On November 3, 2023, the Illinois Department of Labor (IDOL) published proposed regulations interpreting the Paid Leave for All Workers Act which takes effect January 1, 2024.As a reminder, the Paid Leave for All Workers Act requires Illinois employers to provide covered employees up to 40 hours of paid leave to be used for any purpose, see prior Benefit Beat article here.

The proposed regulations have a 90-day notice period before they can be finalized, meaning the regulations will not be final before the law’s effective date. Employers will want to review the proposed regulations and implement their paid leave policies accordingly. The Illinois DOL has some useful FAQs defining the law.

Employers Existing Paid Leave Policy

An employer who has a qualifying pre-existing paid leave policy in effect on January 1, 2024, is not required to modify the pre-existing paid leave policy. If an employer modifies the pre-existing paid leave policy so that it no longer provides 40 hours of paid leave for any reason, then the pre-existing paid leave policy no longer qualifies for an exemption.

Qualifying pre-existing paid leave policy means a bona fide paid leave policy that an employer has enacted prior to January 1, 2024, that allows all employees to take at least 40 hours of paid leave for any reason of the employee's choosing.All being the operative word, part-time employees are entitled to leave for any reason pursuant to this law.

Covered Employee

An employee eligible for paid leave is one who works for an employer and whose work is primarily performed in Illinois.

Under the proposed regulations, primarily performed in Illinois means the amount of work performed in Illinois compared to the amount of work performed outside Illinois and whether the work is isolated, temporary, or transitory.

Frontloading Paid Leave

In lieu of accruing paid leave as work is performed, employers may frontload the paid leave upon hire and at the beginning of each 12-month period thereafter. If an employer selects the frontload method, the proposed regulations indicate that the employer must give written notice to the employee informing the employee of the amount of paid leave hours available on or before the first day of employment or on or before the first day of the 12-month period.

The proposed regulations also indicate that proration of the frontload amount is permissible for both new hires and for part-time employees. The frontloaded amount must meet or exceed what the employee would have been entitled to accrue over the time period the frontload amount is intended to cover.

Under the proposed regulations, an employer may provide some of its employees paid leave in the form of frontloading and other employees paid leave via accrual. However, an employer cannot illegally discriminate or otherwise violate state or federal law when determining which employees qualify for frontloading or accrual.

Carry Over of Paid Leave

An employer that provides paid leave via an accrual system, must allow employees to carry over any unused leave annually from one 12-month period to the next 12-month period. The proposed regulations allow employers to establish a reasonable policy restricting the carryover of unused paid leave to no more than 80 hours. Paid leave that is frontloaded is not subject to the carry over provision.

Denial of Paid Leave

The proposed regulations create a mechanism in which employers may deny paid leave requests in certain limited circumstances due to operational necessity. An employer must maintain a written policy that outlines how leave requests will be considered, and any basis for denial.

Employers denying leave based on operational needs must maintain and provide to the employee a record of each request that was denied and the reason for the denial.Additionally, employers may restrict the use of paid leave to the employee’s regular workweek.

Notice and Record Keeping

Employers must post a notice in a conspicuous place in the workplace and maintain records for three years showing hours worked, paid leave accrued and used, and remaining paid leave balance for each employee.

The proposed regulations add additional requirements which include the following:

• Provide employees with the paid leave policy prior to or upon commencement of employment or within 90 days after the effective date of the law. Employers that regularly communicate with employees by electronic means must provide the policy electronically.
• Post a written statement summarizing the employer’s written policy and how an employee can obtain a copy of the document. The statement must be provided in English and any other language commonly spoken in the workplace.
• Report employee’s paid leave accrual and remaining balance on each paystub. Alternatively, the employer may report the accrual and remaining balance on a form normally used to notify the employee of wage payments and deductions from wages.

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.