State Resources for Your Business
This map provides information that can help employers gain an understanding of some of the obligations businesses have in their respective states, including tax rates, minimum wage rates, workplace retirement programs, worker safety, and more. This subject matter is monitored and updated regularly.
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Covered Illinois Employers Will Need to Comply with the Paid Leave for All Workers Act
6 min. Read
On Jan. 1, 2024, all covered employers in Illinois will be required to offer their employees up to 40 hours of paid leave per year, and for any reason. The governor of Illinois signed the Paid Leave for All Workers Act into law March 13, 2023, making Illinois the third state (Maine and Nevada are currently the others) to mandate employer-provided paid time off without a qualifying reason.
What Are the Employer Requirements Under Paid Leave for All Workers Act?
A covered employer must decide how they want to provide paid leave hours; an accrual process over a 12-month period or frontloaded hours at the employment start date and annually after that. Employers must establish in writing what the 12-month period will be.
If an employer chooses to frontload the hours, then they are not required to allow employees to carry over any hours from one 12-month period to the next and employees would forfeit any unused leave at the end of the 12-month period. However, employers may choose to provide a more generous policy allowing for carryover.
If an employer chooses to use the accrual process, then covered employees will begin to accrue paid leave on the law’s effective date (Jan. 1, 2024) or at the start of their employment, and the minimum accrual will be one hour of paid leave for every 40 hours worked. Employees can accrue up to 40 hours in a 12-month period.
Employers are also subject to recordkeeping requirements including:
- Employee hours worked
- Paid leave accrued and used by each employee
- Paid leave balances for each employee
Required records must be retained for three years and made available upon request from the Illinois Department of Labor (IDOL), or upon request from the employee.
Additionally, employers must post the required notice in a conspicuous place on-site and provide written notice to employees (printed communication in physical or electronic format) or include a copy in a written policy or an employee handbook, if the employer has one. The required posting, which the IDOL will develop, will also need to be provided in other languages if there is a significant portion of employees that are not literate in English. In such instances, employers must notify the IDOL, which then will prepare a version of the notice in the appropriate language(s).
Employers may require advance notice from employees for their need for leave; up to seven days for any foreseeable need for leave or as soon as practicable for an unforeseen need for leave. If an employer requires any kind of notice for unforeseeable leave, then they must have a written policy documenting the procedures for employees to follow in such circumstances.
Under this law, employees are not required to produce documentation to support the need for their leave.
What Employees Should Know About Paid Leave for All Workers
Covered employees can accrue paid leave hours or have the balance frontloaded on the effective date (Jan. 1, 2024) or their first day of work, whichever is later.
Although employees begin accruing paid leave hours immediately upon their start date or on the effective date of the Act, employers are permitted to impose a waiting period that employees cannot use any paid leave under this law until they complete up to 90 calendar days on the job or 90 days following the effective date of Jan. 1, 2024, whichever is later.
Employees also will have the option of carrying over up to 40 hours of paid leave to the next 12-month period if the employer opts to use the accrual process.
As for pay while on leave under this act, employees must generally receive their hourly rate and tipped employees are owed at least the minimum wage. Employees also will retain any accrued paid leave time if or when they transfer within the company.
Additional Details for Employers
Under the Paid Leave for All Workers Act, employers do not have to pay out earned but unused paid leave time upon employee separation from the company, unless time under this act is credited to an employee’s existing paid time off or vacation bank or other paid leave policy that is required to be paid out under an existing Illinois law or rule.
Are Any Employers Exempt from Paid Leave for All Workers Act?
There are several types of employers that the Paid Leave for All Workers Act does not apply to, including school districts organized under the Illinois School Code, park districts under the Illinois Park District Code, and the federal government.
Additionally, the Act does not apply to employers who already are covered by a municipal or county ordinance in effect on or before Jan. 1, 2024, that requires them to provide paid leave to employees, including paid sick leave (e.g., the Chicago Minimum Wage and Paid Sick Ordinance, the Cook County Earned Sick Leave Ordinance).
Employers should know that if they are in a municipality or county that enacts or amends a local ordinance that provides paid leave, including paid sick leave, after the effective date of the Paid Leave for All Workers Act, they will only need to comply with the local ordinance so long as the benefits, rights, and remedies are greater than or equal to those afforded under this Act.
What are the Penalties for Noncompliance?
Employers could face civil penalties between $500 and $2,500, based upon the specific violation of the Act or any adopted rules. Additionally, employers might also have to pay, in part, attorney fees and other legal costs that an employee might be entitles to due to the employer’s violation.
The above represents a general summary of the provisions of the Paid leave for All Workers Act. Additional provisions and definitions are available in the statute.
Guidance from the IDOL is expected ahead of the law’s effective date, but covered employers can get ahead of any potential obligations by addressing their paid leave policies to make sure they are or will be compliant by Jan. 1, 2024. Paychex can provide support to help your business with its HR needs, including helping you keep up to date on federal and state employment regulations that could impact your business.
Amended New York State Pay Transparency Law to Impact Businesses with 4 or More Employees
6 min. Read
Pay transparency continues to be a major focus among state legislatures moving into 2023. In late December 2022, the governor of New York State signed into law legislative bill S.9427-A/A.10477 that will require covered employers in the state to comply with obligations related to pay transparency in job advertisements.
New York is one of seven states as of this publication date that have passed pay transparency legislation, and joins California, Rhode Island, and Washington in implementing such a law in 2023. New York’s law, which applies to employers located in New York state, goes into effect Sept. 17, 2023.
What is Pay Transparency?
Pay transparency is the act of sharing compensation information for positions within your business, including but not limited to pay rates for available positions, pay increases, bonuses, benefits, and more.
The primary goal of pay transparency laws are to help close pay gaps. In 2020, women made 83 cents for every dollar made by men, according to the U.S. Department of Labor. The gender pay gap was greater for black women (64 cents) and Hispanic women (57 cents).
Companies can demonstrate various degrees of pay transparency. For example, one company might choose to share pay ranges for open positions while another business might choose to share specific pay rates for every job. However, all businesses are required to comply with the applicable pay transparency laws in their state or local jurisdiction.
What is Required of Covered Employers Under the NY Pay Transparency Law?
An employer with four or more employees has an obligation to comply with the following requirements*:
- Include the minimum and maximum annual salary or hourly range when advertising a job, promotion, or transfer opportunity under the following conditions:
- Disclose the job description if one already exists when advertising a job, promotion, or transfer opportunity
a. If that job will be performed physically, at least in part, in New York state1
b. If the job, no matter where it is performed, reports to a supervisor or other site located in New York state
There is some ambiguity in the language of the amendment, but it seems to indicate that a business not located in New York state that wants to advertise a fully remote position might not be covered under the law.
The amendments also changed the record-keeping requirements, so employers would not be required to maintain records of the history of compensation ranges for each job, nor the job description, promotion, or transfer opportunity of such positions. However, it is a best practice to maintain records for a period of time to protect your business, regardless of whether it is required by a specific law.
Are There Other Pay Transparency Laws in NYS?
New York state, as of this publication, has three local jurisdictions with pay transparency laws that went into effect in 2022, including Ithaca (Sept. 1), New York City (Nov. 1), and Westchester County (Nov. 6). According to the state law, none of the provisions of the state law supersede the requirements of any local law, so businesses need to understand and comply with any additional requirements of the pay transparency laws in their local jurisdiction. For example, the NYC law covers employers of even one domestic worker, so the NY state law might not apply to them, but the NYC law would.
The state Labor commission is expected to release further guidance/regulations in advance of the effective date (Sept. 17, 2023).
What Are the Penalties for Noncompliance with NYS Pay Transparency Law?
According to the law, any business found in violation of the provisions will be subject to civil fines as follows:
- $1,000 for the first violation
- $2,000 for the second violation
- $3,000 for the third violation and beyond
There is no private right of action, but individuals may file a complaint with the NYS DOL commissioner. Employers should note that there is also an anti-retaliation provision in the law.
Paychex will continue to monitor this topic and provide updates on additional guidance provided by the NYS Commission of Labor. Also, has your business considered the benefits of working with an HR solutions provider that offers an HR Professional? You’ll get help assessing your needs, simplifying management processes, and identifying employment laws and regulations so you can better navigate compliance challenges.
* Certain employment agencies are considered eligible employees.
1 A written statement that details that compensation will be based on commission might meet the disclosure requirements for commission-only jobs.
Under Initiative 82, Washington, D.C. to Phase Out Tip Credit by 2027
6 min. Read
Washington, D.C. voters made it known at the November 2022 ballot box by an overwhelming margin that they want the tip credit to go away. Almost 75 percent of the nearly 180,000 votes cast helped Initiative 82 easily pass, calling for the phase out of the tip credit over the next five years.
The initiative — also known as the District of Columbia Tip Credit Elimination Act — requires a gradual increase in the minimum hourly cash wage paid to tipped wage workers in the nation’s capital and a corresponding decrease in the tip credit until it reaches zero on July 1, 2027. Seven states (Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington) currently prohibit employers from using a tip credit for tipped wage workers.
This law also impacts the Tipped Wage Workers Fairness Amendment Act (TWWFAA) of 2018 but does not eliminate any of the compliance obligations for employers who take the tip credit.
Recently signed legislation by the mayor of Washington, D.C., will delay the first increase to the minimum hourly cash wage until May 1, 2023 (originally set for Jan. 1, 2023), plus the initiative is undergoing Congressional review. There also will be a second minimum hourly cash wage increase in 2023.
What is a tip credit?
A tip credit enables employers to pay tipped-wage employees less than the minimum wage because tip income generally results in a tipped worker’s wages reaching or exceeding the minimum wage. The tip credit is the difference between the minimum wage and the minimum cash wage. Using Washington, D.C., as an example, the local minimum wage currently in effect is $16.10. The minimum cash wage for tipped workers is $5.35 per hour, making the tip credit $10.75.
Employers are responsible for making up the difference if an employee’s hourly tip earnings (averaged weekly) added to the minimum cash wage does not equal the full minimum wage in D.C.
Initiative 82 will follow this schedule for changes in the tip credit.
|Date||Maximum Tip Credit||Minimum Cash Wage|
|May 1, 2023||$10.10||$6|
|July 1, 2023||$8.10||$8|
|July 1, 2024||$6.10||$10|
|July 1, 2025||$4.10||$12|
|July 1, 2026||$2.10||$14|
|July 1, 2027||$0||$16.10|
D.C. Employers Still Have Compliance Obligations
Employers must comply with several provisions of the TWWFAA to maintain using the tip credit, but they also could avoid the time-consuming aspects of each requirement by paying their employees the current minimum wage in D.C.
Sexual harassment training
Under the TWWFAA, established employers had to create a sexual harassment policy and file it with the D.C. Office of Human Rights (DCOHR). Businesses also have to post the policy and distribute it to all employees. Employers must also report sexual harassment claims annually to the DCOHR, with the recently completed year’s (2022) reporting due by March 31, 2023, via an online form.
Businesses with tipped workers in Washington, D.C. must provide sexual harassment prevention training from a certified provider, which will include prevention measures, response protocol, and intervention, and within 30 days of completing the training are required to submit a certification to the DCOHR.
All employees must participate in the training within 90 days of hire or have been trained within the previous two years (beginning Dec. 12, 2020). Training must occur every two years and can be done online or in-person for non-managers, owners, and operators. Managers must attend in-person training sessions.
Minimum Wage Act training
- All owners, operators, and managers must complete training annually on the requirements of the Minimum Wage Act, with managers required to complete training in person while owners and operators can complete it online.
- Certification of training must be provided to the OHR annually.
Wage statement requirements
Employers must provide a statement with each wage payment that includes:
- Payment date
- Gross wages
- Deductions and additions, with gratuities noted on separate line
- Net wages
- Hours worked during the pay period
- Employee’s tip declaration form for the pay period, separating cash tips from credit card tips
Quarterly wage reporting requirements
Employers must submit a quarterly report certifying each employee was paid at least the minimum wage (tip included). A third-party payroll processor must submit the quarterly report via a web application that has yet to be determined. Hotels are exempt from using a third-party payroll processor.
Reports must contain:
- Employee name
- Number of hours worked during the week by each employee
- Total pay – tips included – for each employee
- Average weekly wage for each employee
- Employer’s tip-out policy – what numbers were used to calculate wages
Employers also will be required to provide to employees a notice stating:
- Provisions of subsection 4(f) of the Minimum Wage Act
- Each employee may retain all their tips if there is no tip-sharing policy
- Employer’s tip-sharing policy, if tips are shared
- Percentage that tips are reduced for credit card fees
Paychex will continue to monitor the developments under Initiative 82. In your research for a third-party payroll provider, consider the more than 50 years of experience an industry leader such as Paychex provides to more than 730,000 business clients who utilize our payroll and HR solutions.