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Chicago Finalizes Rules On New Paid Leave And Paid Sick Leave Ordinance

Chicago Finalizes Rules On New Paid Leave And Paid Sick Leave Ordinance

As of July 1, 2024, businesses operating in Chicago will need to comply with the city’s new Paid Leave and Paid Sick Leave Ordinance. This updated law replaces the previous Chicago Paid Sick Leave Ordinance and introduces significant changes that employers must understand and prepare for.

Key Provisions Of The New Ordinance

Under the new ordinance, eligible employees in Chicago will be entitled to earn up to 40 hours of paid sick leave and an additional 40 hours of paid leave per 12-month period. This paid leave can be used for any reason, providing employees with greater flexibility and work-life balance.

The ordinance also includes provisions regarding the definition of a 12-month period, carryover of unused leave, denial of leave requests, use of paid time off (PTO) policies for compliance, rate of pay calculations, and employer notification requirements.

Defining The 12-Month Period

Employers have the flexibility to establish their own 12-month period for accruing and using paid leave and paid sick leave. This period can be based on the employee’s anniversary year, the calendar year, a contract year, the fiscal year, or the tax year, as long as it consists of consecutive months.

Carryover Of Unused Leave

Employees can carry over up to 80 hours of paid sick leave and up to 16 hours of paid leave from one 12-month period to the next. Employers have the option to frontload 40 hours of paid leave and 40 hours of paid sick leave at the beginning of the 12-month period, but frontloading paid sick leave does not alleviate the carryover obligations for that type of leave.

Denial Of Leave Requests

The ordinance allows employers to require reasonable preapproval for using paid leave to maintain business continuity. However, denials must be based on legitimate factors, such as the impact on operations, the nature of the business, and ensuring fair treatment of employees. Denials must be provided in writing with a clear rationale.

The final rule includes a new provision that allows employers to restrict the use of paid leave or paid sick leave to the employee’s regular workweek. This means that employees could be prevented from accessing their paid leave or paid sick leave during scheduled mandatory overtime or weekends.

Using PTO Policies For Compliance

Employers can use existing PTO policies to comply with the ordinance, but they must adhere to its requirements, such as the shorter waiting period for using paid sick leave. For example, the 30-day waiting period for paid sick leave must apply to the policy instead of the 90-day waiting period for paid leave.

Rate Of Pay Calculations

Employees must receive their regular rate of pay when using paid sick leave and paid leave, including continuing health care benefits if applicable. The final rules did not provide guidance on calculating the regular rate of pay for non-exempt employees based on the previous 90 days of employment.

Employer Notification Requirements 

The ordinance outlines various notification requirements for employers, including:

  • Posting notices
  • Providing new hire notifications
  • Annual frontloading notices (if applicable) 
  • Annual employee notifications 
  • Establishing written policies
  • Notifying employees of policy changes
  • Providing information on available paid leave balances

Ensuring Compliance With GMS

As the July 1st effective date approaches, businesses in Chicago must take proactive steps to ensure compliance with the new Paid Leave and Paid Sick Leave Ordinance. Failure to comply can result in penalties and legal consequences.

At GMS, we understand the complexities of navigating the ever-changing labor laws and regulations. Our team of experts can assist your business in reviewing and updating your paid leave policies, employee handbooks, and notification procedures to align with the new ordinance. We can also provide guidance on record-keeping, payroll calculations, and other compliance-related matters.

By partnering with GMS, you can have peace of mind knowing that your business is fully compliant with state and local laws. and any other applicable labor laws. Contact us today to learn more about our comprehensive compliance solutions and how we can help your business stay ahead of the curve.

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