New paid sick leave and minimum wage raises underway in Chicago and Cook County

On July 1, many employers in Chicago and Cook County faced new requirements and revised their policies and practices. Employers with one or more employee must now provide paid sick leave (PSL) to most employees, including temporary and part-time employees. Covered employees earn 1 hour of PSL for every 40 hours worked, up to 40 hours of PSL every year. PSL can be used for employee or family illness/injury and other specified reasons.

Additionally, Chicago’s minimum wage increased from $10.50 to $11/hour, and Cook County’s rose from the state’s $8.25 wage to $10/hour. The majority of Cook County municipalities voted by home rule to opt out of the sick leave and/or wage increase. Challengers argue (litigation is pending) that only the state can constitutionally pass such laws, and that businesses would have to reduce staff and lower/eliminate benefits, and/or raise prices, jeopardizing future business.

APPLICABLE RULES AND CONFLICTS

Although the city and county ordinances are similar, there ARE differences between the laws and the rules established for implementation. Employers must be aware of which rules apply to what circumstances. The Chicago regulations provide that in the case of a conflict between the Chicago and Cook County ordinances, the Chicago ordinance shall prevail within the City. The Cook County law does NOT apply to employees who work (only) in Chicago - they are covered by the Chicago ordinance. Otherwise, follow the general legal principle that the provision most generous to the employee governs.

Businesses with locations and/or employees outside of Cook County (including outside of Illinois) may also be subject to PSL laws in those states, cities and counties where they have employees, following a national trend of PSL laws. It is crucial that employers determine and follow each applicable law based on jurisdiction.

Employers who already provide sick days or paid time off (PTO) at a rate and in a manner that complies with applicable law may be deemed to satisfy the requirements. Most, however, will require policy modifications, including broadening the reasons allowed for taking leave, adding carryover rights and changing the medical certification rule. (Many employers require a doctor’s note for employees who are absent for 3 days for illness. Under the new laws, employers can only require medical certification for absences exceeding 3 consecutive days.)

Non-compliance could be costly. Violators can be subject to a fine of up to $1,000 per day per affected employee, plus lost wages, and injunctive relief. Employees may also bring a lawsuit for violations.

COVERED EMPLOYERS

The Chicago PSL law covers employers, including nonprofits, who maintain a business facility in Chicago and/or who are required to obtain a business license to operate in the City. “Business facility” means a place maintained by an Employer where it conducts business operations, and also includes places where a domestic worker or home health care worker is employed and engages in work for an Employer. A person or entity that employs 1 or more employees, including domestic workers, home health care workers or day laborers who qualify as Covered Employees, is an Employer for PSL. (The Illinois overtime exemption for employers with less than 4 employees does not apply, even to small employers of domestic or home health care workers.)

Cook County’s PSL and minimum wage laws apply to employers with their principal place of business within Cook County and at least 1 Covered Employee, unless the municipality in which they operate has opted out of the ordinance. Any fixed location where the business of the employer is transacted is a “place of business,” e.g. store, restaurant, office, factory and storage facility, as well as a residence where a person employs a Covered Employee as a domestic worker.

There is a significant distinction to note. While the city and county PSL rules and Cook County’s minimum wage all apply to employers with 1 or more covered employee, Chicago’s Minimum Wage rules do not apply to employers with less than 4 employees - other than employers of domestic workers (i.e. the same meaning as in the Illinois Minimum Wage Law.) Therefore, Chicago employers with less than 4 employees (other than domestic workers) need not pay Chicago minimum wage. But they are subject to Chicago PSL rules. Chicago employers with 1 or more domestic employee are covered by both and must pay the new minimum wage for work performed in Chicago by a Covered Employee.

COVERED EMPLOYEES

A “covered employee” is any employee who works at least 2 hours in a 2-week period while physically present in the respective geographic boundary (either Cook County or Chicago) and works at least 80 hours in any 120-day period. (Both laws recognize exemptions, such as employees covered by collective bargaining agreements and employees under 18. There are also rules for seasonal employees and breaks-in-service.)

SICK LEAVE ACCRUAL

Under both ordinances, covered employees accrue 1 hour of paid sick leave for every 40 hours worked, up to a maximum of 40 hours in a 12-month period. Employees who are exempt from overtime requirements accrue paid sick leave based on the number of hours worked in a normal work week, up to 40 hours.

FRONT-LOADING OPTION

Alternatively, employers can use a “front-loading” method and award employees a lump sum of 40 hours of paid sick leave immediately upon the date of an employee’s eligibility. This may eliminate the burden of calculating accrued paid sick leave, but could also provide some employees more sick leave than they would have otherwise been eligible to receive.

WHEN AND HOW ACCRUED LEAVE MAY BE USED

An employer may require employees to work up to 180 days before using any accrued sick leave. If an employee separates employment before the end of the 180-day period, the employer is not required to pay the employee the sick leave accrued but not used. Unlike vacation/PTO, employees are not due accrued, unused sick leave when employment ends. Employers may also establish a minimum increment of 4 hours in which paid sick leave can be used.

SICK LEAVE CARRYOVER

An employee who does not use all accrued paid leave by the end of the 12-month period may carry over to the following year half of all unused, accrued time, up to 20 hours. However, if the employer is subject to the Family Medical Leave Act (FMLA), workers can carry over additional PSL plus time allowed under the FMLA (amount is different under each ordinance.)

PERMISSIBLE USES OF SICK LEAVE

Employees may use accrued paid sick leave in the following situations:

• The employee or the employee’s family member is ill or injured.

• The employee needs to receive medical care, treatment, diagnosis or preventative medical care.

• The employee needs to care for a family member receiving medical care, treatment, diagnosis or preventative medical care.

• The employee or the employee’s family member is the victim of stalking or domestic or sexual violence.

• The employee’s place of business is closed due to a public health emergency.

• The employee needs to care for a child whose school or place of care has been closed due to a public health emergency.

NOTICE/CERTIFICATION

An employer may require that a covered employee provide up to 7 days’ notice if the paid sick leave is reasonably foreseeable. If the leave is not reasonably foreseeable, an employer may require that a covered employee notify the employer via phone, email or text message on the same day the sick leave is taken. Additionally, an employer may require medical certification supporting the leave for absences exceeding 3 consecutive work days.

RECORDKEEPING

Employers must maintain personnel and payroll records for 5 years showing details of PSL earned and used.

TAKEAWAY FOR EMPLOYERS

Given how many employers operate both in Cook County and in Chicago, having two different sets of rules is extraordinarily burdensome. Hopefully, the nuances and unanswered questions will be resolved through court/agency interpretation or legislative clarification. Until then, employers should do their best to comply.

Formal Notice

The Cook County and Chicago Commissions on Human Rights, responsible for enforcing the respective laws and rules, have issued model rules and posters. Employers should display the poster in a conspicuous location in the workplace. Employers were also required to give each worker notice of their rights under the ordinance with their first paycheck on/after July 1.

Written Policy

The regulations make clear that a written policy is essential. Otherwise, certain assumptions will be made about an employer’s practices and employees’ rights that may lead to penalties for employers. For example, if an employer cannot show a written policy with reasonable requirements for employees to provide notification, the Commission will presume that employees can use paid sick leave without providing any prior notice.

Employers should obtain a legal assessment as to which laws and rules apply and proposed revisions/updates/creation of sick leave and related policies (e.g. PTO, FMLA, short-term disability leave.)

Training

Train supervisory and payroll/benefits personnel to comply with the new benefits and recordkeeping rules.


© 2017 Lori A. Goldstein

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September 2017Volume 23Number 1PDF icon PDF version (for best printing)