‘Paid leave for any reason’ laws pick up steam: Third state joins the list

Gov. J.B. Pritzker signed a law that requires private companies in Illinois to provide workers with paid leave for any reason – with limited exceptions.

The passage of the Paid Leave for All Workers Act (PLFAW) makes Illinois the third state in the nation to pass such a law, signaling that the trend may be gaining momentum.

Similar laws have passed in Maine and Nevada as well as a local ordinance in Bernalillo County, New Mexico.

What HR needs to know about paid leave for any reason

First things first: The law requires most employers to provide workers with up to 40 hours of paid leave that can be used for any reason within a 12-month period.

The law takes effect on Jan. 1, 2024.

1. Covered employers and employees

The PLFAW Act applies to most private employers, as well as most state and units of local governments, or any state or local government agency. However, there are notable exceptions:

• State school districts under the Illinois School Code
• State park districts under the Illinois Park District Code, and
• Employers that are required by a municipal or county ordinance (as of Jan. 1, 2024) to provide any type of paid leave to employees.

It also applies to most employees working in Illinois, regardless of whether their status is full-time, part-time, temporary, exempt or nonexempt. There are a few limited exceptions:

• Employees as defined in the federal Railroad Unemployment Insurance Act or the Railway Labor Act.
• Students enrolled in and regularly attending classes in a college or university where they are also employed on a temporary basis at less than full-time. The legislation specifically clarifies that “this exclusion applies only to work performed for that college or university.”
• Short-term employees who work at an institution of higher education for less than two consecutive calendar quarters during a calendar year and who do not have a reasonable expectation that they will be rehired by the same employer of the same service in a subsequent calendar year.
• Construction industry employees covered by a bona fide collective bargaining agreement (CBA).
• Employees covered by a bona fide CBA with an employer that provides “national or international services of delivery, pickup, and transportation of parcels, documents, and freight.”

2. Accrual, carryover, rate of pay

Under the PLFAW Act, covered employees must accrue one hour of paid leave for every 40 hours worked. Exempt employees who are not subject to overtime requirements of the FLSA are deemed to work 40 hours per week for purposes of accrual.

Any earned but unused accrued paid leave must be carried over to the following year – unless the company frontloads the leave.

The leave must be paid at employees’ regular hourly rate of pay.

3. Retaliation, enforcement, penalties

The law expressly prohibits employers from threatening to take or taking any adverse employment action against employees who exercise their rights to take the leave provided in the law.

In the event of disputes, employees may file complaints with the state DOL, which has the authority to conduct investigations, recover underpayments and damages for affected workers, and assess civil penalties.

4. Compliance issues

Companies have a year to get their compliance efforts on track. Here’s what the law requires:

Policy requirements: Companies may require employees to provide seven days’ notice when the leave is foreseeable. If companies opt to require such notice, they must create and implement written policies that provide workers with procedures to submit notice for leave.

Recordkeeping requirements: Companies must document employees’ hours worked, paid leave accrued, paid leave taken and paid leave balances for three years. Employers must also provide workers with notice of the amount of leave accrued or used upon request.

Posting requirements: Companies will be required to display a labor law poster that will be prepared by the state DOL. If a large percentage of the workforce doesn’t speak English, the company must post notices in appropriate languages spoken by employees. Violations of posting requirements will be $500 for the first infraction and $1,000 for repeat offenses.

Notice requirements: Companies must provide written notice of the PLFAW Act to workers.