Paid Sick Leave is Coming to Chicago

E. Jason Tremblay

E. Jason Tremblay

On June 22, 2016, the Chicago City Council passed the Chicago Minimum Wage and Paid Sick Leave Ordinance (the Ordinance). Provided the Ordinance is signed into law by Mayor Rahm Emanuel (which is expected), the Ordinance will take effect on July 1, 2017. As discussed more fully below, the Ordinance will allow Chicago employees to accrue up to 40 hours of paid sick leave every 12 months.

Who is covered by the Ordinance?

Covered Employers

While there are some narrow exceptions (such as employees covered by a collective bargaining agreement), the Ordinance applies to virtually all Chicago employers, no matter their size. It applies to employers who have at least one (1) employee in Chicago and who either (A) maintain a business facility within the City, or (B) are subject to at least one of the City’s numerous licensing requirements. Put another way, a small employer who is not even physically located within Chicago may be covered by the Ordinance provided they have at least one employee working within the City.

Covered Employees

Covered employees include any full-time or part-time employee who works in Chicago at least two hours in any two-week period. To be covered, the employee must also work at least 80 hours for a covered employer in any 120-day period. Notably, time spent traveling in the City that is compensable, such as sales calls and making deliveries, counts towards the hours requirement.

How is paid sick leave earned and handled?

Commencing on July 1, 2017, covered employees will accrue one hour of paid sick leave for every 40 hours worked. Exempt employees are assumed to work 40 hours per week, unless their normal work week is less than 40 hours, in which case the accrual of paid sick leave will be based upon the number of hours the exempt employee regularly works in a work week.

Employers are allowed to limit the amount of paid sick leave an employee may accrue to 40 hours in a 12-month period, although employers are also allowed to offer more than 40 hours of sick leave too. At the end of the applicable 12-month accrual period, the employee is entitled to carry over one-half his or her unused accrued paid sick leave to the following 12-month period, up to a maximum of 20 hours. Moreover, if the employer is subject to the Federal Family and Medical Leave Act (FMLA), an employee may carry over up to an additional 40 hours of his or her accrued sick leave to the following 12-month period (in addition to the 20 hours) but the additional 40 hours must exclusively be used for FMLA-eligible purposes.

In lieu of allowing employees to accrue sick leave as they work (i.e., the accrual method), employers may also satisfy the Ordinance’s requirements by awarding the entire 40 hours of paid sick leave immediately upon the date of eligibility and, thereafter, at the beginning of each subsequent 12-month period. While this may be administratively easier for employers to implement, it “front loads” sick leave at the beginning of the 12-month period, and could provide more paid sick time than required if the employee leaves prior to the expiration of the 12-month period.

When can employees use sick leave?

While employees begin to accrue paid sick leave immediately upon the commencement of employment, the Ordinance does allow employers to prohibit employees from beginning to use such sick leave until 180 days after he or she commences employment. Employers also have the right to obligate employees to use sick time in increments of four hours or less per day.

The Ordinance entitles employees to use paid sick leave for the following reasons: (1) the employee, or the employee’s family member, is ill, injured, or is receiving medical care, treatment, diagnosis or preventative medical care; (2) the employee, or the employee’s family member, is the victim of domestic violence or a sex offense; or (3) a public official closes the employee’s place of business because of a public health emergency, or the employee needs to care for a child after a public official has closed the child’s school or place of care because of a public health emergency. The Ordinance broadly defines “family member” to include step- and foster relationships, legal guardians and domestic partnerships.

An employer cannot require an employee to find a replacement worker to cover the hours during which he or she is using paid sick leave. Such provisions, which tend to be prevalent, especially with smaller employers, are unenforceable under the Ordinance.

How do employees request sick leave?

There are also various leave request and certification aspects of the Ordinance. For example, when the employee’s need for paid sick leave is reasonably foreseeable, an employer may require the employee to provide up to seven (7) days advance notice of such paid sick leave. If the paid sick leave is not reasonably foreseeable, an employer may require the employee provide notice as soon as practicable. Not surprisingly, an employee is not required to provide prior paid sick leave notice if he or she cannot provide notice because he or she is unconscious or otherwise incapacitated.

An employer may also require a medical certification to justify the sick leave request, but only when the employee is absent for more than three (3) consecutive work days. Other notice and certification requirements apply in circumstances where the employee or the employee’s family member is the victim of domestic violence or a sex offense.

Do employers have to pay out unused, accrued paid sick leave upon termination?

Unless otherwise provided for in a collective bargaining agreement, unused, paid sick leave is not required to be paid out by the employer upon the termination or separation of employment.

What are the Ordinance’s notice requirements?

The Ordinance requires employers to post a written notice advising employees of the right to paid sick leave. As with all other labor law notices, the notice must be in a conspicuous place at each of the employer’s facilities or locations located in Chicago. Moreover, all covered employers must also provide employees with notice of their rights to paid sick leave under the Ordinance with their first paycheck. Such notice will be prepared in the near future by the Commissioner for Chicago’s Department of Business Affairs and Consumer Protection.

What remedies exist for employees under the Ordinance?

As with most employment-related statutes and ordinances, employers are prohibited from discriminating or retaliating against employees for exercising, or attempting in good faith to exercise, their rights protected under the Ordinance. An employer who violates the Ordinance, will be subject to a civil action by the affected employee. In such lawsuit, the employee will be entitled to recover damages equal to triple the full amount of unpaid sick leave lost or denied because of the employer’s violation, the interest on that amount, costs, and attorneys’ fees.

What should employers do to prepare?

This Ordinance is significant for all Chicago employers, small and large. While there is some time to prepare for the effective date of this Ordinance, Chicago employers should consider and implement some of the following actions:

  • Evaluate whether an existing paid time off (PTO) policy will satisfy the requirements of the Ordinance.
  • Determine whether to use an accrual or lump-sum method of providing paid sick leave.
  • Review and revise, if necessary, existing paid sick leave time and/or paid time off policies and procedures to meet the Ordinance’s requirements.
  • Audit time-keeping, payroll and benefit systems to insure proper tracking of paid sick leave usage, accrual, caps, and carry over limits.
  • Insure that the proper written notices will be provided, including the applicable poster at each worksite located within Chicago, as well as the separate employee notice provided to each employee in their first paycheck.

As always, should you have any questions, please contact E. Jason Tremblay at 312-876-6676 or your designated Arnstein & Lehr LLP attorney.

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