Beginning January 1, 2024, employees in Illinois will accrue Paid Leave, which they’ll be able to use for any purpose. Resourcing Edge will share additional guidance closer to the effective date. In the meantime, here are the highlights.
The new law applies to employers of all sizes, and almost all employees are covered, with limited exceptions. Employers are exempt if they’re required to provide paid sick leave under the sick leave laws in Chicago or Cook County.
Accrual and Carryover
Employees will accrue Paid Leave at a rate of one hour of Paid Leave for every 40 hours worked. Employers can calculate exempt employee accrual based on a 40-hour workweek (even if the employee generally works more than that) or they can use their normal workweek if they regularly work less than 40 hours.
Employers can cap accrual at 40 hours per year. Unused Paid Leave must be carried over from year to year.
Employees can begin to use their Paid Leave on March 31, 2024, or after 90 days of employment, whichever is later. Employers may cap use of leave at 40 hours per year.
Employees may use Paid Leave for any reason. Employers cannot require documentation to support an employee’s request for Paid Leave.
Employees are entitled to determine how much Paid Leave to use, though employers can require them to use their Paid Leave in minimum increments of two hours, or their entire workday, if shorter than two hours.
Employers are required to provide employees with notice about their Paid Leave rights by displaying a poster at each worksite and providing individual notice to each employee. Employers that have a handbook or policy manual must include it there as well. The Illinois Department of Labor (IDOL) will create the required notice.
Employers can require employees to provide seven days’ notice for foreseeable leave and as much notice as is practicable for unforeseeable leave.
Employers aren’t required to pay out unused Paid Leave when an employee quits or is terminated. Employees who are rehired within 12 months of separation must have their unused Paid Leave restored.
Employers can use their existing vacation or paid time off policy to fulfill their obligations under the new Paid Leave law, as long as it offers equal or better benefits. In that case, however, unused vacation or paid time off must be paid out when an employee separates from employment (as required for vacation and paid time off under state law).
Resourcing Edge will share additional guidance closer to the effective date.
Employers in Illinois now have significant new recordkeeping obligations with respect to employee expense reimbursement as well as a bit more direction about when reimbursement is required. While Illinois employers have been required to reimburse employees for business expenses since 2019, the statute was brief, and the Illinois Department of Labor (IDOL) had not provided any illuminating guidance. New rules have now been released and we address the key points below.
Employers must keep all of the following for at least three years:
- Any policies regarding reimbursement
- Employee requests for reimbursement
- Documentation showing approval or denial of reimbursement
- Documentation showing actual reimbursement, including any supporting documents
Meaning of “Primary Benefit”
The statute requiring reimbursement says that employees must be reimbursed for necessary expenditures, which include all reasonable expenditures required of employees while doing their job and that are for the primary benefit of the employer. While we still don’t have guidelines for what counts as “reasonable,” IDOL has provided a five-factor test to determine whether an expense is for the primary benefit of the employer. Because this is a factors or balancing test, employers should look at the answers as a whole. Just because the answer to one or more is “no” doesn’t mean you can rule out reimbursement. The factors are:
- Whether the employee has any expectation of reimbursement.
- Whether the expense is required or necessary to perform the employee’s job duties.
- Whether the employer is receiving a value that it would otherwise need to pay for.
- How long the employer is receiving the benefit.
- Whether the expense is required of the job.
Expenses that should have been reimbursed but were not, are now owed to departing employees as part of their final pay. Making unreimbursed expenses part of their final pay creates both a payment deadline and employer liability under the wage payment law.
Policies Not Followed
The new regulation warns that if employers have a practice of reimbursing employees for expenses above and beyond their policy limits, deviating from that practice would be a violation of the law. In essence, if you let some people exceed the policy limits and still get fully reimbursed, you need to let everyone exceed the policy limits and get fully reimbursed.