This year has started with a bang for Illinois employers. Days into 2023, the legislature passed the Paid Leave for All Workers Act (the “Act”), which would require Illinois employers to provide most employees with a minimum of 40 hours of paid leave per year to be used for any reason at all–not just for sick leave. Governor Pritzker has announced he looks forward to signing the legislation. If he does, Illinois will join Maine and Nevada and become the third state to require paid leave for employers for “any” reason. If signed, the bill will take effect January 1, 2024, and will apply to all employers with at least one employee working in Illinois.

Here’s what Illinois employers need to know now.

Who is covered–and who is not

Under the Act, an employee who works in Illinois is entitled to earn and use up to a minimum of 40 hours of paid leave (or a pro rata number of hours) during a 12- month period.

The Act looks to the Illinois Wage Payment and Collection Act to define “employer” and “employee” (with some additions and carve-outs), but essentially applies to all employers with at least one employee in Illinois and employees in Illinois with some notable exceptions:

• Independent contractors under Illinois law
• Individuals who meet the definition of “employee” under the federal Railroad Unemployment Insurance Act or the Railway Labor Act
• College or university students who work part time and on a temporary basis for the college at which they are enrolled
• Individuals who work for an institution of higher learning for less than two consecutive calendar quarters and who do not have an expectation that they will be rehired by the same institution
• Employees working in the construction industry covered by bona fide collective bargaining agreements (CBAs)
• Employees covered by CBAs with an employer that provides services nationally and internationally of delivery, pickup and transportation of parcels, documents, and freight.

Also, the Act does not apply to any employer that is covered by a municipal or county ordinance in effect on the effective date of the Act that requires employers to give any form of paid leave to their employees, including paid sick leave or other paid leave. Thus, for instance, employers covered by the Chicago Paid Sick Leave Ordinance or Cook County Earned Sick Leave Ordinance won’t be required to provide paid leave under the Act.

When and how paid leave accrues under the Act

Paid leave accrues for employees at the rate of one hour of paid leave for every 40 hours worked, up to a minimum of 40 hours of paid leave per 12-month period (or a greater amount if the employer chooses to provide more than 40 hours of leave).

An employee would begin to earn paid leave on their first day of their employment (or the first day of the 12-month period, see below)–or on the effective date of the Act, whichever is later.

Employees who are exempt from the overtime requirements of the federal Fair Labor Standards Act (FLSA) will be deemed to work 40 hours in each workweek for purposes of paid leave accrual unless their regular workweek is less than 40 hours, in which case paid leave accrues on a pro-rata basis based on the employee’s regular workweek.

The “12-month period”

The 12-month period can be any consecutive 12-month period designated by the employer in writing at the time of the employee’s hire.

The employer can change the 12-month period if the employer gives notice to employees in writing prior to the change, and the change does not reduce the eligible accrual rate and paid leave available to the employee. If the employer changes the designated 12-month period, the employer must provide employees with documentation of the balance of their hours worked, paid leave accrued and taken, and their remaining paid leave balance.

Employees can start using paid leave after 90 days of employment (or the Act’s effective date)

Employees can begin using paid leave 90 days after the commencement of their employment or 90 days following the effective date of the Act, whichever is later-but employers can allow employees to use paid leave earlier.

Employees determine how much paid leave they need to use, but employers can set a reasonable minimum increment for the use of paid leave not to exceed 2 hours per day. If an employee’s scheduled workday is less than 2 hours a day, the employee’s scheduled workday will be used to determine the amount of paid leave.