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  • Writer's pictureJulie A. Cardosi

Mandated Paid Leave for Employees Around the Corner -- Will Your Dealership Be in Compliance ?

In January 2023, the Illinois General Assembly passed the Paid Leave for All Workers Act (“PLFAW”)[1] and as of the writing of this article, the legislation is expected to be signed into law by Illinois Governor Pritzker and once signed, will become effective January 1, 2024. This new law will require most all Illinois employers to provide employees up to 40 hours of paid leave which employees can take “for any reason of the employee’s choosing” during a designated twelve-month period.

The PLFAW broadly defines “employers” and will essentially apply to all private employers regardless of size, including franchised automotive dealerships, and certain public employers including state and local governmental units and agencies.[2] The new law will cover these employees working in Illinois whether full-time, part-time, temporary, short-term, exempt or non-exempt, with certain specifically carved out exceptions (i.e., employees defined in federal Railroad Unemployment Insurance Act or Railway Labor Act; employees working in construction industry covered by a collective bargaining agreement; etc.).

Under the PLFAW, employees will be able to earn and use up to a minimum of 40 hours of paid leave (or a pro rata number of hours of paid leave), during a 12-month period which the employer designates in writing, such as in employment policies or an employee handbook. Employers can choose to “frontload” the leave on the first day of employment or the first day of a designated 12-month period, or use an accrual method (e.g., employees’ paid leave accrues at rate of 1 hour of paid leave for every 40 hours worked up to a minimum of 40 hours paid leave, or greater amount if the employer elects to provide more than 40 hours of paid leave).[3] Employees may also determine how much paid leave they need to use, but employers are permitted to establish a reasonable minimum increment for the use of paid leave not in excess of 2 hours per day.

In calculating the paid leave under the PLFAW, employers must pay the employee’s standard hourly rate of pay. For employees whose wages also include commissions, in calculating their paid leave, they must be paid at least the full minimum wage applicable in the jurisdiction in which they’re employed.

Under the PLFAW, employers will not be permitted to require any documentation or certification of the need to take leave; however, employers may require up to 7 calendar days’ notice of “foreseeable” leave if the employer has a written policy provided to employees outlining the notice requirements and procedures. This written policy must be provided to the employee on the employee’s first day of employment, or on January 1, 2024, whichever is later. If the leave is not foreseeable, employees must provide notice as soon as practicable. Employers will also not be allowed to interfere with, deny or alter an employee’s work hours or days to avoid providing the required paid leave.

Regarding an employee’s unused, accrued paid leave, under the PLFAW, if employers frontload the paid leave on the first day of employment or the first day of a designated 12-month period, they will not be required to carry over the employee’s unused paid leave to the next 12-month period. An employer may also require employees to use the paid leave before the end of the 12-month period. If, however, the employer uses the accrual method, then accrued, unused and earned paid leave would be permitted to be carried over to the next 12-month period. Also, under the PLFAW, employers will not be required to pay employees accrued, unused paid leave when the employee separates from employment (e.g., terminates, resigns, retires), provided the employer has not credited PLFAW leave to an employee’s paid time off bank or employee vacation account. Finally, if an employer rehires a separated employee within 12 months of separation, the employee’s earned paid leave has to be reinstated.

The PLFAW will be enforceable by the Illinois Department of Labor (IDOL), with specific record-keeping requirements which must be maintained for a specific time period, and conspicuous posting obligations, with penalties for non-compliance by the employer. Employers will also be prohibited from undertaking adverse action against employees for the exercise of their rights. In addition to IDOL enforcement against violations, employees may seek damages, attorneys’ fees and expert witness fees and penalties against employers.

Your dealership should review existing paid leave policies prior to January 1, 2024, and consult with private counsel and human resources advisors about the PLFAW. If the dealership has in place a policy that provides at least 40 hours of paid leave, the employer may not be required to modify the policy, but that policy must offer an employee the option, at the employee’s discretion, to take paid leave for any reason.

[1] Illinois Senate Bill 0208, 102nd Illinois General Assembly, [2] Excludes Illinois school districts under the Illinois School Code and Illinois park districts under the Illinois Park District Code. Also, does not apply to employers covered by a municipal or county ordinance in effect as of 1/1/24 requiring any form of paid leave to employees. [3] Employees classified as “exempt” from the overtime requirements under the Fair Labor Standards Act are considered to work 40 hours in each workweek for purposes of paid leave accrual unless their regular workweek is less than 40 hours. Paid leave begins to accrue on the employee’s first day of employment, or on January 1, 2024, whichever date is later. Employers can require that employees wait the later of 90 days from their start date, or 90 days from January 1, 2024, to begin using earned paid leave.

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