Large Fines Assessed Under Chicago and Cook County Paid Sick Leave Ordinances

In 2016, the City of Chicago and Cook County passed matching paid sick leave ordinances to become effective in 2017.¹ The ordinances, though a watershed moment in the Chicagoland area for employee paid sick time, would become part of a national trend of municipalities across the country requiring private employers to offer paid leave benefits. Now, five years later, businesses have started seeing large penalties assessed by the municipal agencies enforcing the ordinances. These penalties illustrate the difficulties even sophisticated employers face when trying to comply with the ordinances and, in light of recent amendments, also underscore the need to review and potentially update current policies.

Large Public Penalties Assessed Against Employers

In May 2021, the Chicago Office of Labor Standards entered into an agreement with a food and beverage company to pay $476,083 in restitution and a $95,217 fine for allegedly failing to provide paid sick leave to 465 employees between 2017 and 2020. According to the public records, when the Chicago ordinance became effective in July 2017, the collective bargaining agreement between the company and a union representing the employees had expired. The parties were in the midst of extended negotiations and paid sick leave was allegedly not implemented during the negotiations.

Then last month, the Chicago Office of Labor Standards entered into another agreement with a franchisee of a fast food chain, for $458,931 in restitution and a $100,000 fine. The penalties related to allegedly failing to grant paid sick leave to more than 2,000 employees throughout Chicago between 2017 and 2020.

Compliance Becoming a More Complicated Task

Many Chicago and Cook County employers have become very familiar with the ordinances as a result of managing the legal requirements since the ordinances became effective in July 2017. At that time in 2017, though, the ordinances had nearly identical requirements and significant overlap on the key obligations. For example, both ordinances required (and still require) employers to provide 40 hours of paid sick leave to workers in each 12-month period of employment, with the right to cap annual accrual at 40 hours. Employees still qualify for sick leave under both ordinances if they work at least 80 hours for a covered business in any 120-day period and perform at least two hours of that work in Cook County or Chicago during any two week period. Neither ordinance requires pay for unused sick leave as cash upon termination. And both ordinances have an exemption where unionized employees can waive their rights by doing so clearly, expressly, and unambiguously in the collective bargaining agreement. We reported on many of these original requirements in a prior alert.

In the years following enactment, however, subtle but important differences began to emerge in the ordinances, occasioned by Chicago and Cook County publishing their own interpretative rules, as well as Chicago passing amendments that became effective August 1, 2021.

A prime example of the subtle differences between Chicago and Cook County is in the way the ordinances treat "frontloading" (the practice of offering a bank of all the paid sick leave available over the 12-month period to the employee at the outset of the 12-month period). To illustrate this point, consider the three ways Cook County permits frontloading for employers subject to the Family and Medical Leave Act. The employer can (a) frontload the 40 hours the employee could accrue in a year, while allowing the employee to carryover up to 60 hours into the next year, (b) frontload the 60 hours that the employee could have carried over from a previous year, while allowing the employee to accrue up to an additional 40 hours for use in the current year, or (c) frontload the entire 100 hours. The Chicago rules do not outline these three alternatives. Instead, the Chicago rules state that FMLA-covered employers can satisfy the ordinance by frontloading 60 hours.

As another example, the recent amendments to the Chicago ordinance expanded the reasons for which employees can take Chicago paid sick leave, creating another discrepancy between Chicago and Cook County. Italicized below are the reasons an employee could take Chicago paid sick leave before the amendments. The reasons added by the amendments are marked in bold:

1. The Covered Employee is ill or injured, or for the purpose of receiving professional care, including preventive care, diagnosis, or treatment, for medical, mental, or behavioral issues, including substance use disorders.

1. A member of the Covered Employee’s family is ill, injured, or ordered to quarantine, or to care for a family member receiving professional care, including preventive care, diagnosis, or treatment, for medical, mental, or behavioral issues, including substance use disorders.

1. The Covered Employee, or a member of the Covered Employee’s family, is the victim of domestic violence, as defined in Section 103 of the Illinois Domestic Violence Act of 1986, or a sex offense, defined here as any conduct proscribed in Article 11 and Sections 12-7.3, 12-4.4 and 12-7.5 of the Illinois Criminal Code of 2012, or trafficking in persons as defined in Section 10-9 of the Illinois Criminal Code of 2012 (720 ILCS 5/10-9); or

1. The Covered Employee’s place of business is closed by order of a public official due to a public health emergency, or the Covered Employee needs to care for a family member whose school, class, or place of care has been closed.

1. The Covered Employees obeys an order issued by the Mayor, the Governor of Illinois, the Chicago Department of Public Health, or a treating healthcare provider requiring the Covered Employee to:
   1. stay at home to minimize the transmission of a communicable disease;
   2. remain at home while experiencing symptoms or sick with a communicable disease;
   3. obey a quarantine order issued to the Covered Employee;
   4. obey an isolation order issued to the Covered Employee.

The amendments to the Chicago ordinance also clarify that employees must retain earned but unused paid Chicago sick leave in a change of control of the business (assuming the worker's employment continues under new ownership). Employers must post and disseminate a revised notice advising employees of their paid sick leave rights and their rights with respect to pursuing claims for wage theft. The revised notice, which reflects the amendments, has become available online from the Chicago Commissioner of Business Affairs and Consumer Protection.

As an additional complication, the Cook County ordinance might not apply in specific Cook County locations where employees work. In the first few years after the Cook County ordinance became effective, multiple townships and villages within Cook County opted out of the ordinance (which meant employees working in those townships or villages were not covered by the Cook County paid sick leave obligations). In the past few years, however, some of the townships and villages that initially opted out have reversed course and opted back into coverage—perhaps yet another example of a municipal process that employers have to monitor to know what obligations they face for paid sick leave.

Insights and Recommendations

• The Cook County Commission on Human Rights—the municipal agency responsible for enforcing the Cook County sick leave ordinance—is likely not far behind the Chicago agencies in pursuing alleged violations of the ordinance requirements. In view of this regulatory activity, employers subject to the ordinances will want to take a fresh look at leave policies to make sure they comply with the ordinances, including the new amendments to the Chicago ordinance and each municipalities' interpretive rules.

• In the enforcement actions mentioned above, the Chicago Office of Labor Standards assessed penalties for alleged noncompliance over a period of several years. For that reason, when reviewing existing leave policies for compliance with the ordinances, employers should also audit for historical compliance to confirm that no issues have persisted for a period of time that could create exposure to larger penalties.

• With some employees performing duties remotely, employers should consider whether any workers who changed to a remote location in Chicago or Cook County have become eligible for paid sick leave when not eligible previously.

• Although the majority of municipalities within Cook County opted out of coverage under the Cook County ordinance, employers should double check that they do not have employees in one of the townships or villages that decided to reverse course and opt back into coverage.

For more information on these Chicago and Cook County sick leave ordinances or for assistance in conducting a compliance audit, please contact your local Quarles & Brady attorney or:

• Brian Hartstein | (312) 715-5211 | brian.hartstein@quarles.com
• William Walden | (312) 715-5111 | william.walden@quarles.com
• Kaitlin Phillips | (312) 715-5179 | kaitlin.phillips@quarles.com

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¹ Cook County is Illinois' most populous county and includes Chicago, among other municipalities