Chicago Paid Sick Leave Goes Into Effect: What Employers Need to Know

July 5, 2017
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Category: Zenefits

In the absence of paid family or paid sick leave provisions in federal law, a growing number of states and cities, including California, New York, Washington, and Arizona have begun to fill the gap. Be sure to check out the rest of our content on major developments in the 2017 leave landscape, and how Zenefits can help you comply with the new regulations in your state or city.

State and local sick leave laws, by administrative district

In June 2016, the Chicago City Council unanimously passed an ordinance mandating paid sick leave for Chicago employees. Cook County, Illinois, followed suit shortly after and passed its own mandatory paid sick leave ordinance in October, 2016. While the two laws are substantially similar, and went into effect on July 1, 2017, they differ in scope. The Cook County Ordinance applies to private employers throughout the jurisdiction, but will NOT impact county municipalities that have their own earned sick leave laws, provided they (1) are as, or more generous than, the Cook County Ordinance, and (2) contain remedies against noncompliant employers. This means that covered employers in the municipality of Chicago will only need to abide by the Chicago Ordinance.

NOTE: A number of municipalities have opted out of the Cook County requirements, click here for more information on the Ordinance, and for a list of the municipalities that have opted out.

Keeping track of sick leave based on hours worked by each employee is complicated and fraught with risk, given the penalties for failing to properly account for and allow employees use of their earned sick time. Zenefits can help get you in compliance as soon as possible, with our hourly accrual tool, webinars, and team of qualified HR Specialists. Read on for more information on the Chicago Ordinance, and its potential impact on your workplace.

Who is Covered?

Covered Employers: The Chicago Ordinance applies to non-government employers who maintain a business facility within the city of Chicago (“the City”), and/or are required to maintain a business license to operate within the city.

Covered Employees: An employee is covered by the ordinance if they perform at least 2 hours of work for an employer, within any 2-week period, while present in the geographic boundaries of the city of Chicago. Additional information on what constitutes business activity in the City can be found here.

  • Eligible Employees (including domestic employees, day laborers, tipped workers, and home health care workers): In addition to being covered by the ordinance, an employee must be eligible  to use accrued Paid Sick Leave. A covered employee becomes eligible to use accrued paid sick leave on the 180th calendar day following their start date, once they have worked least 80 hours within any 120 day period for the covered employer.

When does Paid Sick Leave Begin?

Covered employees will begin accruing their earned paid sick time on either July 1, 2017, or the first calendar day after their employment, whichever comes later.

NOTE: Only hours worked by the employee in the City of Chicago will count toward the accrual of paid sick leave.

When can Employees take Paid Sick Leave?

Employees may take paid sick leave for their own conditions or to care for family members in the following circumstances:

  • When the employee or family member is ill or injured, or is in need of medical care, diagnosis, or preventative treatment.
  • When the employee or family member is the victim of a sex offense or domestic violence.
  • When the employee’s workplace is closed due to a public health emergency, or their child’s school or place of care is closed due to a public health emergency.

How Can I Comply?

Here’s a quick overview of some of the major requirements employers must put in place to comply with the Chicago Ordinance. You can find more information here.

NOTE: Employers subject to the Family and Medical Leave Act must follow additional sick leave requirements, which we have flagged below.

1. Accrual Requirements: For the purposes of paid sick leave, covered employees will begin accruing leave on the first calendar day after their employment date, or after July 1, 2017, whichever is later. Since employees will accrue leave in hourly increments, employers are required to accurately track the hours of non-salaried employees, so they can receive the correct leave entitlement.

    • Accrual Amount: Employees will earn 1 hour of paid sick leave, for every 40 hours worked.
    • Exempt Employees: Covered employees who receive a salary, and are classified as “exempt” under the Fair Labor Standards Act, are assumed to have worked 40 hours per week. The rate of accrual for employees exempt from overtime is 1 hour of paid sick leave, for each week of employment. If the salaried position is for an amount different than 40 hours, the employee will accrue leave at the rate of 1 hour for every 40 hours of salaried work.
    • Leave Cap: Sick leave hours are capped at 40 hours per 12-month period, unless the employer has a higher internal limit.
      • FMLA: For employers subject to FMLA, a covered employee may use a maximum of 60 hours of accrued paid sick leave, with 20 of those hours granted or carried over for FMLA-qualifying purposes.

NOTE: Covered employers are not required to allow accrual while the employee is on paid or unpaid leave.

2. Carryover Requirements: At the end of their 12-month accrual period, employers must allow employees to carry over up to half (a maximum of 20 hours, unless employer has a higher internal limit) of their unused paid sick leave to the following year.

    • FMLA Requirement: An employer subject to the Family and Medical Leave Act must allow employees to carry over 40 hours of unused paid sick time to be used exclusively for FMLA-qualifying purposes in addition to their 20 carried over hours of regular unused paid sick time.

3. Accrual vs. Immediate Grant of Leave: Instead of requiring employees to accrue leave over time, employers can also choose to frontload, or immediately grant  employees Paid Sick Leave at the beginning of their employment. If the employer follows the frontloading guidelines in the Ordinance, they will be exempt from accrual and carryover requirements. However, the frontloading requirements vary based on an employer’s FMLA status.

  • Non-FMLA employer (<50 employees): Employees are granted all 40 hours of Paid Sick Leave no later than 180 days after their start date. The employer is not required to provide additional leave.
  • FMLA-Qualifying Employer (50> employees): Employees are granted all 40 hours of Paid Sick Leave no later than 180 days after their start date. However, employers subject to FMLA must allow employees to use 20 of their 40 hours of Paid Sick Leave for FMLA-qualifying purposes. The employer must then grant an additional 20 hours of paid sick leave each subsequent year to be used for FMLA-qualifying purposes.
  • FMLA Grant Breakdown: In a frontloading scenario, an FMLA-eligible employee would receive all 40 hours of their paid sick leave, and be able to use 20 of those hours as FMLA time in their first year. Upon the additional grant of 20 hours of paid sick leave each subsequent year, the employee will then be able to take up to 40 hours of FMLA paid sick time per year, and a separate 20 hours of regular paid sick leave if necessary.  

NOTE: If the employee’s reason for paid sick leave does not qualify for FMLA purposes, then they remain capped at 40 maximum hours of regular paid sick leave.

4. Payments:  Once paid sick leave has been used by the covered employee, an employer must pay out the leave no later than the next regular payroll period.  However, the employer is not required to pay out accrued or unused sick leave upon the end of the employee’s employment (resignation, termination etc.)

NOTE: Employers may NOT request covered employees to waive their sick leave rights in exchange for payment.

5. Notice Requirements: Employers must post paid sick leave notices in conspicuous locations, at any Chicago facility with covered employees. The notice must inform employees of the current Chicago minimum wage, and their right to paid sick leave.

  • Paycheck Notice: Employers must also provide notice to covered employees with their first paycheck subject to the Ordinance (July 1 onwards), or their first paycheck after hire. This notice must also inform employees of the current Chicago minimum wage, and their right to paid sick leave.
  • Employee Notice Requirements: If the employee’s need for leave is foreseeable, they may be required to provide up to 7 days of advance notice before taking sick leave. If the need for sick leave is unforeseeable, the employee must try to provide notice as soon as possible.
      • Required Documentation from Employees: If the employee is absent, or is requesting sick time for 3 or more consecutive work days, they may be required to provide documentation that the absence is for a permitted purpose (see above), but not the specifics of the health condition.

6. Waiting Period: Employers must allow their employees to use their paid sick leave no later than 180 days after their start date, once they have worked at least 80 hours within any 120 day period.

7. Recordkeeping: Employers are required under the Ordinance to track employee hours, maintain records of sick leave accrual, and make this information available to the Department of Business Affairs and Consumer Protection (BACP) upon request. Employers must also maintain the following records for covered employees, for at least 5 years:

  • Name, mailing address, phone number, and email of each covered employee.
  • Job title and occupation of each employee.
  • The covered employee’s hire date, and date of sick leave eligibility.
  • The number of sick leave hours accrued and used by each covered employee.
  • Employee’s pay schedule (hourly, salary, overtime etc.), compensation, and deductions, as well as an explanation of any additions and deductions.
  • Dates of payment to each covered employee.

Do I need to amend my paid leave policy?

If your company’s paid leave policy provides sick leave that is the same as or greater than the amount required by the Chicago Ordinance, and can also be taken for the same purpose, and under the same conditions, then you may not need to provide additional sick leave time. However, you should consult your attorney before making this determination or any other changes based on the Ordinance.

NOTE: Employers always have the option to offer more generous earned paid sick time policies than those required by the Ordinance.

What penalties will I face for noncompliance? 

Employees can report any violations or denials of sick leave to the City of Chicago, which may investigate and take action against the employer. Employees also have the right to file civil actions against the employer in court.

Zenefits Time and Attendance software eases the burden of employee time tracking – see how simple managing PTO, sick leave, accrual and more is here:

Visit our Help Center for further details on coverage, notice, and paid time off requirements. Request a demo with one of our HR specialists to see Zenefits in action today. 

About

Anagha Krishnan is a Regulatory Analyst at Zenefits. She is focused on developments in the HR, Benefits, and Payroll space, and helping small businesses get in compliance with new regulations. A Berkeley Law grad, Anagha enjoys pop culture podcasts, trying out new tea blends, and getting to the beach when she can.

Category: Zenefits


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