Illinois Paid Leave for All Workers Act

AT A GLANCE

On March 13, 2023, Illinois Governor Pritzker signed legislation that will provide paid leave for employees within the state. The Act will require nearly all covered Illinois employers to provide its eligible employees with up to 40 hours of paid leave per 12-month benefit period, to be used for any reason. The Act will become effective on January 1, 2024.

Eligibility

The Act applies to all employers in Illinois with certain exceptions such as school districts who are under the School Code or park districts who are under the Park District Code. The Act covers all employees, except for:

• Employees as defined in the federal Railroad Unemployment Insurance Act or the Railway Labor Act
• Temporary college or university student-employees
• Certain short-term employees of an institution of higher learning
• Employees working in the construction industry who are covered by a bona fide collective bargaining agreement (CBA)
• Employee who are covered by a bona fide CBA with an employer that provides services nationally and internationally of delivery, pickup, and transportation of parcels, documents, and freight

Accrual Requirements

Upon the effective date of this Act, or when employment begins – whichever is later – eligible employees will accrue one hour of paid leave for every 40 hours worked.

• Eligible employees can accrue up to 40 hours within a 12-month benefit period
• Employers can choose to frontload 40 hours at the beginning of a 12-month benefit period
• Carryover is not required if hours are frontloaded
• Employees may use up to 40 hours within a benefit period
• Employees may carryover unused, accrued paid leave into a new benefit period

Exempt employees are presumed to work 40 hours per workweek for the purposes of accrual unless their regular workweek is less than 40 hours, in which case paid leave accrues based on that regular workweek. Paid leave is not required to be paid out at termination.

Rate of Pay

Employees must receive their hourly rate of pay when using paid leave, which does not include commissions or gratuities. However, an employee’s hourly rate of pay for leave under the Act cannot drop below the applicable minimum wage.

Existing Leave Policies

Employers may use other types of paid leave policies to satisfy their obligation to provide paid leave under the Act.

The Act indicates that an employer is “not required to modify their policy” if it satisfies the minimum amount of leave required under the Act and the employee is allowed to take paid leave for any reason.

If an employer does use another type of vacation bank to satisfy its obligations under the Act, any unused leave must be paid out upon separation from employment, which is required under the Illinois Wage Payment and Collection Act.

City and County Paid Sick Leaves

The Act does not preempt the Chicago Paid Sick Leave Ordinance or the Cook County Earned Sick Leave Ordinance. Instead, it states that the Act “shall not apply to any employer that is covered by a municipal or county ordinance that is in effect on the effective date of the Act that requires employers to give any form of paid leave to their employees, including paid sick leave or paid leave.”

For any local ordinances enacted or amended on or after January 1, 2024, an employer will be in compliance with the provisions of the local ordinance so long as the paid leave is greater than or equal to the benefits, rights, and remedies afforded under the Act.

Notice and Recordkeeping Requirements

Employers must post a notice, which will be provided by the agency, in a conspicuous place on the employer’s premises and include a copy of the notice in a written document, or written employee manual or policy. If the employer’s workforce includes a significant portion of non English speakers, the agency will also provide a notice in that language.

Employers must maintain accurate records for each employee showing the employee’s:

• hours worked;
• paid leave accrued and used; and
• remaining paid leave balance

Records must be retained for at least three years and must be made available for inspection by the Illinois Department of Labor. Employers must also provide paid leave available and used balances upon request.

For more information on Illinois' wage and payroll tax laws, check out our Illinois Wage and Payroll Tax Facts page.

Next Steps

Paylocity will have the accrual requirements set up with our system prior to January 1, 2024. Please work with your Account Manager if you have questions about how to add a time off type or approve time off.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.