Chicago Amends Rules for Paid Leave and Paid Sick Leave Ordinance

The Details

The City of Chicago has updated rules for its Paid Leave and Paid Sick Leave ordinance. The new rules take effect June 1, 2026, and clarify and define various aspects of the ordinance, including definitions, accrual, use, pay during leave, discipline for misuse, and more.

Background

Chicago’s ordinance requires all employers to provide both paid leave that covered employees can use for any reason (PL) and paid sick leave (PSL).

New Rules

Accrual

The new rules clarify that non-exempt employees under the federal Fair Labor Standards Act (FLSA) accrue PL and PSL on all hours worked, including overtime.

The accrual rate for an employee who is exempt from overtime requirements of the FLSA is capped at 40 hours per workweek for purposes of PL and PSL accrual.

Only hours worked within Chicago count toward accrual.

Remote Workers

The new rules also clarify that remote workers (who meet the definition requirements of a covered employee) and those who telecommute (who meet the definition requirements of a covered employee) are covered by the ordinance, even if the employer is physically located outside of the geographical boundaries of the city.

Note that a “covered employee” means an employee who works at least 80 hours for an Employer within any 120-day period while physically present within the geographic boundaries of the City. Once the threshold is reached, the Employee will remain a Covered Employee for the remainder of the time that the Employee works for the Employer.

Covered employees do not accrue PL or PSL for hours worked outside the geographic boundaries of Chicago, even if their employer is Chicago-based.

Use

Under both the prior and new rules, a covered employee may use PSL when their child’s place of care has an unscheduled closure. The new rules clarify that the term “place of care” includes not only professional and formal organizations (e.g. afterschool programs, childcare centers, summer camps) but also includes providers outside of institutional settings and locations (e.g. paid babysitters, family and friends who supervise children when covered employees are working).

Pay During Leave

The new rules clarify that for tipped employees, PL and PSL pay is based on the highest hourly rate of their base hourly wage, federal minimum wage, Illinois minimum wage, or full Chicago minimum wage (no tip credit).

For employees who receive commissions: PL and PSL pay is based on the base wage or the highest hourly rate of the federal minimum wage, the Illinois minimum wage or the full Chicago minimum wage (no tip credit), whichever is greater.

Discipline for PSL Misuse

The new rules add a provision that an employer may take disciplinary action, up to and including termination, against an employee who misuses PSL, such as patterns including, but not limited to:

·      Unscheduled PSL on or adjacent to weekends, regularly scheduled days off, holidays, vacation or pay day;

·      Taking scheduled PSL on days when other leave has been denied;

·      Using PSL on days when the employee is scheduled to work a shift or perform duties perceived as undesirable.

Employee Notice

Under the ordinance, employers may set “reasonable methods” for employee notification, but the new rules make clear that employers are prohibited from requiring that employees appear in person or deliver any document before using PSL or after using PSL to return to work.

Certification

The ordinance permits an employer to require certification for the use of PSL if an employee is absent for three or more consecutive workdays. The new rules clarify that “three consecutive workdays” means PSL absences on three consecutive days that the employee is scheduled to work. A shift that spreads from one calendar day into the next calendar day must be counted as one workday.

The rules also clarify that employers are prohibited from:

·      Requiring certification before notice of a third consecutive workday of PSL, and

·      Delaying PSL use or PSL pay pending certification.

Employer Notices

The rules clarify acceptable posting methods and formatting requirements for notices. For example, the new rules state that employers must post the required notice through the employer’s usual methods of communication for such notices.

A posted paper notice must be printed on, and each page scaled to fill, a sheet of paper that measures no less than eleven inches by seventeen inches.  

All notices must be posted in English. Employers must also request and post notices in the languages understood by a significant portion of its workers who aren’t literate in English. For purposes of this rule, “significant portion” means 5% or more of covered employees at a jobsite.

Available Paid Leave Written Notification

The rules confirm that an employer may choose a reasonable system for giving notice to its employees of the availability and use of Paid Leave and Paid Sick Leave, including, but not limited to, listing updated amounts of PL and PSL available to each employee on pay stubs or regular payroll statements; developing an online system where covered employees can access such information; or providing a handwritten record of available time.  Regardless of the method of notification, employers are still required to maintain copies of these records to be in compliance with the ordinance.

Employers are not required to provide notification to an employee if the employee has not worked any hours since the last notification. If an employer chooses to frontload, the employer must make written notification of the fact and the availability of the hours to a covered employee at the beginning of the benefit year. Employers that frontloads hours are still obligated to keep employees apprised of their available and used benefits in accordance with the ordinance

Alternative Policies

Under the new rules, an employer may establish a policy that allows employees access to a single, combined paid time off bank of up to 80 hours in lieu of maintaining separate PL and PSL banks, provided the policy meets or exceeds all requirements of the ordinance including for example, accrual, carryover, and permissible use.

Successor Liability

The 2026 rules clarify the obligations that arise when a business is sold, transferred, or assigned and employees continue working in Chicago. The revised rules make clear that failure to properly transfer and recognize employees’ accrued but unused leave balances following such a transaction constitutes a violation of the ordinance. Liability for these failures may extend to both the original and successor employer, as well as any joint employers,

Joint Employers

The new rules introduce an explicit joint employer standard. Multiple entities that share control over the terms and conditions of employment may be jointly responsible for compliance and liable for violations of the ordinance.

In addition, covered employees jointly employed by more than one employer shall be counted by each employer (e.g. for purposes of determining the size of the employer), regardless of whether their names appear on the employer’s payroll.
The rules indicate that joint employment can occur in a variety of situations, including, but not limited to, when an employer uses a temporary staffing agency, lead agency, professional employer organization, or other entity serving the same or similar functions. Review the text of the rules for more details.

Next Steps

·      Review the rules in full.

·      Update leave practices and policies as necessary.

·      Employers with multi-jurisdiction operations should ensure Chicago-specific requirements are applied to covered employees performing work within Chicago.