Chicago Refines Paid Leave Rules Ahead of June 1 Effective Date

The City of Chicago has finalized revised rules implementing its Paid Leave and Paid Sick and Safe Leave Ordinance, with an effective date of June 1, 2026. Although the rules do not fundamentally alter the ordinance’s structure, they provide important clarifications regarding employer liability and employee use of leave.

Additionally, the revisions introduce explicit compliance expectations, particularly for organizations utilizing staffing arrangements, operating multiple worksites, or maintaining unified PTO policies.

Expanded Scope of Permissible Use for Childcare Unavailability 

The ordinance allows use of paid sick and safe leave (“paid sick leave”) when an employee needs to care for a family member whose school, class, or “place of care” has been “closed.” The rules clarify that a “place of care” can include informal childcare arrangements, such as babysitters, family members, or friends who provide care while the employee is working, and that a “closure” can include situations in which the childcare provider is unexpectedly unavailable.

This clarification reinforces that covered childcare arrangements are not limited to formal or institutional settings and addresses more restrictive interpretations of the ordinance. As a practical matter, employers may see increased unscheduled absences, particularly among employees who rely on informal care networks. For many employers, this change is less about policy revision and more about operational awareness and day‑to‑day administration.

Discipline for Misuse of Leave

The rules now expressly confirm that employers may take disciplinary action for misuse of paid sick leave, including where employees exhibit patterns of suspicious usage. In doing so, the rules provide a non-exhaustive list of examples of such patterns, 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.

This clarification is significant because it confirms employers may impose discipline for abusive patterns of use, even if an employee reports the use is for a protected reason. At the same time, employers should ensure that any such action is consistent and tied to an objective, documented, pattern of misuse, rather than isolated instances of paid sick leave use.

Joint Employer Liability

The rules introduce an explicit joint employer standard – an issue on which the ordinance itself is silent – providing that multiple entities may be responsible for compliance where the entities share control over the terms and conditions of employment. This includes relationships involving staffing agencies, professional employer organizations (PEOs), and similar arrangements.

Under the revised rules, all joint employers may be held jointly and severally liable for compliance with the ordinance, and covered employees must be counted by each entity for purposes of determining employer size and coverage thresholds.

This represents a material addition to the regulatory framework, creating new potential exposure for employers operating in shared or contingent workforce models. Employers should evaluate existing arrangements to ensure that responsibilities for paid leave compliance are clearly defined and aligned with the rule’s joint liability standard and that they are properly counting employees in determining whether applicable thresholds are met.

Successor Liability in Business Transactions

The ordinance already requires employers to ensure that employees retain accrued but unused leave following a sale, transfer, or assignment of the business where the employee continues working in Chicago. The revised rules build on this framework by clarifying that failure to properly transfer and recognize leave balances constitutes a violation of the ordinance by explicitly tying such violations to the ordinance’s broader requirement to provide “meaningful access” to leave.

In addition, the rules confirm that liability for failures in this context may extend to both the original and successor employer, as well as any joint employers, reinforcing the potential for shared responsibility in transactional or multi‑entity arrangements.

Although the underlying obligation to preserve leave balances is not new, the rules introduce greater clarity – and potential exposure – around how those obligations must be implemented in practice.

Recognition of Combined PTO Policies

The rules confirm that employers may utilize a single, combined PTO policy to satisfy their obligations under the ordinance in lieu of separate paid leave and paid sick leave banks, provided the policy meets all statutory requirements, including accrual, carryover, and permissible use.

This clarification is consistent with longstanding guidance and confirms an approach many employers have already adopted. At the same time, the rules make clear that the underlying compliance requirements remain unchanged – meaning that the portion of leave used to satisfy statutory obligations must independently comply with all required elements, regardless of how the employer structures its broader leave programs.

Importantly, nothing in the rules requires employers to limit employees to a single leave bank. Employers may continue to maintain separate PTO or vacation benefits in addition to the leave required by the ordinance, provided the bank used to satisfy statutory obligations complies with the applicable requirements.

Final Considerations for Employers

Taken together, the revised rules largely reinforce existing compliance frameworks but provide additional clarity in areas that have historically created uncertainty for Chicago employers. The most significant impacts are likely to be felt in areas involving multi-employer liability, transactional risk, and workforce administration, rather than the core leave entitlement itself.

Employers should use the lead time before June 1 to confirm that policies and practices are aligned with the clarified requirements.