If Pain (Or Anything Else), Yes Gain – Part 138: Chicago Issues Revised Paid Leave and Paid Sick Leave Rules for 2026

What You Need to Know

 On May 15, 2026, the City of Chicago adopted revised rules interpreting Chicago’s Paid Leave and Paid Sick and Safe Leave Ordinance.[1] The updated rules, effective June 1, 2026, make a number of substantive additions and clarifications, including new guidance on joint employment, workplace posting, rate of pay for tipped employees, reasons for use, paid sick leave abuse, successor employer obligations, benefit year administration, universal PTO policies, and accrual for exempt & non-exempt employees.[2]

Here are some highlights:

Joint Employer Guidance

The Ordinance itself is silent on joint employment; however, the new rules expressly address joint employment.

The new joint employment rule states that joint employment exists when the essential terms and conditions of an employee’s work are controlled by two or more entities. The updated rule further clarifies that:

• Separate entities may be treated as joint employers;
• Joint employers may have separate ownership, management, and facilities;
• All joint employers are individually and jointly responsible for compliance with the Ordinance; and
• Jointly employed workers must be counted by each employer, regardless of whether they appear on a particular employer’s payroll.

The rule specifically notes that joint employment may arise in arrangements involving temporary staffing agencies, lead agencies, professional employer organizations, and similar entities.

Workplace Posting and Notice to Employees

The Ordinance requires employers to display a workplace posting. Interestingly, the amended rules have removed the general provision  mentioning electronic dissemination of the notice through the employer’s internal communication channels, but maintain the previous iteration’s language stating that a posted paper notice must be printed on and scaled to fit a sheet of paper no less than 11 inches by 17 inches. Notably, the amended rules retain the language stating that an employer must post the notice through its “usual methods of communication.”

Relatedly, as a reminder, Chicago employers must comply with new hire and annual notice obligations under the Chicago Ordinance. Regarding the latter, the Ordinance requires that employers provide a notice to employees of their paid time off rights annually with a paycheck issued within 30 days of July 1.

Rate of Pay for Tipped Employees

Under the amended rules, non-exempt employees who receive gratuities must be paid the higher of (1) their base hourly wage, or (2) the applicable minimum wage (without any allowance or credit for tips). Previously, this rule stated that non-exempt employees who receive gratuities simply had to be paid the highest applicable minimum wage.

New Guidance Regarding Reasons for Use – Child Care Closures

The revised rules also add guidance regarding the use of Paid Sick Leave when a child’s place of care experiences an unscheduled closure.

The rules clarify that “place of care” includes not only professional and formal organizations such as childcare centers, after-school programs, and summer camps, but also non-institutional providers, including paid babysitters, family members, and friends who supervise children while employees are working.

The rules include examples of when Paid Sick Leave can be used involving an at-home babysitter canceling unexpectedly and the unplanned cancellation of after-school programming.

Abuse of Paid Sick Leave

The new rules also add a new provision addressing abuse of Paid Sick Leave.

Under Rule PTO 2.17, employers may take disciplinary action, including termination, against employees who abuse Paid Sick Leave or use Paid Sick Leave for purposes other than those authorized by the Ordinance.

The rule provides several examples of potential abuse, including patterns involving:

• Unscheduled leave adjacent to weekends, holidays, vacations, or paydays;
• Scheduled leave taken at times when other leave requests have been denied; and
• Leave taken on days involving shifts or duties perceived as undesirable.

Successor Employers

The revised rules create a new section governing treatment of earned, unused Paid Leave and Paid Sick Leave in light of employer sales and transfers.

Under Rule PTO 2.12, failure to properly transfer accrued and unused Paid Leave and Paid Sick Leave to a successor employer constitutes a policy or practice of failing to provide meaningful access to leave under the Ordinance.

The rule further provides that the original employer, successor employer, and any joint employer may be individually and jointly liable for such violations.

Benefit Year Administration

New benefit year guidance expressly states that employers may establish different benefit year dates for different employees or may synchronize benefit years across the workforce.

The rules also include examples of qualifying benefit years, including:

• Anniversary date of employment;
• Calendar year;
• Contract year;
• Fiscal year; and
• Tax year.

Universal PTO Policies

The amended rules add Rule PTO 2.08, confirming that employers can use a single, combined PTO policy to satisfy their obligations under the Ordinance, as long as the policy meets the requirements of the Ordinance.

Clarifications Regarding Accrual

The amended rules provide additional guidance regarding leave accrual for exempt and non-exempt employees. The rules now expressly state that:

• Non-exempt employees accrue leave on all hours worked, including overtime hours; and
• Exempt employees’ accrual calculations are capped at 40 hours per workweek (in other words, exempt employees do not accrue Paid Leave or Paid Sick Leave on hours worked in excess of 40 hours per workweek).

What Employers Should Do Now

The 2026 Chicago Paid Leave and Paid Sick and Safe Leave rule revisions provide additional guidance in several areas that previously lacked detailed instruction from the City of Chicago. Employers with Chicago employees should review their paid leave policies, practices, and system configurations to ensure compliance.

With the paid leave landscape continuing to expand and grow in complexity, companies should reach out to their favorite Seyfarth attorney for solutions and recommendations on addressing compliance with nationwide paid leave requirements. To stay up-to-date on paid leave developments in Chicago and beyond, click here to sign up for Seyfarth’s Paid Sick Leave mailing list. Companies interested in Seyfarth’s Paid Sick Leave laws survey should reach out to paidleave@seyfarth.com.

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[1] For more information on the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance, see our prior Legal Updates, here and here.

[2] As a reminder, several other paid time off laws exist in Illinois, including the statewide PTO law, Cook County PTO ordinance, and Village of Orland Park PTO ordinance. Neither the statewide PTO law nor the Cook County PTO ordinance technically applies within the City of Chicago due to the existence of Chicago’s Paid Leave and Paid Sick and Safe Leave Ordinance.