Earlier this year, Illinois passed the Paid Leave for All Workers Act, or PLAWA. PLAWA covers most employers that have employees who work in Illinois. The nuts and bolts of PLAWA are detail-heavy, but the sticking points are that Illinois employees are entitled to 1 hour of paid time off for every 40 hours they work in a 12-month period. Employers are not required to grant more than 40 hours of paid leave in that period, but employees are also allowed to take that leave for any reason – generally, no questions asked.
PLAWA, in its final form, left many questions unanswered – especially for employers who already offered 40 hours of paid leave to employees. Recently, the Illinois Department of Labor, or IDOL, released proposed regulations to implement PLAWA. Because the regulations must go through comments and final approval, the final regulations will not take effect until after PLAWA itself takes effect on January 1, 2024. But IDOL’s proposed regulations offer employers insight as to how IDOL plans to enforce the law. So, let’s address some of the answers IDOL provided to major questions raised by the statute.
Question 1. We already have a PTO policy. Do we need to worry about PLAWA?
A. Yes, for at least two reasons.
- First, your PTO policy may not apply to all of your employees. For example, some employers offer PTO to full-time employees and, in some cases, part-time employees who work a minimum number of hours per week. But PLAW leave applies to full-time, part-time, and temporary/seasonal employees. You may need to create a written policy to address PLAW leave for employees not covered by your standard PTO policy.
- Second, Illinois requires accrued but unused vacation time to be paid out at separation from employment. PLAW leave does not need to be paid out unless it is combined with a vacation bank. If an employer offers employees under 40 hours of vacation annually and plans to combine PLAW leave with vacation leave, it needs to be aware that it will have an increased payout obligation.
Question 2. We already have a PTO policy that covers all of our employees and offers 40 or more hours per year for any reason. Do we need to change our policy to comply with PLAWA?
A. No. IDOL’s proposed regulations provide that a “qualifying pre-existing paid leave policy” does not need to be changed. A “qualifying pre-existing paid leave policy” is a pre-January 1, 2024 policy that, in practice, allows all employees to take at least 40 hours of paid leave for any reason. It is assumed, but ultimately unclear, whether IDOL intended that definition to read “at least 40 hours of paid leave, or a pro-rated amount for employees who earn less, for any reason.”
Question 3. How and when do employees begin to accrue PLAW leave?
A. January 1, 2024 for current employees, and immediately upon hire for new employees after that date (but the leave can’t be used until 90 days after it initially begins to accrue). Employers may frontload PLAW leave or use an accrual method. Interestingly, IDOL requires accrual to be granted based on 15-minute increments, with partial increments always rounded up. For example, if a non-exempt employee worked 39 hours and 46 minutes in a week, IDOL would consider that 40 hours, not 39.75 hours, thus entitling the employee to 1 hour of PLAW leave. (Note: overtime exempt employees are assumed to work 40 hours in a week unless their actual hours worked are fewer.)
Question 4. What about carryover?
A. If PLAW leave is frontloaded, it does not need to be carried over. PLAWA requires all PLAW leave to be carried over from 12-month period to 12-month period if leave is granted on an accrual basis. But IDOL’s regulations allow employers to cap that amount at 80 hours. Regardless, employees are only entitled to use 40 hours in a 12-month period.
Question 5. Can employers limit the increment size for PLAW leave?
A. Yes. Employers can require employees to take PLAW leave in at least 2-hour increments. IDOL’s regulations do allow employees to use PLAW leave in 1-hour increments thereafter. And if the scheduled work day is less than 2 hours, employees can use an increment that matches the size of the work day.
Question 6. If we keep separate banks for vacation and PLAW leave, can we require employees to use one before the other?
A. No. IDOL’s regulations grant the employee the right to use PLAW leave before or after any other employer-provided leave.
Question 7. Can employers deny PLAW leave?
A. Yes, but only in limited situations where denial is warranted because of “operational needs.” Employers who wish to use this option must have a written policy that explains how leave requests are considered and why they may be denied. Employers also need to consider whether the employee provides a critical health, safety, or welfare function for the public, whether similarly situated employees are subjected to the same leave request review, whether granting the leave would significantly impact business operations, and whether the employee otherwise has a chance to use the leave. If an employer denies leave for operational needs, it must provide a written explanation to the employee and retain a copy.
Question 8. Tell me about notice and posting requirements.
A. There are several, including:
- Additional terms. If an employer adds terms and conditions to use of PLAW leave beyond those required by PLAWA, it must have a written paid leave policy available in English and any language commonly spoken by the employer’s workforce which explains PLAWA’s protections. The paid leave policy must be given to every employee before the date they are first allowed to use PLAW leave.
- Notice. Employees whose use of PLAW leave is foreseeable can be required to give 7 days’ notice. Notice of unforeseeable leave must be given as soon as practicable.
- Notice of coverage. Employers who use a pre-existing policy to cover PLAW leave must inform employees within 30 days after their hire date or, if they are a current employee, January 31, 2024.
- Posting. Employers must post notice of PLAWA in a conspicuous location where such notices are customarily posted. If employers regularly communicate with employees electronically, notice must also be provided through those means. The notice must contain a summary of PLAWA in the form of a statement provided by IDOL, as well as a statement written by the employer that summarizes the written paid leave policy (such as a handbook policy).
- Paystub. Each paystub (or equivalent form used) must provide the employee’s unused balance of PLAW leave.
Question 9. We have Chicago employees. How does PLAWA intersect with Chicago’s leave?
A. PLAWA treats local ordinances (or laws) differently based on when they are passed.
- If an employer is located in a municipality or county that, as of January 1, 2024, requires it to provide paid leave, including paid sick leave, PLAWA does not apply. But it does apply to employers located in municipalities or counties that do not have such a requirement, including those that have opted out of an overlapping paid leave law.
- If a municipality or county enacts or amends an ordinance to provide paid leave time (including paid sick leave) after January 1, 2024, and those benefits are greater than or equal to those provided under PLAWA, the employer must comply with the ordinance. But if the ordinance’s benefits are not at least equal to PLAWA, the employer must comply with PLAWA.
Question 10. So, if we have a “qualifying pre-existing paid leave policy” as defined in Question/Answer 2 and will use that policy to cover PLAW leave, do we need to follow any of the requirements in Questions/Answers 3-9?
A. For the most part, no. However, remember that the pre-existing policy must allow employees to take leave for any reason, so it must comply with Question/Answer 7. And there are still notice of coverage requirements, as explained Question/Answer 9. Employers who do not currently have a qualifying pre-existing paid leave policy may wish to consider implementing such a policy before January 1, 2024.
Contact the author Adam Walker.