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June 10, 2024
Employers have only 3 weeks left to implement compliance measures with the new ordinance titled the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance (the “Ordinance”). Effective Monday, July 1, 2024, the Ordinance will replace Chicago’s Paid Sick Leave ordinance, which has been in effect since 2017. While the definition of a Covered Employee will remain the same, there are many significant changes and challenges which can subject entities or persons employing any such employee to enforcement action by the City of Chicago’s Department of Business Affairs and Consumer Protection. The Ordinance can also render current policies or practices noncompliant come July 1st, including but not limited to paid time off and other relevant benefits. We strongly advise that you not assume your payroll provider will handle compliance with the Ordinance for you.
The Ordinance mandates that Covered Employees working in the City of Chicago must be afforded 1 hour of paid leave for any reason and 1 hour of paid sick leave for every 35 hours worked earning up to 40 hours of paid leave and 40 hours of paid sick leave per a 12-month period. There is not a one-size-fits-all definition for a 12-month period within the Ordinance. Understanding the Ordinance and the nuances presented in addition to practical ways to implement compliant policies and measures that may best align with your business is imperative. For more information about the Ordinance, including whether your current or anticipated business’ policies comply, please contact our office as soon as possible. Below we have identified three mistakes to avoid in updating or implementing policies and practices for compliance with the Ordinance.
1. Failing to Maintain Records or Track Compliance
Record keeping under the Ordinance is now more important than ever given a failure to maintain the required records can lead to an adverse presumption of noncompliance and consequences. The Ordinance requires employers to keep certain records containing specific information for at least 5 years, and to provide copies of these records upon request. While this record keeping is strictly required for Covered Employees, monitoring compliance should include tracking hours worked by any and all employees who regularly work within and outside of City of Chicago limits. Implementing this compliance measure has been regarded as one of the largest challenges for many employers. Given that the workplace landscape has broadened significantly since 2020 including many hybrid and remote workers, we encourage you to reach out to our office for options on best practices.
2. Not Allowing Proper Carryover
Covered Employees are to keep any unused sick leave accrued per the prior ordinance and further accrue paid leave and paid sick leave as set forth in the new Ordinance. The Ordinance not only requires compliant notices and written leave policies, for these purposes among others, as specified therein, but also expressly mandates unused paid leave and paid sick leave hours be carried over to the next 12-month period. Absent a compliant unlimited PTO policy or a policy frontloading a minimum of 40 hours of paid leave for any reason, Covered Employees must be allowed to carryover up to 16 hours of unused paid leave. Regardless of whether paid sick leave is frontloaded or accrued, Covered Employees must be allowed to carryover up to 80 hours of unused paid sick leave.
3. Failing to Pay Proper Wages for Used Paid Leave and Paid Sick Leave Hours
Any Covered Employee who has a fixed pay rate that meets or exceeds the minimum wage, must be paid the same pay rate for any paid leave, or paid sick leave used during that pay period. Commission based employees, whose hours are not tracked shall accrue at the same rate as salaried employees, and must be paid either their calculated base wage, the highest hourly rate of federal minimum wage, Illinois minimum wage, or the full Chicago minimum wage, whichever is greater. The calculation of such payments based on the highest minimum wage similarly applies to tipped employees.
We continue our commitment to advise our clients with the most up to date information as it becomes available and are here to help you and your business maintain compliance in today’s challenging workplace environment. For more information on how your business can best comply with the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance please contact our office via phone or email at (312) 461-1005, juanita@lawatjbr.com, or danielle@lawatjbr.com.
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