Ready For Chicago’s New Paid Leave Rules? Chicago Paid Leave And Paid Sick Leave Rules Update

Chicago’s landmark Paid Leave and Paid Sick and Safe Leave Ordinance (the “Ordinance”) reshaped how employers manage time-off benefits for their Chicago workforces. On May 18, 2026, the Chicago Commissioner of Business Affairs and Consumer Protection rolled out new rules and guidance for the Ordinance, (Chapter 6-130, Chicago Municipal Code), further broadening employee protections. The amended rules (the “Rules”) took effect on June 1, 2026.

Chicago enacted the original Ordinance in November 2023, requiring employers to provide Covered Employees¹ with at least 40 hours each of paid leave (“Paid Leave”) and paid sick and safe leave (“Paid Sick Leave”) annually. The Ordinance took effect on July 1, 2024. While the Rules clarify existing ambiguities, they also expand the Ordinance’s reach and impose new requirements and potential liabilities upon employers with Covered Employees.

Joint and Successor Liability

Significantly, the Rules expand the Ordinance’s regulatory reach by bringing joint and successor liability squarely within its ambit. With respect to joint liability, the Rules impose shared obligations on entities that exercise control over the terms and conditions of employment, bringing staffing agencies and professional employer organizations (PEOs) expressly within the Ordinance’s purview. Notably, each entity within a joint employment relationship must count all Covered Employees when calculating employer size for purposes of determining coverage thresholds — a requirement that will meaningfully expand the pool of employers subject to the Ordinance’s obligations.

The Rules similarly extend the Ordinance’s reach to successor liability. While the Ordinance already required employers to preserve accrued but unused leave balances following a sale, transfer, or assignment of a business, the Rules now tie this obligation to the Ordinance’s broader “meaningful access” standard — making clear that the failure to properly transfer and recognize leave balances constitutes an independent violation of the Ordinance, not merely an administrative oversight. Critically, liability for non-compliance extends not only to the successor employer but also to the original employer and any joint employers, creating overlapping exposure across the entirety of the employment relationship and underscoring the importance of careful due diligence in any business transfer involving Covered Employees.

Immigrant Workers and Day Laborers

The Rules also reflect Chicago’s broader political agenda by expanding employee protections beyond the Ordinance’s baseline requirements. Notably, the Rules address the City’s immigrant workforce directly, clarifying that “[i]mmigration status does not affect an individual’s status,” thereby ensuring that concerns about immigration standing do not deter workers from asserting their rights under the Ordinance. The Rules further extend express protections to day laborers — a category of worker previously left without clear coverage under the Ordinance — signaling the City’s intent to cast the widest possible net of protection over vulnerable and non-traditional segments of its workforce.

Alternative Childcare Arrangements

Beyond their policy-driven expansions, the Rules also serve an important clarifying function. Where the Ordinance left gaps or ambiguities in its requirements, the Rules step in to resolve them — and in doing so, further broaden the scope of employee protections in ways that employers must carefully implement. For instance, the Ordinance generally permitted Covered Employees to use Paid Sick Leave when they needed to care for a family member whose school, class, or “place of care” was “closed” but failed to define those terms or otherwise provide any meaningful guidance.

The Rules signal a deliberate departure from restrictive interpretations thereof, clarifying that a “place of care” encompasses informal childcare arrangements — including babysitters, family members, and friends who provide care while the employee is at work — and that a “closure” extends to situations in which the childcare provider is unexpectedly unavailable. In other words, nearly all childcare arrangements – formal and informal – now fall squarely within the Ordinance’s purview. Practically speaking, this expansive reading likely will result in increased unscheduled absences, particularly among those Covered Employees who rely on informal care networks.

While the Rules lean employee-friendly, they also afford employers some important (and newfound) protections. Notably, employers may discipline employees who abuse Paid Leave or Paid Sick Leave, particularly where there are discernable patterns of suspicious usage. The Rules provide a non-exhaustive list of examples, including:

• Unscheduled Paid Sick Leave on or adjacent to weekends, regularly scheduled days off, holidays, vacation or pay day;
• Taking scheduled Paid Sick Leave on days when other leave has been denied; and
• Taking Paid Sick Leave on days when the employee is scheduled to work a shift or perform duties perceived as undesirable.

By expressly referencing these patterns in the rule text, the City has provided clearer support for employers seeking to identify and address misuse. That said, to protect against potential discrimination or other disparate treatment claims, employers should tie any disciplinary action to an objective, documented pattern of misuse, rather than isolated instances.

Key Takeaways for Employers

Employers should ensure they implement this latest wave of changes to the Ordinance into their leave policies and practices. Sheppard attorneys are available to assist employers understand the Rules and remain compliant with this evolving paid leave landscape.

Footnote

1. The term “Covered Employee” has the definition assigned in Section 6-130-010 of the Municipal Code of Chicago. In relevant part, a Covered Employee is 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. An “Employer” is a person who gainfully employs at least one employee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.