Tag: Cook County

Ethylene Oxide Verdict First of Its Kind, and It’s Eye Opening!

Our prior reports discussed when an ethylene oxide case would go to verdict, and what the ensuing result would look like.  We no longer need to speculate.  On September 19, 2022, a Cook County (Illinois) jury awarded $363 million to a plaintiff who alleged that she developed breast cancer as a result of ethylene oxide emissions from the Sterigenics Willowbrook plant.  This was the first ethylene oxide personal injury case to go to trial, but there are hundreds of cases behind it waiting their turn.

Trial

After a five week trial in the Circuit Court of Cook County, Illinois, Law Division (Sue Kamuda v. Sterigenics et al, case number 2018-L-010475), the jury returned a verdict in the amount of $363 million.  Plaintiff had requested $21 million in compensatory damages and $325 million in punitive damages.

Plaintiff Kamuda argued that the ethylene oxide utilized at the Willowbrook plant, opened in 1984 and used primarily to sterilize medical equipment, caused serious cancer and reproductive health risks. Kamuda alleged that the company failed to analyze how long the chemical would stay in the air in the Willowbrook community or the distance it would travel. Further, Kamuda argued that Sterigenics recklessly failed to install emission controls decades earlier to reduce releases of the chemical.

For its part, Sterigenics argued that plaintiff Kamuda’s reliance on risk assessment and regulatory studies inaccurately led to her assertion that her breast cancer resulted in part from the plant’s ethylene oxide emissions.

Notably, the facility was closed a few years ago after the state of Illinois issued a seal order in February 2019 directing that ethylene oxide emissions had to be reduced significantly. Ultimately, the company decided to keep the facility closed.

Analysis

With this very large jury verdict, plaintiff firms will surely be pushing to get their ethylene oxide cases to trial, or, at a minimum, leverage steep pre-trial settlements.  Further, plaintiff firms will surely recruit new plaintiffs who allege some type of cancer as a result of residing in the vicinity of an ethylene oxide plant.

The next ethylene oxide case to go trial is scheduled for two weeks from now in the same court, though with different plaintiff counsel and judge, as well as a different alleged disease (leukemia).

We note that it remains to be seen whether the Kamuda verdict will be appealed. It also remains to be seen whether this verdict is aberrational or is a bellwether for future trials. Will juries return verdicts based on one type of cancer but not for another?  We will continue to report as these ethylene oxide trials go to verdict and analyze the ramifications.

Article By David A. Goldman of CMBG3 Law

For more environmental, energy, and resources legal news, click here to visit the National Law Review.

©2022 CMBG3 Law, LLC. All rights reserved.

Chicago and Cook County Amusement Tax

In previous posts, we have explored several local Illinois taxes, including the Chicago Personal Property Lease Transaction Tax and Cook County Parking Lot Tax. Also notable is the Chicago and Cook County Amusement Tax, which can apply more broadly than taxpayers often anticipate. Specifically the scope of the amusement tax has been expanded over the last few years to non-traditional amusements, including electronically transferred television shows, movies, videos, music, and games.

Imposition of The Amusement Tax

Although the Chicago and Cook County amusement tax are imposed similarly on taxpayers, they are independently administered taxes that feature key differences. Both the Chicago Amusement Tax Ordinance (“Chicago Ordinance”) and Cook County Amusement Tax Ordinance (“Cook County Ordinance”) impose the tax “upon the patrons of every amusement” within the city or county, but require the owner, manager, or operator of the amusement to collect the tax from each patron and remit the tax to the Chicago Department of Finance (“Chicago Department”) or the Cook County Department of Revenue (“Cook County Department”).[1] Further, both Ordinances define “amusement” as “any exhibition, performance, presentation or show for entertainment purposes”.[2]

Where the Chicago and Cook County Ordinances deviate, however, are the examples used to define “amusement”, the rates of tax, and applicable exemptions. For example, although the Ordinances provide similar examples of qualifying amusements, including a motion picture show, athletic contest, or any theatrical, musical or spectacular performance, the Chicago Ordinance also includes “paid television programming” viewed within or outside the home.[3] In contrast, the County Ordinance does not include such language. Additionally, whereas the Chicago Ordinance imposes the amusement tax at a rate of 9 percent of the admission fees or other charges paid for the privilege to enter, witness, view or participate in the amusement, the County Ordinance imposes the tax at a rate of 3 percent (unless a lower rate applies, as addressed below).[4]

Further, the Chicago and Cook County Ordinances often exempt different activities. For example, although both Ordinances exempt admission fees to witness in person “live theatrical, live musical or other live cultural performances that take place in any auditorium, theater or other space”[5] with a certain limited capacity (“Small Venue Exemption”), the Ordinances include a different capacity limitation. Under the Chicago Ordinance, the Small Venue Exemption renders the amusement tax inapplicable where the maximum capacity of the venue, including all balconies and all sections, is not more than 1,500 persons.[6] In contrast, under the Cook County Ordinance, the Small Venue Exemption only applies where the venue has a capacity of not more than 750 persons.[7] Further, if the venue has a capacity of more than 750 persons, but fewer than 5,000 persons, the Cook County amusement tax applies at a rate of 1 percent rather than the general rate of 3 percent.[8] This serves as a notable example of where the Ordinances may appear to be substantially similar but in fact feature key differences. Additionally, whereas the City clarified in a 2004 Amusement Tax Ruling that “primarily educational” activities are not taxable amusements, Cook County has not released similar guidance.[9] The result is that depending on the nature of the activity, amusement tax may apply in one but not both jurisdictions.

Identifying Taxable “Admission Fees”

A contested issue in applying the amusement tax in both Chicago and Cook County is the amount that compromises the taxable “admission fees or other charges paid for the privilege to enter, witness, view” such amusement.[10] For example, in 2014, the Illinois Court of Appeals held that under the Cook County Ordinance, for club seats and luxury suites to Chicago Bears home football games, “admission fees or other charges” include the amenities available to holders of club seat tickets and tangible personal property included in the luxury suite admission price, not just the value of the home seat games.[11] The Court determined that because a fan cannot witness a game from a club seat without paying the club privilege fee and annual licensing fee, it is not possible to separate the “other charges” from the fee paid to enter the stadium.[12] As a result, the Illinois Appellate Court determined the full price paid by club seat holders and luxury suite licensees is subject to the County’s amusement tax. This decision may lead to efforts by the Chicago Department and Cook County Department to expand a taxpayer’s taxable base beyond the mere value of a “seat”. For example, both the County and the City have been aggressive in their application of the amusement tax to service fees despite clear language in the Ordinances that exempts separately stated optional charges.[13]

Expanding the Scope to Electronically Transferred Amusements

The Chicago Department has recently become aggressive in its expansion of the scope of the Chicago Ordinance. In a 2015 Amusement Tax Ruling, the Chicago Department asserted that the amusement tax is imposed “not only [on] charges paid for the privilege to witness, view or participate in amusements in person but also charges paid for the privilege to witness, view or participate in amusements that are delivered electronically.”[14] As a result, the Chicago Department intended to clarify that the Chicago amusement tax applies to fees or charges for the following if delivered in the City: (1) watching electronically delivered television shows, movies or videos; (2) listening to electronically delivered music; and (3) participating in games, on-line or otherwise.[15] Although treated with resistance by taxpayers[16], the implication is that the City Department has the authority to impose the amusement tax on users of streaming services such as Netflix and Spotify, and online gaming, such as PlayStation. Following the Mobile Telecommunication’s Sourcing Conformity Act[17], the amusement tax applies to customers whose residential street address or primary business address is in Chicago, as reflected by their credit card billing address, zip code or other reliable information.[18]

Further, as explored briefly above, the Chicago Ordinance treats “paid television programming” as a taxable amusement.[19] “Paid television” means programming that can be viewed on a television or other screen, and is transmitted by cable, fiber optics, laser, microwave, radio, satellite or similar means to members of the public for consideration.[20] Additionally, an “owner” includes “any person operating a community antenna television system or wireless cable television system, or any other person receiving consideration from the patron for furnishing, transmitting, or otherwise providing access to paid television programming.”[21]

In 2014, the Chicago Department began auditing and assessing amusement tax on a number of restaurants and bars located through the City who subscribed to paid satellite television programming and who did not collect the amusement tax[22]. In a move to clarify the application of the tax, in November 2016, the Chicago Department released an Informational Bulletin that provided additional information to business subscribers of satellite television regarding their obligation to collect and remit the Chicago amusement tax. As a result, bars, restaurants and any other businesses that subscribe to satellite television are required to remit the Chicago amusement tax on charges paid for satellite television services used in Chicago.

Applicability to Ticket Resellers and Agents

An area of uncertainty within both the Chicago and Cook County amusement tax is the potential applicability to ticket resellers and agents. The issue dates back to 2006 when the Chicago Department amended the Chicago Ordinance to require not only a “reseller” but also a “reseller’s agent” to collect and remit amusement tax.[23]This amendment set the stage for the Chicago Department to attempt to collect the tax from StubHub as a reseller’s agent. StubHub is an internet auction listing service that operates a “platform” where it charges buyers and sellers a fee to buy and sell ticket to various events.

On appeal to the Illinois Supreme Court, the Court entered a significant decision for online auctioneers, holding that municipalities may not require electronic intermediaries to collect and remit amusement taxes on resold tickets.[24] The basis of the Court’s ruling is that although the Illinois Ticket Sale and Resale Act (the “Act”) [25]gives municipalities the authority to require sellers and resellers of tickets to collect the amusement tax, municipalities do not have the authority to require internet auction listing services, such as StubHub, to collect the tax.[26] Although both the Chicago and Cook County Ordinance still define an “operator” as a person who “sells or resells a ticket”, the Stubhub decision resulted in the removal of the term “reseller’s agent” and “auctioneer” from the Chicago Ordinance.[27]

Conclusion

Although the Chicago and Cook County amusement tax are similarly imposed, there are notable differences between the applicability of the Chicago and Cook County Ordinances. These differences are particularly noteworthy with respect to potential exemptions and electronically transferred amusements. Accordingly, taxpayers should not assume that because the amusement tax applies in one locality, it applies in both Chicago and Cook County.

[1] Municipal Code of Chicago (“M.C.C.”) § 4-156-020(A), 4-146-030(A); Cook County Ordinance (“C.C.O.”) § 74-392(a), 74-395(a).

[2] M.C.C. § 4-156-010; C.C.O. § 74-391.

[3] M.C.C. § 4-156-010.

[4] M.C.C. § 4-156-020; C.C.O. § 74-392.

[5] The Chicago and Cook County Ordinance define “live theatrical, live musical or other live cultural performance” identically as a “live performance in any of the disciplines which are commonly regarded as part of the fine arts, such as live theater, music, opera, drama, comedy, ballet, modern or traditional dance, and book or poetry readings. The term does not include such amusements as athletic events, races, or performances conducted as adult entertainment cabarets.” M.C.C. § 4-156-010; C.C.O. § 74-391. In this regard, the Chicago Department and Cook County Department appear to play the role of an art critic, defining which activities qualify as “fine arts”. See a prior post exploring the issue in the context of disc jockeys.

[6] M.C.C. § 4-156-020(D).

[7] C.C.O. § 74-392(d).

[8] C.C.O. § 74-392(f)(1).

[9] Chicago Amusement Tax Ruling #1, ¶ 2.

[10] M.C.C. § 4-156-020; C.C.O. § 74-392.

[11] Chi. Bears Football Club v. Cook County Dep’t of Revenue, 16 N.E.3d 827, 835 (2014).

[12] Id. at 834. In determining the full price paid by club seat ticket holders and luxury suite licensees is subject to the amusement tax, the Court affirmed the reasoning of the court in Stasko v. City of Chicago, 997 N.E.2d 975, 993 (2013)(holding that the Chicago Ordinance applied because purchasing the permanent seat license was a prerequisite to viewing the game).

[13] M.C.C. § 4-156-020(H); C.C.O. § 74-392(e)(3).

[14] Chicago Amusement Tax Ruling #5.

[15] Chicago Amusement Tax Ruling #5, ¶ 8.

[16] The Chicago amusement tax, as it applies to certain electronically delivered amusements, such as paid television, was challenged but held by the Cook County Circuit Court to be constitutional in Labell v. City of Chicago, Case No. 15 CH 13399 (Cook Cnty. Cir. Ct. May 24, 2018). In this application, the amusement tax is often derisively referred to as the “ Cloud Tax” or the “Netflix Tax“.

[17] 35 ILCS 638.

[18] Chicago Amusement Tax Ruling #5, ¶ 13.

[19] M.C.C. § 4-156-010.

[20] Id.

[21] Id.

[22] For additional background regarding the Department’s efforts to collect the Chicago amusement tax from satellite providers, see a prior post.

[23] Under the Chicago Ordinance, a reseller’s agent is a “person who, for consideration, resells a ticket on behalf of the ticket’s owner or assists the owner in reselling the ticket. The term includes but is not limited to an auctioneer, a broker or a seller of tickets for amusements, as those terms are used in 65 ILCS 5/11-42-1, and applies whether the ticket is resold by bidding, consignment or otherwise, and whether the ticket is resold in person, at a site on the Internet or otherwise.” M.C.C. § 4-156-010 (amended May 24, 2006).

[24] City of Chicago v. Stubhub, Inc., 979 N.E.2d 844, 845 (2011).

[25] 720 ILCS 375/0.01 et seq. (2010).

[26] Stubhub, Inc., 979 N.E.2d at 857.

[27] M.C.C. § 4-156-010; C.C.O. § 74-391.

 

© Horwood Marcus & Berk Chartered 2019. All Rights Reserved.

Navigating a Cook County Department of Revenue Audit and the Procedure for a Formal Protest

A recent national trend in the practice field of state and local tax has been the uptick in local jurisdictions’ audit activity. The Cook County Department of Revenue (“Cook County” or “Department”) is no exception to this trend where in recent years, the Department has increased its audit activity, and much to the chagrin of taxpayers, has taken aggressive positions in the interpretation of its tax ordinances. Consequently, this has led to increased litigation in the administrative proceedings before the Cook County Department of Administrative Hearings (“D.O.A.H.”). This post provides an overview of the Department’s audit and ensuing D.O.A.H. processes and will highlight some of the procedural differences compared to other jurisdictions such as Chicago and Illinois. This background should assist any taxpayer in navigating the pitfalls and traps they will likely face if they receive a notice of Tax Assessment and Determination (“Assessment”).

Authority to Tax

The Illinois Constitution grants a home rule unit, which includes a county that has a chief executive officer elected by electors of the county, with authority to exercise any power and perform any function pertaining to its government and affairs, including the power to tax.  Ill. Const. Art. VII, § 6(a), 55 ILCS 5/5-1009. For taxes that are measured by income or earnings or that are imposed upon occupations, Cook County only has the power provided by the General Assembly.  Ill. Const. Art. VII, § 6(e). Cook County, however, is not preempted from imposing a home rule tax on (1) alcoholic beverages; (2) cigarettes or tobacco products; (3) the use of a hotel room or similar facility; (4) the sale or transfer of real property; (5) lease receipts; (6) food prepared for immediate consumption; or (7) other taxes not based on the selling or purchase price from the use, sale or purchase of tangible personal property.  55 ILCS 5/5-1009.

Audit Overview

Cook County, like the Illinois Department of Revenue and the City of Chicago Department of Finance, initiates an audit by issuing an individual or business a notice of audit to the taxpayer. The notice will generally identify the taxes subject to review, the periods under audit, and the time and location where the Department will undertake the audit. The notice will likely also include document requests and/or questionnaires that the Department has requested to review as part of audit. In some instances, however, if the Department believes that a taxpayer is not reporting a tax that the Department believes it is subject to, the Department will skip the audit and issue a “jeopardy assessment.” A jeopardy assessment assesses liability based on the books and records of who the Department deems to be similarly situated taxpayers.

Additionally, as my colleague Samantha Breslow discussed in ” Navigating a Chicago Audit and the Procedure for a Formal Protest“, taxpayers should take the Department’s information requests seriously.  It is especially important that the taxpayer stays engaged and responsive to Department auditors as a failure to do so may result in the Department issuing a jeopardy assessment. Cook County Code of Ordinances (“C.C.O.”) § 34-63(c)(2).[1]

Protest

While the Department’s audit process is very similar to Illinois, Chicago, and most other jurisdictions for that matter, the Department’s tax appeals process differs significantly. Unlike the Chicago Department of Finance which affords taxpayers 35 days to protest a notice of tax assessment, and the Illinois Department of Revenuewhich affords taxpayers 30-60 days to protest a notice of tax assessment, a taxpayer subject to a Department tax assessment must file its protest within 20 days of the Department’s mailing the notice of tax determination and assessment. C.C.O § 34-80. The taxpayer must either personally serve the Department with its protest, or place its protest in an envelope, properly addressed to the Department and postmarked within twenty days of the Department’s mailing of the protest. C.C.O. 34-79. At a minimum, a protest must identify the date, name, street address of the taxpayer, tax type, tax periods, the amount of the tax determination and assessment, and the date the county mailed the notice of assessment. The protest should also include an explanation of reasons for protesting the assessed tax and penalties. The Department has published a ” Protest and Petition for Hearing” form which must be used by a protesting taxpayer.  The form must be signed, and must include a power of attorney if the taxpayer is represented by someone other than the taxpayer.

Taxpayers should pay attention to the extremely short time frame in which to a protest must be filed. When considering the Department is only required to serve this notice by United States registered, certified or first class mail, a taxpayer is often left with less than 15 calendar days to file its protest. This is especially true for corporate taxpayers whose headquarters may differ from the address of its tax or legal department or the individual responsible for protesting tax assessments.

Administrative Proceedings

Upon timely receipt of a taxpayer protest, the Department will determine whether any revisions to the Assessment are warranted. This stage may result in a continuation of the audit where the Department will request additional documentation from the taxpayer and the Director of the Department does have the authority to amend the Assessment. While nothing prohibits the Department from increasing the Assessment during this stage, generally if a revision to the Assessment is made, the result is a reduction in the Assessment.[2]

If the parties are unable to resolve the audit, the Department then institutes an administrative adjudication proceeding by forwarding a timely filed protest to the D.O.A.H. C.C.O. § 34-81; C.C.O. § 2-908. The Director of the D.O.A.H. is appointed by the President of the County Board, and is subject to approval by the County Board of Commissioners. C.C.O. § 2-901(b).The Director appoints hearing officers, or administrative law judges (“ALJ”), who are independent adjudicators authorized to conduct hearings for the Department.C.C.O. § 2-901(a). The ALJ has authority to hold settlement conferences, hear testimony, rule upon motions, objections and admissibility of evidence. C.C.O. § 2-904. Note, however, the ALJ is prohibited from hearing or deciding whether any ordinance is facially unconstitutional. C.C.O. § 34-81.

At all proceedings before the ALJ, the Department will be represented by the State’s Attorney. The ALJ will set the matter for an initial pre-hearing status where the parties should be prepared to provide the ALJ with a brief overview of the facts and issues in dispute. The parties will then work to narrow the issues for presentment of findings by the ALJ. This will likely be accomplished by pre-hearing motion practice and the parties’ attempt to stipulate to facts and legal issues to be decided by the ALJ. Ultimately, the taxpayer and the Department will participate in a hearing, or trial, before the ALJ prior to the ALJ issuing a final order with findings of fact and conclusions of law. C.C.O. §  2-904.

Most taxpayers and practitioners are surprised to learn that the D.O.A.H. has no formal discovery. In fact, the parties are only entitled to conduct discovery with leave of the ALJ. Cook County D.O.A.H. General Order No. 2009-1 (“General Order”), Rule 6.3.In our experience,the ALJ will occasionally permit limited interrogatories and requests to admit, but requests to produce have been denied, and depositions arestrictlyprohibited. This is true even where a party intends on introducing an expert witness at the hearing.  Notably, because the Illinois Supreme Court rules do not apply, there is also no corresponding requirement that an expert submit its conclusions and opinions of the witness and bases thereof to the adverse party. See  Ill. S. Ct. R. 213(f). The ALJ may subpoena witnesses and documents which the ALJ deems necessary for the final determination. General Order, Rule 6.4. The lack of procedure naturally increases the likelihood of surprise at final hearing.

After the completion of any pre-hearing motions and the narrowing of the issues, the parties proceed to a hearing where each party will present its case. This is where the record is made for purposes of appeal. No additional evidence is permitted to be introduced at the Circuit Court. The Petitioner, often the Department, must present its case first and bears the initial burden.[3] However, the Department’s Assessment is deemed to be prima facie correct. C.C.O. § 34-64.Thus, a taxpayer has the burden of proving with documentary evidence, books and records that any tax, interest or penalty assessed by the Department is not due and owing.  C.C.O. § 34-63. The formal and technical rules of evidence do not apply at the hearing. C.C.O. § 2-911. A taxpayer can also present fact and expert witnesses in support of its position and may wish to call Department personnel such as the auditor and supervisor as adverse witnesses to support its case.

After both parties have concluded their case, each may request an opportunity to present a closing argument. General Order, Rule 9.4. In lieu of, or in addition to a closing argument, the ALJ may request the parties to file post hearing briefs. It is during the closing argument and/or brief, that the parties will have the opportunity to present its legal and factual defense to the Assessment.

After the hearing and review of post-trial briefs, the ALJ will issue a final order which includes findings of fact and conclusions of law. The findings of the ALJ are subject to review in the Circuit Court of Cook County pursuant to the Administrative Review and the aggrieved party has 35 calendar days to file an appeal. C.C.O. 2-917.

Conclusion and Takeaways:

The D.O.A.H. presents some unique litigation and procedural challenges for a taxpayer wishing to protest a Department Assessment. The major takeaways for a taxpayer protesting an assessment are (1) a taxpayer must file its protest within 20 days of the Department’s mailing of the assessment; (2) the D.O.A.H. has limited discovery rules and prohibits the use of depositions which can inhibit a taxpayer’s ability to build a case. Accordingly, a taxpayer must present adequate witnesses and documentation to support its case at hearing; and (3) a taxpayer must build a record at the administrative proceeding because it will be foreclosed from doing so at the circuit court if an appeal is necessary. These takeaways can go a long way in assisting a taxpayer’s chances of success in what is at times, an unpredictable venue.

[1] If a Taxpayer believes that it has paid a prior amount of tax, interest, or penalty in error to the department, in addition to amending its return, the taxpayer must file a claim for credit or refund in writing on forms provided by the Department. Cook County Code of Ordinances (“C.C.O.”) § 34-90.  The claim for refund must be made not later than four years from the date on which the payment or remittance in error was made. Id.  

[2] If the assessment is revised, the Taxpayer should determine whether the revisions are documented in an official “Revised Notice of Assessment and Determination” or alternatively, whether the revisions were documented in something less formal such as revised schedules or workpapers.  If it is the former, while the Ordinance does not expressly require an Amended Protest to be filed, the issue of whether a revised protestmust be filedwithin 20 daysof the Revised Assessment has been raised in administrative proceedings before the Department. 

[3] We have seen instances where the Taxpayer is identified as the Petitioner in the captioned matter.  In fact, the Taxpayer is identified as Petitioner in the Department’s Protest and Petition for Hearing Form.  However, because the Department submits the matter to DOAH, the taxpayer has no choice on whether it is identified as Petitioner or Respondent in the proceeding, and the Department’s inconsistency often leads to confusion regarding burden of proof issues.

 

© Horwood Marcus & Berk Chartered 2018. All Rights Reserved.
This post was written by David W. Machemer of Horwood Marcus & Berk Chartered 2018.

Chicago and Cook County Paid Sick Leave Laws Go Into Effect July 1: Are You Ready?

As the holiday weekend approaches, many employers in Chicago and Cook County find themselves scrambling to prepare for the Chicago and Cook County Paid Sick Leave Ordinances that will take effect this Saturday, July 1, 2017. The Ordinances, though straightforward in their purpose of providing some limited sick paid time off to employees, raise a number of thorny, confusing questions and various administrative concerns for all employers. To add to this uncertainty, the City of Chicago only yesterday released its extensive final interpretative rules on the City’s Ordinance, which raise a number of interpretative questions and, in places, appear to diverge from the previously-issued final rules of the Cook County Commission on Human Rights on the County’s Ordinance. Not only that, the list of Cook County’s municipalities that are opting out from the County’s Ordinance has been changing, literally, by the hour. To help you get up to speed and make any final necessary changes, in this Alert we will review some key requirements and provide responses to some FAQs employers have been asking related to paid sick leave in Chicago and Cook County.

Paid Sick Leave Requirements

The Ordinances require employers in Chicago and certain municipalities in Cook County to provide all employees, regardless of full-time, part-time, seasonal, or temporary status, with one (1) hour of paid sick leave for every for 40 hours worked, up to a maximum accrual cap of 40 hours in any benefit year. Employees are entitled to begin using accrued paid sick leave following 180 days of employment, provided they have worked at least 80 hours in any 120 day period.

Employees must be allowed to use paid sick leave for any of the following reasons:

  • The employee is ill, injured, or requires medical care (including preventive care);

  • A member of the employee’s family is ill, injured, or requires medical care;

  • The employee or a member of his or her family, is the victim of domestic or sexual violence; or

  • The employee’s place of business, or the childcare facility or school of the employee’s child, has been closed by an order of a public official due to a public health emergency.

In addition to providing employees with paid sick leave, employers are required to inform employees about their rights to paid sick leave by posting the Chicago and Cook County notices in the workplace and distributing these notices to employees with their first paycheck following the Ordinances’ effective date, or with any new employee’s first paycheck.

Frequently Asked Questions

When updating their employment policies and/or practices, employers should be mindful of the following frequently asked questions:

Do the Ordinances apply to all employees working in Chicago and/or Cook County?

The Ordinances are broadly worded such that employers are required to provide paid sick leave to all employees working in the geographic boundaries of the City of Chicago and/or Cook County. However, the Cook County Ordinance permits municipalities in Cook County to opt out of the Ordinance prior to its effective date.

So far, more than half of the municipalities in Cook County have opted out of the Cook County Ordinance, meaning that employers are not required to provide paid sick leave to employees working in these locations. However, if an employee should change work locations, or travel for work, into a municipality that has not opted out of the Cook County Ordinance (such as the City of Chicago), the employee would be entitled to accrue paid sick leave for hours worked in that municipality.

Are employees able to carryover accrued paid sick leave?

The Ordinances permit employees to carryover half of their accrued unused paid sick leave, up to a cap of 20 hours, into the next benefit year. Employees working for employers covered by the Family Medical Leave Act (FMLA) may carryover up to an additional 40 hours of paid sick leave into the next benefit year, to be used exclusively for FMLA-specific purposes.

Nonetheless, in most instances, employers may cap the amount of paid sick leave that an employee can use in a benefit year at 40 hours. The exception to this rule being that employees who carryover and use all 40 hours of FMLA-specific paid sick leave may use an additional 20 hours of regular paid sick leave in any benefit year. Thus, in limited circumstances employees may be able to use as many as 60 hours of paid sick leave in a single benefit year.

Are employers permitted to front-load paid sick leave?

Both Ordinances permit employers to front-load paid sick leave at the start of the benefit year, or at the time of hire. Employers who front-load paid sick leave do not need to track paid sick leave accrual or permit the carryover of paid sick leave into the next benefit year, provided that the requisite amount of paid sick leave has been front-loaded. The precise amount of paid sick leave to be front-loaded may depend on whether the employer is subject to FMLA and/or based in Chicago or Cook County, as their respective rules address front-loading differently. Employers with questions regarding the precise amount of paid sick leave that must be provided to employees should contact counsel.

Are employers able to provide paid time off in lieu of paid sick leave?

Employers may provide employees with paid time off (PTO) instead of paid sick leave, provided that all their employees are provided at least as much PTO as the Ordinances require to be made available for paid sick leave use in a benefit year. Employers should note, however, that accrued unused PTO must be paid out upon termination of employment. There is no such requirement to pay out accrued unused paid sick leave.

Recommendations

In light of the impending effective date for Chicago’s and Cook County’s Paid Sick Leave Ordinances, it is important that employers take any remaining necessary steps to ensure that their paid sick leave policies and practices will comply with the Ordinances. Policies that do not provide the requisite benefits to employees, or those that are silent on key issues such as paid sick leave accrual and/or usage restrictions, will be construed against the employer and could lead to costly violations.

This post was written by Alexis M. Dominguez and Sonya Rosenberg  of Neal, Gerber & Eisenberg LLP.

Cook County, Illinois Increases Minimum Wage

cook county illinois minimum wageEffective July 1, 2017, employers in Cook County, Illinois, will be required to pay a higher minimum wage that will continue to increase every year thereafter. On October 26, 2016, the Cook County Board voted to gradually increase the minimum wage to $13 per hour by July of 2020. This is similar to the City of Chicago’s minimum wage increase, which gradually raises the minimum wage to $13 per hour by 2019. The new law applies to the all of Cook County, including unincorporated areas. However, home-rule towns can vote to opt out of the increase.

The minimum wage will first increase from $8.25 to $10 per hour on July 1, 2017. It will subsequently increase $1 per year until reaching $13 an hour in 2020. Future annual increases will be tied to the rate of inflation, not to exceed 2.5%. Tipped workers who make $4.95 under Illinois law will not see a wage increase until July 1, 2018, and these wage increases will be tied to the rate of inflation, not to exceed 2.5%.

Employers in Cook County should prepare for payroll increases beginning July 2017 and continuing every year thereafter.

ARTICLE BY Brian P. Paul & R. Whaley of Michael Best & Friedrich LLP
© MICHAEL BEST & FRIEDRICH LLP

Cook County, Illinois, Enacts Paid Sick Leave Ordinance

paid earned Sick leaveThe Cook County “Earned Sick Leave” Ordinance mandates that employers in Cook County, Illinois, allow eligible employees to accrue up to 40 hours of paid sick leave in each 12-month period of their employment. The Ordinance, passed on October 5, 2016, becomes effective on July 1, 2017.

The Ordinance is similar to amendments to the Chicago Minimum Wage Ordinance providing for paid sick leave, also going into effect on July 1. Chicago is part of Cook County.

Paid Sick Leave Requirements

Who is covered?

Individuals are entitled to benefits under the Ordinance if they:

perform at least two hours of work for a covered employer while physically present within the geographic boundaries of the County in any particular two-week period; and work at least 80 hours for a covered employer in any 120-day period.

Compensated time spent traveling in Cook County, including for deliveries and sales calls and for travel related to other business activity taking place in the County, can count toward the two-hour requirement. However, uncompensated commuting time in the County will not be counted. Certain railroad employees are not covered by the Act.

Covered employers include individuals and companies with a place of business within the County that gainfully employ at least one covered employee. Government entities and Indian tribes are not covered employers under the Ordinance.

The Ordinance does not apply to collective bargaining agreements in force on July 1, 2017. After that date, the Ordinance may be waived in a bona fide CBA if the waiver is explicit and unambiguous. In addition, the Ordinance does not apply to any covered employee in the construction industry who is covered by a bona fide CBA.

What if my company already provides employees with paid time off (PTO)?

If an employer has a policy that grants employees PTO in an amount and a manner that meets the requirements of the new Ordinance, the employer is not required to provide additional paid leave. However, any existing PTO policy must meet each requirement of the Ordinance, including the reasons for which the time off may be used, to qualify for this exemption.

When do employees begin to accrue paid sick leave?

Employees begin to accrue paid sick leave on the first calendar day after the start of their employment or July 1, 2017, whichever is later.

How much sick leave is required and can employers limit the amount used?

Employees will accrue one hour of paid sick leave for every 40 hours worked. For purposes of calculating accruals, the Ordinance assumes exempt employees work 40 hours per workweek, unless their normal workweek is less, in which case the accrual will be based upon the number of hours in their normal workweek.

Accrual and usage of paid sick leave is capped at 40 hours for each 12-month period. Employees may carry over half of their unused paid sick leave (up to 20 hours) to the next 12-month period. The Ordinance also provides for additional carryover and usage for employers covered by the Family and Medical Leave Act that can be used exclusively for FMLA-eligible purposes.

When can employees start using paid sick leave?

New employees can begin using accrued paid sick leave no later than the 180th day following the commencement of employment. The Ordinance is unclear as to how the 180-day waiting period will apply to current employees who were hired prior to July 1, 2017.

For what reasons can an employee use paid sick leave?

Employees may use paid sick leave for their own illness, injuries, or medical care (including preventive care) or for the illness, injuries, or medical care of certain covered family members. “Family member” is defined broadly to include a child, legal guardian, or ward, spouse under the laws of any state, domestic partner, parent, parent of a spouse or domestic partner, sibling, grandparent, grandchild, or any other individual related by blood or whose close association with the employee is the equivalent or a family relationship. “Family member” also includes step- and foster relationships.

Employees also can use paid sick leave if either the employee or a family member is a victim of domestic violence or a sex offense.

Finally, employees are entitled to use paid sick leave if their place of business or the child care facility or school of their child has been closed by an order of a public official due to a public health emergency.

Can employers set restrictions on the use of paid sick leave?

Employers are entitled to set reasonable minimum increments for the use of paid sick leave, not to exceed four hours a day.

What notice must be provided by employees who need to use paid sick leave?

Employers may require that employees provide up to seven days’ advance notice if the need for paid sick leave is foreseeable. Scheduled medical appointments and court dates for domestic violence will be considered reasonably foreseeable. If the need for leave is unforeseeable, employees must provide as much notice as is practical. The Ordinance expressly provides that employees may notify their employers of the need for leave by phone, email, or text message. Employers may adopt notification policies if they notify covered employees in writing of such policies and the policy is not unreasonably burdensome. If leave is covered by the FMLA, notice must be in accordance with the FMLA. Employees need not give notice if they are unconscious or medically incapacitated.

Employers also may require that employees using paid sick leave for more than three consecutive workdays provide certification that the leave was for a qualifying purpose. However, employers cannot require that certification specify the nature of the medical issue necessitating the need for leave, except as required by law. Employers cannot delay commencement of Earned Sick Leave or delay payment of wages because they have not received the required certification.

Do employers have to pay out unused, accrued paid leave upon termination?

Unlike PTO and vacation pay, unless a collective bargaining agreement provides otherwise, unused, accrued sick leave need not be paid out upon termination or separation of employment.

What are the posting and notice requirements?

Employers must post notice of employees’ rights in a conspicuous place at each facility where any covered employee works that is located within the geographic boundaries of the County.

In addition, at the commencement of employment, employers must provide each covered employee written notice advising of his or her rights to Earned Sick Leave under the Ordinance. The Cook County Commission on Human Rights will publish a form notice.

Implementation and Enforcement

The Ordinance provides a private right of action for employees who believe they are denied their right to request or use paid sick leave. Employers who violate the Ordinance may be subject to damages equal to three times the amount of any unpaid sick time denied or lost as a result of the violation, along with interest, costs, and reasonable attorneys’ fees.

Anti-Retaliation

Employers are prohibited from discriminating against or taking any adverse action against covered employees in retaliation for exercising, or attempting in good faith to exercise, any right under the Ordinance, including disclosing, reporting, or testifying about any violation of the Ordinance or regulations promulgated thereunder, or requesting or using paid sick leave. Additionally, an employee’s use of paid sick leave under the Ordinance cannot be counted for purposes of determining discipline, discharge, demotion, suspension, or any other adverse activity under an employer’s absence-control policy.

Employers with operations in Cook County, Illinois, should review the Ordinance and their policies and practices related to paid sick leave carefully.

Employers should review their policies and practices regularly with employment counsel to ensure they effectively address specific organizational needs and comply with all applicable laws.

Article by Kathryn Montgomery Moran & Jody Kahn Mason of Jackson Lewis P.C.

Jackson Lewis P.C. © 2016