The City of Chicago has issued updated regulations interpreting its Paid Leave and Paid Sick and Safe Leave Ordinance, providing employers with important guidance on paid leave administration, employee discipline, joint employment, and business transitions. The revised rules took effect on June 1, 2026, and clarify several areas that have created compliance challenges for employers since the ordinance was enacted.
Combined PTO Policies Remain Permitted
One of the most significant clarifications confirms that employers may maintain a single paid time off (PTO) bank instead of separate Paid Leave and Paid Sick Leave banks. However, employers should proceed carefully. To comply, a combined PTO policy must satisfy all requirements of the ordinance, including accrual, carryover, usage, and recordkeeping obligations. Simply offering a generous PTO policy does not automatically satisfy Chicago’s requirements.
Expanded Definition of Childcare Closures
The updated rules clarify that employees may use Paid Sick Leave when a child’s “place of care” unexpectedly closes. Importantly, the definition of “place of care” extends beyond schools and daycare facilities and may include informal caregiving arrangements, such as babysitters or family members who regularly provide childcare.
Employers May Discipline Abuse of Sick Leave
The revised regulations confirm that employers may discipline employees who misuse Paid Sick Leave, including in appropriate cases terminating employment.
Examples of potential abuse include repeated patterns of using sick leave:
• Adjacent to weekends, holidays, or vacation periods.
• After a request for another type of leave was denied.
• To avoid undesirable work assignments.
Employers should exercise caution before taking disciplinary action and ensure decisions are supported by documented facts rather than assumptions.
Joint Employers Share Responsibility
The updated rules make clear that joint employers are both individually and jointly responsible for compliance with Chicago’s paid leave requirements. This clarification is particularly important for employers that utilize staffing agencies, professional employer organizations (PEOs), or other workforce-sharing arrangements. Businesses should review these relationships to ensure responsibilities are clearly understood and documented.
Business Sales and Acquisitions Create Additional Obligations
The regulations also address mergers, acquisitions, and business transfers. When employees move to a successor employer as part of a transaction, accrued and unused Paid Leave and Paid Sick Leave generally must transfer with the employee. Both the seller and purchaser may face liability if these obligations are not properly addressed during the transaction process.
Forework Takeaway
Chicago continues to maintain some of the most complex paid leave requirements in the country. Employers should not assume their existing PTO policies automatically comply with the ordinance and they should proactively audit their written policies and actual procedures to confirm that they are in compliance.