Discussion

New FAQS on IPLAWA

On October 18, 2023, the Illinois Department of Labor (IDOL) published updated FAQs for the upcoming Illinois Paid Leave for All Workers Act (IPLAWA). The IDOL also held several informational webinars to address implementation of the IPLAWA. Key takeaways that employers should be aware of include:

Employer’s Pre-Existing PTO Policies. If employers have an existing paid time off policy that provides at least 40 hours of paid leave that can be used for any reason within a 12-month period, they can keep that policy and do not need to abide by the other provisions set forth in the IPLAWA. However, employers must ensure that their pre-existing policy is in place by January 1, 2024, and that it identifies that leave under the policy may be credited against any paid leave entitlement that the employee may have under the IPLAWA.

Denying IPLAWA Based on Operational Needs. The IDOL clarified that nothing in the IPLAWA prohibits employers from adopting a policy that establishes parameters for taking leave, and that employers may deny leave under the law for limited reasons based on the employer’s operational needs (e.g., seasonal, too many people taking leave at the same time, minimum staffing requirements for operations, etc.). However, the FAQs make clear that if an employer is going to deny leave for operational reasons, the employer must include what factors are to be considered and what circumstances may result in denial as part of their written leave policy. The policy must be communicated to all employees and evenly applied.

Proposed Regulations

In addition to the updated FAQs, the IDOL also issued its proposed regulations for implementing the IPLAWA. The proposed regulations are subject to a 90-day notice period before the regulations can be finalized, and the IDOL has indicated that they expect finalized rules to be issued before March 31, 2024. Although they may change during the rulemaking process, employers should be aware of the proposed regulations which are summarized below.

Employer’s Pre-Existing PTO Policies. In line with the FAQs, the proposed regulations also addressed a broad exemption for employers with pre-existing PTO policies. The regulations confirm that employers with a PTO policy that offers employees at least 40 hours of PTO that can be used for any reason per year do not need to change their policies, even if the pre-existing PTO policy provisions do not align with the IPLAWA on other issues (i.e., increment of use, advance notice/pre-approval provisions, and carryover).

Remote Employee Coverage. To address coverage of remote employees, the proposed regulations define an “employee” as one who: (1) works for an employer whose base of operations, regional office, or headquarters is in Illinois and that employee’s work is primarily performed in Illinois; or (2) primarily performs work in Illinois for an employer that performs substantial business in the state, markets its services in the state, or maintains a registered agent within the state of Illinois; or (3) primarily performs work in Illinois and resides in Illinois. When considering whether work is “primarily performed in Illinois,” IDOL will consider the following factors: (a) the ratio of work performed in Illinois versus outside of Illinois; (b) whether the work performed in Illinois is isolated, temporary, or transitory; and (c) whether the work performed outside of Illinois is of the same nature or has the same duties of the work performed in Illinois.

Accrual of Leave. Under the regulations, paid leave accrues at a rate of one hour for every 40 hours worked, but the calculation must be made on a fractional basis based on 15-minute work increments. For example, if an employee works for 75 hours in a biweekly pay period, they will accrue 1.875 hours of paid leave. Practically, this may result in employees accruing leave faster than the law requires. The proposed regulations require that employers always round up, regardless of where on the “dividing line” the time worked exists.

Leave Carryover. Under the IPLAWA, “all” accrued but unused leave must be carried over from one 12-month period to the next. However, the proposed regulations permit employers to establish a policy that caps leave carryover at 80 hours of unused paid leave. Employers can likely expect some additional guidance on this topic specifically, as the proposed regulations move through the rulemaking process.

Use of Leave. Employees may choose to use their paid leave before using any other leave benefits provided by the employer or state law. Similarly, employees can choose to use other leave benefits provided by the employer or another state law before using their accrued paid leave under IPLAWA. For recordkeeping, if employers provide more than one type of leave, the employer should confirm and document what category of leave the employee wishes to draw from for each absence.

Overlap with Local Laws. The proposed regulations confirm that the IPLAWA does not apply to employers located in a municipality where the employer is required to provide paid leave (including paid sick leave) to an employee, but will apply to employers located in a municipality that has “opted out” of the Cook County Earned Sick Leave Ordinance. If either Chicago or Cook County amend their ordinances after January 1, 2024, the employer must comply with the law that provides more generous paid leave benefits to employees.

Employer Reporting and Notice Requirements. The regulations outline several additional reporting and notice requirements that employers must abide by under the IPLAWA. In addition to the IDOL required notice, written policy, and recordkeeping requirements that are specifically outlined in the Act, the proposed regulations require the following:

• Frontloading Notice. Employers must provide written notice to employees informing the employee of the frontloaded amount of leave before that frontload amount is granted to the employee. “Written notice” means a printed or printable communication in physical or electronic format.
• Customized Employee Statement. Employers must post a statement summarizing the employer’s written policy and how an employee can obtain a copy of the policy. This must be provided in English and any other language commonly spoken in the employer’s workplace.
• Access to Policy. Employers must provide employees with a copy of the paid leave policy prior to or upon the commencement of employment or within 90 days after the effective date of the IPLAWA. If the employer regularly communicates with employees through electronic means, the policy must be provided by the regular electronic method.
• Employee Paystubs. Employers must report employee’s paid leave accrual and remaining balance on each paystub, and provide those records to employees upon request. Alternatively, employers may report the accrual and balance on the form that the employer normally uses to notify the employee of wage payments and deductions from wages.

Action Items

1. Review the full proposed regulations for the IPLAWA here.
2. Continue to monitor the IDOL website for updates to FAQ guidance and finalized regulations.
3. Prepare payroll processes for compliance with leave accrual.
4. Have leave policies updated for compliance.
5. Implement required employee notice procedures.
6. Have appropriate personnel trained on leave requirements.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase

Discussion

HB 4109 may soon require pay transparency in job listings and pay data reporting for Massachusetts employers. Under the proposed pay transparency requirements, employers with 25 or more employees must: (1) disclose the salary or wage range for a position in all job postings; (2) provide the salary range to employees who are offered promotions or transfers; and (3) provide the pay range to employees for their current role, if requested. The pay range must be the annual salary range or hourly wage range that the covered employer reasonably and in good faith expects to pay for such position at that time.

The pay data reporting requirements will apply to private employers with 100 or more employees. Covered employers must submit an EEO data report that includes workforce demographic and pay data categorized by race, ethnicity, sex, and job category. The underlying EEO report will not be considered a public record subject to disclosure, but the data will be aggregated and posted on the Massachusetts Department of Labor website. Notably, there is no private right of action in the law, and the Attorney General’s Office will be in charge of enforcement. The Office will have the power to seek declaratory or injunctive relief and impose fines for violations. Fines can range from $500 to $25,000 per violation, depending on the circumstances.

There was a similar bill in the Senate which is now being reconciled with the House bill. Once the two bills are reconciled, it will head to the Governor who is expected to sign. The law would go into effect one year from the date of signature. Employers should use that time to review their pay practices for compliance.

Action Items

1. Update job descriptions.
2. Conduct an equal pay audit.
3. Implement wage ranges for appropriate positions.
4. Update job posting procedures.
5. Review pay practices and EEO-1 reporting data.
6. Monitor the status of the bill for implementation.
7. Have appropriate personnel trained on the requirements.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase