Paid sick leave laws are steadily gaining traction among states and local municipalities across the United States. The legislation is popular for employees but poses new challenges for employers now required to comply with a patchwork of diverse legal requirements. This summer, Chicago became the latest city to join the trend, enacting a new sick-leave law effective July 1, 2017. Here’s what is required for Chicago employers, and what all employers should consider in developing sick-leave policies.
The National Trend – Challenging for All Employers
California, Oregon, Massachusetts, and the District of Columbia are examples of states that have recently adopted sick leave laws. At the same time, more than 25 local municipalities have joined the bandwagon by enacting their own versions, including New York City, Seattle, Philadelphia, and now Chicago. Due to this mix of new municipal and state laws, other states – particularly within the South and Midwest (excluding Illinois) – have responded by passing laws preempting local paid sick leave laws, seeking to avoid a complicated patchwork of local laws burdening employers.
These new state and municipal legal developments require employers to look carefully at both their applicable laws and paid leave policies. In areas where such laws exist, does the organization have a paid leave policy? If not, now is the time! And if so, evaluate whether the paid leave policy complies with these new laws. If the employer has multiple sites and/or employees working in multiple locations, the organization may need to comply with laws in each work location. Such result may warrant either a “one size fits all” approach, with employers providing paid leave benefits compliant with the most generous applicable law, or alternatively with employers distinguishing among paid leave benefits for employees based on their work locations. Paid leave laws may also result in increased employee costs, so other employee benefits may warrant reexamination and possible reduction.
The Chicago Ordinance - Who is Covered?
Chicago’s Paid Sick Leave Ordinance will be effective July 1, 2017. The Ordinance applies to all employers with at least one covered employee in Chicago and: (1) maintain a business facility within the geographic boundaries of the city; or (2) are subject to at least one of the city’s license requirements. No exception exists for small employers, such as nonprofits with only a few employees.
The Ordinance defines the term “employee” generally in accordance with Illinois’ Minimum Wage Law, excluding clergy, domestic workers, agriculture workers, and other narrow categories. The Ordinance also excludes short-term, seasonal, and temporary employees, by allowing employers to impose a 180-day employment eligibility requirement before employees use any paid sick leave. All covered employees are eligible for paid sick leave provided that they work at least 80 hours in any 120-day period.
How Does Paid Leave Accrue?
Notwithstanding the potential 180-day eligibility period, accrual of paid sick leave begins when an employee starts work or upon the Ordinance’s July 1, 2017 effective date - whichever is later. Employees accrue paid sick leave at a rate of one hour per 40 hours worked for up to 40 hours (5 days) of paid sick leave per 12-month period, unless the employer sets a higher accrual limit. The applicable 12-month period is measured from the date the employee begins to accrue paid sick leave. Alternatively, employers may provide for a paid sick leave benefit immediately upon employee eligibility, provided that such benefit is for at least 40 hours within one calendar year.
Under the new Ordinance, employees may carry over half of their accrued paid sick leave, up to a maximum of 20 hours (2.5 days) at the end of the 12-month accrual period. For employees covered by the Family and Medical Leave Act, the carryover amount is increased to 40 hours. (However, if an employee carries over and uses those 40 hours, he or she may use no more than an additional 20 hours of accrued paid sick leave in the same 12-month period.)
When May Employees Use Paid Sick Leave?
An employee may use paid sick leave when he or she is injured or receiving medical care. In addition, such benefit is available when:
• An employee’s family member is sick or injured, or to tend to a family member receiving medical care;
• The employee or a member of the employee’s family is a victim of domestic violence;
• The employee’s place of business is closed due to a public health emergency, or the employee needs to care for a child whose school or place of care has been closed due to a public health emergency.
Employers may require employees to use their paid sick leave in minimum time increments, such as half-days (four hours). When the need for sick leave is foreseeable, such as for medical appointments or domestic violence court dates, an employee may be required to provide up to seven days’ notice to his or her employer. When the need for leave is not foreseeable, employers only may require employees to provide notice as soon as practicable.
In addition, if an employee is absent for more than three consecutive work days, an employer may require certification that such paid leave was legitimately authorized per above. Documentation from a licensed health care provider will satisfy this requirement, for situations involving heath issues, although such documentation need not specify the nature of any health condition. Verification in other situations may be provided via police reports, court documents, or a statement from an attorney, clergy member, or victim services advocate. Note, however, that an employer may not refuse paid sick leave based on an employee’s failure to provide such certification.
Notably, the Ordinance does not require employers to pay out unused, accrued paid sick leave to employees upon their termination (unless otherwise required by a union’s collective bargaining agreement). Paid sick leave is thus different than earned and unused vacation leave, which under Illinois law must be paid out to terminated employees.
What Must Employers Tell Their Employees?
Per the Ordinance, employers must post a conspicuous notice at each facility where any covered employee works that is located within the geographic boundaries of the City of Chicago, advising employees of the current paid sick leave rights. Employers that do not maintain a facility in Chicago are exempt from the posting requirement. In addition, employers must provide individual notice to their covered employees, with their first paycheck subject to this Ordinance. These two forms should be forthcoming from City government.
What Prohibitions and Penalties Exist Under the Ordinance?
Employers are prohibited from discriminating or retaliating against employees who exercise their rights under the Ordinance. In addition, employers may not count paid sick leave as an absence warranting discipline, discharge, demotion, suspension, or any other adverse activity. However, employers may take such adverse action against employees who misuse their paid sick leave.
In the event of employer violations of the Ordinance, aggrieved employees may pursue legal action, to recover both treble damages for unpaid sick leave benefits and attorney fees. The costs are thus potentially quite significant for noncompliant employers.
How Should Employers in Chicago and Elsewhere Respond?
Employers face increasing costs for human resources, and therefore this paid leave legal trend may be of concern. On the other hand, many employers already provide such benefit as a practical way to help employees and promote a healthy, productive work environment. Given these legal, financial, and practical aspects, employers may need to take the following steps.
A. Determine which – and how many – paid leave laws apply. This evaluation will depend on where an employer’s work sites and employees are located, with legal counsel engaged as needed to determine applicable legal parameters.
B. Check your employee handbooks and other communications about paid sick leave. Employers may need to update their documentation to implement new paid sick leave requirements, to coordinate paid sick leave with other paid leave benefits, and to comply with new carry-over requirements for paid sick leave. For example, employers may need to make clear that a “PTO” (paid time off) policy includes sick leave.
C. Evaluate the cost of legal compliance. Increased paid sick leave benefits may mean that an employer needs to cut back on other employee benefits (e.g., paid vacation leave), in order to stay within budgetary constraints.
D. Keep watch. In light of our current hodge-podge of paid sick leave coupled with the increasing variety of work environments, continued attentiveness to legal compliance remains paramount.