment and within five calendar days before any changes are made to the policy.
• Provide a notice to employees of their right to paid leave and paid sick leave with the first paycheck issued to the employee, and annually with a paycheck issued within 30 days beginning July 1, 2024.
• Provide notice of employees’ paid leave and paid sick leave balances with each paycheck. This may be done on paystubs or through an online system where employees can access their paid leave information.
• Post a notice in a conspicuous place at each facility within the geographic boundaries of Chicago. A model notice will be provided by the Department of Business Affairs and Consumer Protection. Employers that do not maintain a business facility in Chicago are exempt from this posting requirement.

Employers must retain records for five years. Records retained must include employee names, addresses, hours worked, pay rates, number of paid leave and paid sick leave hours earned each year, and dates on which paid leave and paid sick leave was used and paid.

Penalties

Employers who do not comply with the requirements of the ordinance can be fined between $1,000 and $3,000 for each separate offense. Employers failing to follow the notice and posting requirements can be fined $500 for first violation and $1,000 for any subsequent violation.

Coordination with other laws

This law must be coordinated with Cook County’s paid sick leave ordinance. Employees entitled to leave under the Chicago ordinance need not be provided benefits under the Illinois Paid Leave for All Workers Act, which takes effect January 1, 2024.

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.