Seyfarth Synopsis: With the July 1, 2017 effective date only two days away, Chicago has at long last published its final paid sick leave rules. These rules, along with the city’s model notice, should be incorporated into employers’ sick leave programs as they prepare for compliance.

On June 28, 2017, Chicago released its final paid sick leave rules (the “Final Rules”). The Final Rules were issued after the conclusion of a public comment period on Chicago’s draft sick leave rules. Employers should assess and take the Final Rules into account as they prepare for the Chicago Paid Sick Leave Ordinance’s (“PSLO”) July 1, 2017 effective date.

On July 1, Chicago will join Cook County in moving forward with its paid sick leave requirements for covered employers. Cook County released its own final paid sick leave rules earlier this month.

Chicago also recently published a model notice that employers can use to satisfy the PSLO’s notice and posting requirements. As a reminder, the PSLO requires employers to provide employees with individualized notice of certain sick leave rights when the first paycheck subject to the PSLO is issued to employees. In addition, employers must post the model notice in a conspicuous place at their Chicago business facilities.· Interplay with Cook County Earned Sick Leave Ordinance: One antidote prescribed by the Final Rules is guidance on how employers should handle the overlapping Chicago and Cook County paid sick leave requirements. The Final Rules expressly state that “[i]n the case of a conflict between the [PSLO] and the Cook County Earned Sick Leave Ordinance, the [PSLO] shall prevail within the City.”

  • “Calendar Year” and “Benefit Year” Definitions: The Final Rules define the terms “calendar year” and “benefit year” as follows: (a) “Calendar year” means twelve calendar months beginning at any point; and (b) “Benefit year” means the period that an employer sets so that all employees are synchronized to have benefits granted at the same time.
  • Union Employees: The Final Rules confirm the city’s draft paid sick leave rules’ provision about employer obligations with respect to union employees. The Final Rules explain that the PSLO does not apply to hours worked by employees covered by a collective bargaining agreement (“CBA”) in force on July 1, 2017. Employees covered by CBAs entered into after June 30, 2017 will be entitled to the PSLO’s benefits (assuming they otherwise satisfy the law’s eligibility and coverage standards) unless the CBA expressly waives the PSLO’s requirements in clear and unambiguous terms.
  • “Paid Time Off”: The Final Rules define the term “paid time off” to include time that an employer provides to an employee that can be used for any and all reasons in the PSLO, as well as other reasons. The Final Rules explain that where an employer’s Paid Time Off policy meets or exceeds the PSLO’s requirements on (1) accrual / grant of hours of paid sick leave, (2) carryover of paid sick leave from one year to the next, and (3) usage of paid sick leave, the employer does not need to provide additional leave “or [follow] the record requirements.” Importantly, the Final Rules expressly state that “other requirements of the [PSLO]…must still be followed.”
  • Accrual of Sick Time: The Final Rules note that only hours worked within the City of Chicago count toward accrual of paid sick leave and that employers are not required to allow accrual of paid sick leave when an employee is absent on paid or unpaid leave.
  • Salaried, Exempt Employees: Notably, the Final Rules state that salaried, exempt employees should accrue one hour of paid sick leave for each week of employment. However, where “the salaried position is for an amount different from 40 hours worked per week,…the rate of accrual shall be 1 hour for every 40 hours of salaried work.”
  • Frontloading and Usage of Sick Leave: The Final Rules explain that employers subject to the Family and Medical Leave Act (“FMLA”) can avoid the PSLO’s accrual and carryover requirements if they (a) grant covered employees 40 hours of paid sick leave no later than 180 days after the covered employee began working for the employer, and (b) make available an additional 20 hours of paid sick leave at the beginning of each subsequent benefit year to be used for FMLA purposes. In other words, the Final Rules state that employers that frontload their employees with 60 hours of paid sick leave at the start of each year will be able to avoid the PSLO’s carryover and accrual requirements. Where employers do not allow employees to use the full 60-hour grant of paid sick leave for all protected reasons, including those under the FMLA, the Final Rules include complex language about tracking the reasons for which the paid sick leave is used.
  • Year-End Carryover: The Final Rules state that employers must allow newly hired employees to carry over all of their earned, unused paid sick leave, up to 20 hours, at year-end. In other words, when dealing with new hires employers cannot take advantage of the PSLO’s normal carryover provision where the unused balance gets halved. In addition, the Final Rules reiterate that a maximum of 20 hours of regular paid sick leave and 40 hours of paid sick leave for FMLA purposes may be carried over from one year to the next if a covered employee works for an employer that is subject to FMLA.
  • Covered Family Member: The PSLO contains a broad list of covered family members, which includes, among other relationships, any other individual related by blood or whose close association with the employee is the equivalent of a family relationship. The Final Rules confirm that, as was noted in the city’s draft paid sick leave rules, family member may also include a godchild, godparent, and co-parent.
  • Payment of Sick Time: Employers are required to pay employees for used paid sick leave no later than the next regular payroll period beginning after the use of sick leave.
  • Commissioned Employees: The Final Rules state that for employees who are paid on a commission basis, whether base wage plus commission or commission only, the employer must pay the employees for used paid sick leave at the hourly rate of pay based on the base wage or the applicable minimum wage, whichever is greater.
  • No Reinstatement Upon Rehire: The Final Rules confirm that, unlike many paid sick leave laws and ordinances, employers have discretion when deciding whether previously earned, unused paid sick leave becomes available to a covered employee upon rehire.
  • Recordkeeping Requirements: Like the Chicago draft paid sick leave rules, the Final Rules contain a provision explaining covered employers’ recordkeeping obligations. Employers must maintain at least 12 different types of records for a period of not less than five years. These records include the: (a) date each covered employee was eligible to use paid sick leave; (b) Number of hours of paid sick leave accrued by or awarded to each covered employee; and (c) Dates and number of hours each covered employee used paid sick leave.

Chicago employers should take steps now to ensure that they will be able to achieve full compliance with the PSLO by the July 1, 2017 effective date. These are among the actions to consider:

  • Review existing policies and procedures immediately to ensure that they meet at least the minimum requirements or develop a new paid sick leave policy that complies with the PSLO.
  • Determine whether to have a single combined policy or separate policies for Chicago and Cook County locations.
  • Review and, as necessary, revise anti-retaliation, attendance, conduct, and discipline policies to prevent retaliation against employees for taking paid sick leave.
  • Prepare to comply with the PSLO’s posting and notification requirements.
  • Train supervisory and managerial employees, as well as HR, on the PSLO requirements.