All Illinois workers can begin to earn paid time off this week, thanks to a new bill signed into law last year.
The Paid Leave for All Workers Act allows employees to bank one hour of personal time for every 40 hours worked, up to 40 hours a year, regardless of full-time or part-time status. Illinois is just the third state to enact a law giving workers paid time off.
For workers living paycheck-to-paycheck, Sarah McManus says the benefit is a “very big deal.”
McManus is co-owner and manager of the Garlic Press in Uptown Normal. The boutique kitchen and specialty gift shop has a strong reputation for being flexible when workers need time off.
“If their car breaks down or the train’s kept them late, we understand,” McManus said. “The difference is, they could get paid for that.”
While McManus is supportive of the new law, it presents a challenge for the Garlic Press, especially when combined with a $1 increase to the minimum wage. Both took affect Jan. 1.
“It potentially could cost us more,” she said. “There’s no question.”
The Garlic Press has accounted for increased labor costs through marginal price increases, passing some of the burden to customers. Another strategy has been careful attention to profit margins when selecting merchandise. Some businesses like convenience and grocery stores have cut labor costs by installing more self-checkout machines. For McManus, it means her and Garlic Press co-owner Pam Locsin are putting in extra hours.
“We’re the ones staying until 7 p.m.,” she said. “We send everyone home and we work the floor. That’s a direct way for us to save money on that bottom line.”
Challenge for employers
It's just one more thing for employers to factor in, putting pressure on already beleaguered business owners after struggling through the pandemic—assuming they’re aware of the law in the first place.
“There are a ton of small businesses that have no idea this is happening,” said Katie McBride-Rife, an employee benefits consultant at the Iowa-based firm Cottingham & Butler. McBride-Rife lives in Hudson and serves on the Bloomington-Normal Human Resources Council. The Council and McLean County Chamber of Commerce have helped keep business owners apprised to changing labor laws.
“We knew this was coming, but if you’re not plugged in—if you’re busy in a two-man shop—you don’t know this kind of stuff,” said McBride-Rife.
For larger employers with primarily full-time workers, the new law may simply mean a change in the employee handbook.
“If you’re already offering 40 hours a year, all you have to do is say you can take it for any reason, and you’ve got to offer it to all your part-timers, too,” McBride-Rife said.
But even large employers aren’t totally clear on the particulars. McBride-Rife says she’s getting a lot of questions about compliance to the new law—and doesn’t have a lot of answers. What about Illinois-based companies with workers all over the country, for example? Do they give the benefit to all employees, or just the ones living in Illinois?
“The answer is, ‘it depends,’” said McBride-Rife.
Tracking poses an additional challenge. Payroll companies are developing ways for Illinois employers to keep track of the accrual process, but companies who manage payroll internally will need to develop a system to track time earned and time off. The law further stipulates workers can use paid time off for any reason and are not required to find someone to fill their shift.
“If you’re that retail shop that maybe has one or two people working, what if both of them call in the same day?” McBride-Rife said. “How do you staff your store?”
Applies to tipped workers
The law could also place further strain on the restaurant industry, which is still recovering from the pandemic and works on razor thin staffing and profit margins. General manager Joe Slane of Medici in Normal keeps an on-call list for emergencies. Prior to the Paid Leave for All Workers Act, employees were expected to cover a missed shift.
“We can’t not have shifts covered,” Slane said. He keeps staffing lean so tipped workers can make decent money in a shift. But that could mean a crushing blow to service if one or two workers call off.
“Every person is important,” said Slane.
Like other part-time workers, servers and bartenders can now accrue up to 40 hours of paid time off a year, at the minimum wage for tipped employees. As of Monday, that went up a dollar to $8.40 per hour. The federal wage for tipped workers is $2.30 an hour.
Customers may have noticed small price increases already at Medici to cover increased food and labor costs. Slane said they're taking a "wait and see" approach as to how the law will affect staffing and cost.
“It’s a big question mark on how that will all pan out,” he said.
Different for university faculty
It also remains to be seen how Bloomington-Normal's 1,200 university educators might use the new benefit. Illinois State and Illinois Wesleyan University each added 40 hours of additional paid time off to workers' coffers on top of the sick and vacation time they already receive.
“It’s going to be new and a little clunky at first, but I think we’ll figure it out,” said ISU Director of Benefits Services Kelly Walker. ISU Human Resources reached out to every academic department to decide how faculty may use the time while avoiding a disruption in courses. They have yet to receive definitive answers.
Perhaps the biggest change for teachers is that the onus now falls on their department to fill a class, though professors may choose to find their own sub. These sorts of provisions will likely have a greater impact for university faculty, whose pay is not affected by occasionally needing to miss class.
“It probably means less to the exempt staff in terms of maintaining pay,” Walker said. “It’s more, this is an absence that can’t reflect negatively on you.”
Student workers are exempt from the Paid Leave for All Workers Act—as are independent contractors and workers protected by a collective bargaining agreement.
Good for business?
In a statement, Lt. Gov. Juliana Stratton says the law serves as “protecting wages and providing relief for residents and their families while taking another major step to make our state the best place to live and work.”
McBride-Rife is not convinced the law will attract workers to the state. She said the state's labor laws also make it a tough place to do business.
“I’m of the mindset that you don’t force employers to offer benefits if they historically haven’t,” she said. “I don’t think that’s something the government should necessarily be involved in."
In other words, small businesses who want to take care of their employees were likely already doing it. And without a dedicated human resources person on staff, that means expensive outsourcing to a third-party agency or private attorney to parse through the changes.
“I haven’t met one business or HR person that’s like, thank gosh, another law that’s going to take care of my people,” she said. “It’s another layer of complexity. The larger companies are managing it a little bit better, but for these smaller ones—it’s really tough.”
