Do You Get Sick Pay Upon Termination in Illinois?

In Illinois, you generally do not get sick pay upon termination. The Illinois Wage Payment and Collection Act leaves sick leave out of “final compensation,” so an employer owes you nothing for an unused sick balance unless a written policy, employment contract, or collective bargaining agreement promises a payout, or unless your sick time was pooled with vacation into a single PTO bank.

Why Sick Leave Sits Outside Final Compensation

The Illinois Wage Payment and Collection Act defines final compensation as wages, salaries, earned commissions, earned bonuses, and the cash equivalent of earned vacation and holidays, plus anything else owed under a contract or agreement.¹ Sick leave is not on that list. The Illinois Department of Labor states the rule directly: “An employee is not entitled to vacation, severance pay, sick pay or holiday by law. However, if the employer has a policy that guarantees the employee any of these benefits, the employee may be entitled to receive payment upon separation.”²

Federal law does not add anything. The Fair Labor Standards Act does not regulate sick leave payouts, and the Family and Medical Leave Act only guarantees unpaid leave for qualifying medical situations.³ Whether you quit, were fired, were laid off, or retired, the outcome is the same unless your employer created a payout right on its own.

Combined PTO Banks Change the Answer

This is where most sick-pay disputes actually turn. Many Illinois employers have replaced separate vacation and sick balances with a single paid-time-off bucket. When they do, Illinois treats the whole balance as vacation, and the Wage Payment and Collection Act prohibits any policy that forfeits earned vacation upon separation.¹

The Department of Labor draws the line this way: if an employer keeps vacation and sick leave in separate accounts with separate recordkeeping, only the vacation portion must be paid out. But if both flow into a single vacation or PTO account, the employer has effectively made all of it vacation, and the full unused balance becomes final compensation.⁴

If you are leaving a job with a combined PTO system, pull your most recent pay stub or leave balance statement. That total should appear on your final paycheck. An employer that withholds it is violating the same provision that protects vacation payouts.

When a Policy, Contract, or Union Agreement Creates a Payout Right

The default no-payout rule only applies when the employer stayed silent. Three kinds of documents can turn your sick balance into money you are legally owed:

An employee handbook or written policy stating that unused sick time will be paid at a specified rate upon departure.
An individual employment contract or offer letter describing how sick hours convert to cash at termination.
A collective bargaining agreement that spells out sick leave payout terms.

The Wage Payment and Collection Act enforces these internal promises the same way it enforces a missed paycheck.⁴ The reverse is also true. If the handbook clearly states that sick leave carries no cash value upon separation, the employer owes nothing. Read the version of the policy that was in effect on your last day, not a later edition.

Already-earned benefits cannot be stripped retroactively. If the employer previously promised a sick leave payout and later swapped in a use-it-or-lose-it policy, time you accrued under the old promise is still protected.

Chicago Workers Are in the Same Position

Chicago has its own paid sick leave ordinance, but it does not change the payout question. The city’s ordinance states that employers are not required to reimburse unused paid sick leave upon termination, resignation, or retirement, unless a collective bargaining agreement says otherwise.⁵ A Chicago job gives you no extra right to a sick leave check at the door.

Paid Leave for All Workers Act Hours

Illinois enacted the Paid Leave for All Workers Act (PLAWA) in 2024, letting most employees earn at least one hour of paid leave for every 40 hours worked, up to 40 hours in a 12-month period, usable for any reason.⁴ The law also says employers are not required to pay out unused PLAWA leave at separation.⁶

The exception is the same combined-bank problem described above. If your employer credits PLAWA hours into a PTO or vacation account rather than tracking them separately, the unused balance in that account must be paid out as vacation would be.⁶ Employers must give written notice when they change their PTO or vacation policies in ways that affect your right to final compensation, so recent policy updates are worth reading closely.

When Your Final Paycheck Is Due

Illinois requires employers to pay all final compensation at the time of separation if possible, and no later than the next regularly scheduled payday.¹ That deadline applies whether you resigned, were fired, or were laid off. You can request in writing that the check be mailed, and the employer must comply.

The final check should include all hours worked through your last day, the cash value of any earned vacation you did not use, and any sick leave payout promised by your policy or contract. If a promised payout is missing, that is the moment to raise it in writing, before you move on.

If Your Employer Refuses to Pay a Promised Payout

First, gather proof. You need the employee handbook or written policy that was in effect when you left (not a later version), any signed offer letter or contract mentioning sick leave, your final pay stub, and records showing your accrued balance. Without the specific policy language promising the payout, a claim has little to stand on.

Filing a Wage Claim With the Department of Labor

The Illinois Department of Labor accepts wage claims through its online filing system, which is the fastest method; mailed and emailed claims take longer to process.⁷ The form asks for the employer’s legal business name, the total dollar amount owed, and a reference to the handbook page or contract section supporting your right. The Department contacts the employer for a response and, if the claim has merit and the employer disputes it, can move the case to a formal hearing.

Filing a Civil Lawsuit Instead

You can file in Illinois circuit court instead of going through the Department of Labor, but not both at once.⁸ The civil route gives you access to attorney’s fees and court costs that administrative claims do not. For larger balances, or when an employer is clearly stalling, a lawsuit paired with the statutory penalty can recover more than the original amount owed.

Deadline

Wage claims must be filed within one year after the wages or final compensation were due.⁹ The clock starts on the date your final paycheck should have been issued, not the date you noticed the shortage. Mark the deadline when you leave.

Penalties the Employer Faces

An employer that fails to pay what it owes faces a penalty of 5% of the unpaid amount for each month the underpayment remains outstanding. Ignoring a Department of Labor order or court judgment adds another 20% paid to the Department and 1% per calendar day paid directly to the employee for every day past the compliance deadline.⁸ Willful nonpayment can bring criminal charges in extreme cases. These penalties apply to any component of final compensation, including a sick leave payout promised in a policy or contract, which is why many employers settle legitimate claims rather than let the monthly penalty compound.

Taxes on a Sick Leave Payout

If you do receive a payout, the IRS treats lump-sum benefit payments as supplemental wages, subject to a flat 22% federal withholding rate for amounts up to $1 million. Illinois state income tax adds another 4.95%.¹⁰ Social Security and Medicare are withheld as on regular wages. A $2,000 payout can net closer to $1,400 after withholding, which is worth building into any claim calculation or negotiation.

1
Justia Law. Illinois Code 820 ILCS 115 – Illinois Wage Payment and Collection Act
2
Illinois Department of Labor. Vacation FAQ
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U.S. Department of Labor. Sick Leave
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Illinois Department of Labor. Paid Leave for All Workers Act FAQ
5
American Legal Publishing. Chicago Municipal Code 6-130-020 – Requirement to Provide Paid Leave and Paid Sick Leave
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Justia Law. Illinois Code 820 ILCS 192 – Paid Leave for All Workers Act
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Illinois Department of Labor. Unpaid Wages
8
FindLaw. Illinois Code 820 ILCS 115/14
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Illinois General Assembly. Illinois Code 820 ILCS 115 – Illinois Wage Payment and Collection Act
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Illinois Department of Revenue. 2026 Booklet IL-700-T – Illinois Withholding Tax Tables