Guide · Employment · Paid Leave

Paid Leave for Illinois Employers: PLAWA, the Chicago Ordinance, and Your PTO Policy

Illinois employees outside Chicago fall under the Paid Leave for All Workers Act, and people who work in Chicago fall under the City’s paid leave ordinance. This guide compares the two on coverage, accrual, use, separation pay, notices, and penalties, and shows where an existing PTO policy and the Wage Payment and Collection Act’s vacation rule fit.

By Lincoln Square Law · 12-minute read

An employer with staff in Chicago and elsewhere in Illinois usually runs two leave programs at once. The Paid Leave for All Workers Act (PLAWA) gives most Illinois employees up to 40 hours of paid leave a year for any purpose (820 ILCS 192/15). Chicago’s ordinance, implemented July 1, 2024, gives covered employees two separate banks, Paid Leave and Paid Sick Leave, each with its own accrual, use, and payout rules (Chicago Mun. Code 6-130-020, 6-130-030). The practical question is rarely whether to offer leave. It is whether the existing PTO policy satisfies the law that applies to each worker, and what must be paid at separation. Anything that may change is described as of this writing.

Which law covers which worker

PLAWA does not apply to an employer covered by a municipal or county paid leave ordinance in effect on January 1, 2024, and the Illinois Department of Labor (IDOL) refers Chicago and Cook County questions to the local agencies (820 ILCS 192/15, 56 Ill. Adm. Code 200.270(a)). The carve-out is narrower than it sounds. An employer covered by a local ordinance must still give PLAWA leave to employees the ordinance does not cover, and an employer in a municipality that opted out of the county ordinance remains subject to the Act (56 Ill. Adm. Code 200.270(b), (c)). A Chicago company with a warehouse in an opted-out suburb, or sales staff downstate, therefore has two programs.

Chicago coverage turns on physical presence. A Covered Employee works at least 80 hours for an employer within any 120-day period while physically in the City, and one employee is enough to make an employer (Chicago Mun. Code 6-130-010). Only hours worked inside the City count, and remote workers who meet the threshold are covered even when the employer is elsewhere (Chicago OLS Rules PTO 2.04(a)). For PLAWA, IDOL’s rules ask whether the employee’s base of operations is in Illinois and the work is primarily performed here (56 Ill. Adm. Code 200.110). Chicago’s Office of Labor Standards published revised rules in 2026. This guide relies on the codified ordinance and the 2024 rules, so confirm rule-level points against the current rules.

Workers the state Act excludes

PLAWA borrows its definitions from the Wage Payment and Collection Act, adds the State and local governments as employers, and includes domestic workers. School districts and park districts are not employers. Excluded employees include those covered by the federal Railroad Unemployment Insurance Act, students employed part time by their own college or university, and certain short-term higher education employees (820 ILCS 192/10).

Nor does the Act reach construction employees covered by a bona fide collective bargaining agreement, or employees covered by one with a national and international parcel and freight delivery employer. Other agreements may waive the Act only in explicit, clear, and unambiguous terms (820 ILCS 192/15). Chicago has the same construction exclusion and explicit-waiver standard, and any other waiver is void (Chicago Mun. Code 6-130-040). Independent contractors fall outside both laws, so a misclassification finding brings leave exposure with it.

How leave is earned

Under PLAWA an employee earns one hour for every 40 hours worked, up to 40 hours in a 12-month period, or the employer frontloads the full amount at the start of employment or of the period (820 ILCS 192/15). The employer picks the 12-month period, and IDOL’s guidance expects written notice if it changes. Leave is paid at the employee’s hourly rate, and tipped employees receive the full minimum wage or the agreed base rate, whichever is higher (56 Ill. Adm. Code 200.330(b)).

Chicago accrues faster and twice over: one hour of Paid Leave and one hour of Paid Sick Leave for every 35 hours worked, in whole hours only, with exempt employees presumed to work 40 hours a week. Each bank caps accrual at 40 hours per 12-month period, and the employer may frontload 40 hours of either (Chicago Mun. Code 6-130-030).

When leave can be used, and for what

PLAWA leave becomes usable 90 days after employment begins, for any purpose, with no reason given and no documentation required (820 ILCS 192/15, 56 Ill. Adm. Code 200.300(b)(2)). A manager who conditions approval on knowing why an employee wants Friday off has created a compliance problem.

In Chicago, Paid Sick Leave must be usable by the 30th day of employment, and Paid Leave within 90 days. Paid Leave is for any reason, with no explanation or proof. Paid Sick Leave is limited to the ordinance’s purposes, such as the employee’s or a family member’s illness or care, domestic or sexual violence, public health closures, and quarantine orders (Chicago Mun. Code 6-130-030). An employer offering one 80-hour bank must allow use after 30 days (Chicago OLS Rules PTO 2.07(b)).

Notice, documentation, and minimum increments

For foreseeable PLAWA leave the employer may require up to seven calendar days’ notice, and it must provide its policy at the start of employment (820 ILCS 192/15, 56 Ill. Adm. Code 200.310). Minimum increments may not exceed two hours a day (56 Ill. Adm. Code 200.300(g)(1)). Chicago allows up to seven days’ notice for foreseeable Paid Sick Leave and notice as soon as practicable when it is not. Documentation may be requested only after three consecutive workdays of Paid Sick Leave, and in violence-related cases the employee chooses the document. Minimum increments may not exceed four hours a day for Paid Leave or two for Paid Sick Leave (Chicago Mun. Code 6-130-030).

Carryover and the yearly cap on use

Unused PLAWA leave carries over, but the employer need not allow more than 40 hours of use in the period (820 ILCS 192/15). An employer that frontloads need not allow carryover at all (56 Ill. Adm. Code 200.320(b)). An employee rehired within 12 months gets the balance back (56 Ill. Adm. Code 200.420(b)). Chicago allows carryover of up to 16 hours of Paid Leave and 80 hours of Paid Sick Leave (Chicago Mun. Code 6-130-030). Frontloading Paid Leave ends the carryover duty, but frontloading Paid Sick Leave does not (Chicago OLS Rules PTO 2.05(a)). A policy that zeroes both banks at year end fails on the sick leave side.

What is owed at separation

PLAWA does not require payout of unused leave (820 ILCS 192/15). But if the leave is credited to a vacation or general PTO bank, IDOL’s rules require it to be paid out the way vacation is under the Wage Payment and Collection Act (56 Ill. Adm. Code 200.460). That Act requires the monetary equivalent of all earned vacation at the final rate of pay, bars forfeiture policies, and sets payment no later than the next regularly scheduled payday (820 ILCS 115/5). A blended PTO bank that includes vacation should be treated as payable in full. A separate PLAWA bank, with no other paid leave offered, carries no payout (56 Ill. Adm. Code 200.460(d)).

Chicago requires payout of unused Paid Leave by employer size. A Large Employer (more than 100 Covered Employees) pays the full balance. A Medium Employer (51 to 100) was capped at 16 hours until July 1, 2025 and has paid the full balance since. A Small Employer (50 or fewer) pays nothing (Chicago Mun. Code 6-130-010, 6-130-020). Size is the average over the prior 12 months, counting part-time, seasonal, and temporary workers (Chicago OLS Rules PTO 2.10). Paid Sick Leave is not paid out unless a collective bargaining agreement says so, and an employer with unlimited PTO owes 40 hours minus the time used in the last 12 months (Chicago Mun. Code 6-130-020, 6-130-030).

Testing an existing PTO policy

Neither law requires a second bank if the existing policy already complies. PLAWA accepts a policy that provides at least the minimum and lets the employee take leave for any reason, at the employee’s discretion (820 ILCS 192/15). Chicago accepts a policy that meets or exceeds the ordinance in amount and manner (Chicago Mun. Code 6-130-030). The test is the manner, not the hours. A ten-day bank that requires two weeks’ notice, approval based on the reason, or a doctor’s note after one day fails PLAWA for a worker in Peoria. In Chicago, a single bank must still honor the Paid Sick Leave carryover, the documentation limits, and the 30-day start.

As a recommendation, many employers with Chicago staff keep a designated sick bank and a separate Paid Leave or vacation bank because it simplifies the separation analysis, accepting that time credited as vacation is payable. The written policy should also match the benefits description in job postings (see our guide to Illinois pay transparency) and belongs in the onboarding packet (see the new-hire compliance checklist).

Postings, balance statements, and records

PLAWA requires posting IDOL’s notice where employee notices are customarily posted and including it in the handbook, with a $500 penalty for a first audit violation and $1,000 for later ones, and three years of records showing hours worked and leave accrued, taken, and remaining (820 ILCS 192/20). Chicago requires its notice at each facility, with the first paycheck, and annually with a paycheck issued within 30 days of July 1, plus a written balance statement each time wages are paid, which a pay stub can satisfy (Chicago Mun. Code 6-130-050). Chicago records are kept five years, or longer while a claim is pending, and employees may request copies (Chicago Mun. Code 6-130-110).

Retaliation, attendance points, and penalties

PLAWA bars adverse action for using leave, opposing a violation, or supporting another employee, and bars counting leave against an employee in evaluations, discipline, or a no-fault attendance policy (820 ILCS 192/25). Test that rule in the attendance system, which will assign points to protected leave unless someone configures it otherwise. IDOL may assess $2,500 per offense, and complaints may be filed within three years (820 ILCS 192/35, 56 Ill. Adm. Code 200.500(a)).

Chicago fines run from $1,000 to $3,000 per offense, with each day a separate offense (Chicago Mun. Code 6-130-080). Employees may sue for three times the leave denied or lost, plus interest, costs, and attorney’s fees. For Paid Leave that right has existed since July 1, 2025, and the pre-suit cure window expired by its own terms on July 1, 2026 (Chicago Mun. Code 6-130-100). The ordinance also bars changing schedules to avoid providing leave (Chicago Mun. Code 6-130-020).

Reviewing the leave policy, step by step

The sequence below is a recommendation, not a legal requirement.

• Map each worker by where the work is physically performed: Chicago, elsewhere in Cook County (noting opted-out municipalities), the rest of Illinois, or out of state.
• Compute the 12-month average of Covered Employees to set the Chicago payout tier.
• Confirm PLAWA leave and Chicago Paid Leave can be used without a reason, documentation, more than seven days’ notice, or approval based on the reason.
• Decide in writing whether leave sits in a designated or blended bank, and if it is credited to vacation, plan for payout under 820 ILCS 115/5.
• Set the 12-month period, accrual or frontloading, carryover, and increments for each group, checking the Paid Sick Leave carryover separately.
• Configure payroll for the 1-per-40 and 1-per-35 rates, pay-stub balances, tipped pay rates, and attendance rules that do not penalize leave.
• Post and distribute the IDOL and Chicago notices, and give written notice before changing the policy.
• Keep records for five years, train managers on what they may not ask, and revisit the policy whenever IDOL or the Office of Labor Standards revises its rules.