Employers, not only in Chicago, but potentially anywhere in the U.S., may soon be subject to yet another coming blitz of potentially ruinous lawsuits for likely minor mistakes, business groups have warned, under a new paid time off ordinance passed by Mayor Brandon Johnson and his democratic socialist allies on the Chicago City Council.
"In their effort to quickly pass this ordinance as opposition continued to grow, proponents (the mayor and his allies) created a policy that will devastate Chicago businesses, especially small businesses, and make it even more difficult to attract and retain businesses like restaurants, grocery stories, and pharmacies in underserved neighborhoods," a coalition of business advocates wrote in a joint statement.
On Nov. 9, during a relatively quick special City Council meeting just before a long holiday weekend, the Council voted 36-12 to approve the so-called Chicago Paid Leave and Paid Sick and Safe Leave Ordinance.
Under the ordinance, everyone who is considered an employee who works just two hours inside Chicago's city limits within a two week period is entitled by law to receive up to 10 days paid time off annually, including a minimum of five days to use for any reason.
All businesses with more than 50 employees will also be required to pay workers the equivalent of any unused PTO when they either quit or terminated.
The ordinance takes effect on Jan. 1, 2024.
The measure was strongly backed by labor unions and other left-wing "pro worker" advocates.
Supporters hailed the measure as a "legislative victory" for Mayor Johnson that establishes Chicago as the most "progressive" city in the U.S., when it comes to extending new guarantees for all workers.
“I am proud that Chicago is once again leading the nation in the struggle for workers' rights, and strengthening the economic vitality of our city," Johnson said in a prepared statement, before the vote.
In a tweet posted after the vote on social media platform X (formerly known as Twitter), Johnson added: "Paid time off helps businesses retain workers, and helps workers find time for family, and health. We are investing in workers, and investing in people. When workers win, everyone wins."
Johnson has further repeatedly stated his administration enacted the ordinance through a collaborative process, that brought "everyone to the table."
He noted, for instance, that the ordinance originally would have required 15 days off every year. He said the 10 day requirement was the result of a "compromise."
The city's largest business advocates, however, disagreed with that assessment, instead saying the mayor and his allies mostly listened only to their political supporters in ramrodding the ordinance through, ignoring further suggestions from business groups for revisions that they said would have ensured workers would get their PTO, without exposing employers to potential ruin.
They particularly pointed to a provision in the ordinance that will allow workers to sue employers, potentially imposing draconian judgments and demands for settlement. They noted the City Council specifically rejected a request from business groups for a provision that would have given employers 30 days to fix any alleged violations of the ordinance before they could be sued.
The joint statement released after the vote was signed by the Illinois Retail Merchants Association, Chicagoland Chamber of Commerce, Hospitality Business Association of Chicago, Illinois Hotel & Lodging Association, Illinois Manufacturers Association, Illinois Restaurant Association, Building Owners and Managers Association of Chicago, Little Village Chamber of Commerce, Pilsen Chamber of Commerce, Andersonville Chamber of Commerce and Greater Englewood Chamber of Commerce,.
The statement lists six major problems the business groups identified with the ordinance.
Most of the issues center on the risk employers in Chicago and elsewhere could face from potentially massive and costly lawsuits.
They note the "private right of action" included in the ordinance will combine with "an ambiguous definition for a 'covered employee'" to empower trial lawyers to sue not only employers located in the city of Chicago, but any company, anywhere, that sends workers to Chicago, even if just for trade shows or business meetings, if they don't comply with the city's new PTO ordinance.
Further, the business groups said, the ordinance gives employers just eight weeks to bring their human resources system into compliance, or "face exorbitant fines on day one."
And they noted the sudden new PTO mandates come on top of recent city action to eliminate tip credits and quadruple the real estate transfer tax.
The new lawsuit risk also comes on top of thousands of class actions targeted at employers in Chicago and elsewhere in Illinois under Illinois state laws, including the Biometric Information Privacy Act (BIPA) and the Genetic Information Privacy Act (GIPA).
Typically, employers have been targeted under the BIPA law for requiring workers to scan fingerprints when punching in and out of work shifts. Recent rulings from the Democrat-dominated Illinois Supreme Court have declared businesses can be exposed to potentially "annihilative" demands for money under the BIPA law. Lawmakers have also to this point refused to reform the law to protect employers' ability to avoid such catastrophic payouts over technical violations of the law, when no one has been actually harmed.
Many of those same businesses are now also being targeted by class actions under the GIPA law, allegedly for asking job applicants about their medical histories, which they claim amounts to attempts to obtain people's private "genetic information." Payouts under the GIPA law could be even more draconian than under BIPA, legal observers have said.
"With this added burden of the most expensive and complicated paid leave policy in the country, as well as continued supply chain and labor challenges, persistent crime, costly regulations, and skyrocketing property taxes, it is death by a thousand cuts," the business groups said, about the Chicago PTO ordinance.
"Employers in every neighborhood will be left with no choice but to reduce operations and the number of employees, take their operations and jobs elsewhere, or close.
"Today, City Council has cemented Chicago’s status as a hostile place for employers of every size and sector to do business and continued their direction of discouraging economic development, investment, and job growth in the communities that need it most."