Chicago Finalizes Revised Paid Leave Rules Ahead of June 1 Effective Date, by Paul W. Daugherity, 5-28-26

Chicago Finalizes Revised Paid Leave Rules Ahead of June 1 Effective Date

Chicago has finalized revised rules implementing its Paid Leave and Paid Sick and Safe Leave Ordinance, with the revisions taking effect June 1, 2026. Although the revisions do not fundamentally alter the ordinance’s structure, they provide important guidance on employer liability, employee use of leave, and administration of compliant leave policies.

The revised rules are especially significant for employers that use staffing arrangements, operate through affiliated entities, or maintain combined PTO policies. They also expressly confirm that employers may discipline employees for patterned misuse of paid sick leave and address how employees may use leave when childcare arrangements unexpectedly fall through.

Key clarifications

Among the most significant revisions is the inclusion of an express joint-employer standard. Under the revised rules, multiple entities may be responsible for compliance where they share control over the terms and conditions of employment, including in staffing-agency, professional-employer-organization, and similar arrangements, and joint employers may be held jointly and severally liable.

The rules also clarify successor liability in business transactions. Where a business is sold, transferred, or assigned and an employee continues working in Chicago, accrued but unused leave generally must continue to be recognized as required by the ordinance and applicable law. Failures in that process may create liability for the original employer, successor employer, and potentially joint employers.

Employee leave use

The revised rules provide additional guidance on when paid sick leave may be used for childcare-related disruptions. They explain that a “place of care” can include informal arrangements such as babysitters, family members, or friends providing care while the employee works, and that a “closure” can include the unexpected unavailability of that care provider.

The rules also expressly confirm that employers may discipline employees who abuse paid sick leave, including patterned misuse. The city identifies examples such as unscheduled leave near weekends, holidays, paydays, or other scheduled days off; leave taken after another leave request was denied; and leave taken on undesirable shifts, while also making clear that employers should rely on objective, documented patterns rather than isolated instances.

PTO policy implications

The finalized rules confirm that employers may use a single combined PTO policy to satisfy the ordinance, so long as the policy complies with the ordinance’s accrual, carryover, and permissible-use requirements.

Employers should therefore review whether their current PTO design actually satisfies all statutory elements, rather than assuming a general PTO policy is sufficient. This is particularly important for employers with multi-jurisdiction workforces that may already be managing overlapping city, county, and state leave requirements.

For a summary of the revised rules, please see here.

Employer takeaways

Before June 1, employers should consider taking the following steps:

• Review leave policies, handbooks, and payroll practices for compliance with the revised rules.
• Evaluate staffing, PEO, and affiliated-entity arrangements for possible joint-employer exposure.
• Address paid leave treatment in business-sale, merger, and transfer diligence, particularly where employees will remain working in Chicago.
• Train managers and HR personnel on childcare-related leave requests and on the limits of discipline for suspected misuse.
• Confirm that any combined PTO policy satisfies the ordinance’s accrual, carryover, and usage requirements.

Bottom line: The finalized rules clarify employer liability and leave administration under Chicago’s Paid Leave and Paid Sick and Safe Leave Ordinance. Employers should review policies, staffing arrangements, and PTO designs before June 1 to ensure compliance and reduce exposure to liability.

Author: Paul W. Daugherity is a Partner in KD’s Chicago office.