Chicago Paid Leave Rules Clarified and Now in Effect

Employers in Chicago: new rules that may require adjustments are now in effect.

The Chicago Department of Business Affairs and Consumer Protection (BACP) Office of Labor Standards (OLS) adopted new rules for administering Chicago’s Fair Workweek and Paid Leave and Paid Sick and Safe Leave Ordinances. The new rules were published on May 18, 2026, and went into effect on June 1, 2026. A separate blog post addressing the new rules to the Fair Workweek Ordinance can be found here. Without re-hashing all the details about compliance obligations under the Paid Leave and Paid Sick and Safe Leave Ordinance, here’s a summary of what’s important to know as these rules go into force.

Key Paid Leave and Paid Sick and Safe Leave Ordinance Rule Changes

As a reminder, Chicago enacted one of the nation’s most generous paid leave laws in 2023 and refined the Paid Leave and Paid Sick and Safe Leave (PL/PSSL) Ordinance in 2024 (read about that here). Broadly stated, most employees are entitled to accrue two hours of paid leave for every 35 hours worked within Chicago’s city limits – an hour for paid leave and an hour of paid sick leave.

Shortly before the PL/PSSL Ordinance took effect on July 1, 2024, OLS published implementing rules. These have been amended by the 2026 PL/PSSL Rules. Most of the revisions are semantic, consisting of minor wording adjustments, re-ordered definitions, and grammar adjustments. But a few are noteworthy clarifications.

All Joint Employers Must Comply with the PL/PSSL Ordinance

• The new rules define “joint employment” and state that if a covered employee is jointly employed by two (2) or more employers, all joint employers are responsible for compliance.
• Significantly, jointly employed workers must be counted by each joint employer in their headcounts, regardless of which employer has that worker on their payroll.

Non-Exempt Employees Accrue Leave for All Hours Worked – Including Overtime

• Covered employees who are not exempt from the overtime provisions of the Fair Labor Standards Act (FLSA) accrue both Paid Leave and Paid Sick Leave on all hours worked, including overtime.
• In contrast, accrual for exempt employees is capped at 40 hours per work week.
• The practical effect of this accrual distinction is significant: non-exempt employees who regularly work overtime will accumulate leave balances faster than employers’ existing accrual models may have assumed. Payroll and HRIS systems should be audited and reconfigured to track accrual on all compensable hours for non-exempt employees.

Paid Sick Leave Can Be Used for Childcare Needs

• A new provision regarding usage permits employees to use Paid Sick Leave when their child’s place of care has an unscheduled closure. The rule defined “Place of Care” broadly to include formal organizations (e.g., afterschool programs, childcare centers, summer camps) and non-institutional providers (e.g., paid babysitters or family/friends) who supervise children.

Employers Can Maintain Their Own Paid Time off Policy, but It Must Meet or Exceed the Ordinance’s Requirements

• Employers are expressly permitted to maintain a policy that allows employees access to accrue up to eighty (80) hours of paid time off as long as it meets or exceeds all requirements under the Ordinance.

Employers That Fail to Transfer Employees’ Accruals at Separation Face Liability

• A new rule specifies that employers must transfer a covered employee’s accrued and unused leave to a successor employer, and that failure to do constitutes a violation for which both the original and the successor employer – along with any joint employer – will be liable.

Updated Rate-of-Pay Rule for Gratuity Employees

• The rule updates the rate-of-pay at which employees must be paid for Paid Leave and Paid Sick Leave usage. For gratuity employees, the rule adds “their base hourly Wage” as an additional comparator to the existing floor of the highest of the federal, Illinois, or full Chicago minimum wage. This means gratuity employees must now be paid the highest of: (1) their base hourly wage; (2) the federal minimum wage; (3) the Illinois minimum wage; or (4) the full Chicago minimum wage (not the tipped minimum) for leave taken under the Ordinance.

Employers Can Discipline Employees Who Abuse Paid Sick Leave

A new rule clarifies that an employer can take disciplinary action, up to and including termination, against an employee who “abuses or uses Paid Sick Leave” for unauthorized purposes.

The rule offers several examples of abuse, including:

• Scheduling Paid Sick Leave on days when other leave has been denied;
• Scheduling Paid Sick Leave to avoid a shift or undesirable duties;
• Taking unscheduled Paid Sick Leave on or adjacent to weekends, regularly scheduled days off, holidays, vacation or pay day.

Changes Affecting Enforcement

• OLS eliminated a rule that spelled out complaint procedures for employees alleging violations of the PL/PSSL Ordinance.
• This deletion does not diminish BACP’s authority to enforce the ordinance.
• The rule’s elimination also does not affect the private right of action (available for Paid Sick Leave violations since July 1, 2024, and for Paid Leave violation since July 1, 2025) under the PL/PSSL Ordinance.
• Note that, by design, the ordinance’s temporary safe-haven, which requires employees to give employers an opportunity to cure violations before commencing a civil action, expires on July 1, 2026.

What Should Employers Do?

Chicago employers should review these new rules with Human Resources and their payroll vendors, if applicable, to ensure compliance as applicable. Some employers may need to adjust practices for accrual of the Paid Leave and Paid Sick Leave under the updated Ordinance.

Epstein Becker Green Staff Attorney Elizabeth A. Ledkovsky contributed to this update.