PEOs in Illinois

What makes Illinois different

• The Paid Leave for All Workers Act requires up to 40 hours of paid leave per year usable for any reason, accrued at 1 hour per 40 worked, since January 1, 2024. Chicago and Cook County enforce their own broader ordinances instead, so a single Illinois employer can face three different leave regimes.
• The Biometric Information Privacy Act (740 ILCS 14) turns fingerprint and face-scan timeclocks into litigation exposure: collecting biometrics without written consent and a retention policy has produced some of the largest employment-adjacent settlements in the country.
• Since January 1, 2025, employers with 15 or more employees must include pay scale and benefits information in job postings under the Illinois Equal Pay Act.
• Illinois Secure Choice requires employers with 5 or more employees that have operated for 2 or more years to offer a retirement plan or auto-enroll employees in the state program.
• PEOs operate under the Employee Leasing Company Act (215 ILCS 113) and must register with the Illinois Department of Insurance before securing workers compensation coverage for leased employees.
• The 2026 unemployment taxable wage base is $14,250, and Illinois adjusts it annually.

PEO regulation in Illinois

Illinois regulates PEOs as employee leasing companies under 215 ILCS 113, with registration filed at the Department of Insurance and renewed annually. The registration is a workers compensation gate: an unregistered lessor cannot properly secure comp for leased employees, so verify registration before relying on a PEO’s coverage.

What a PEO does and does not solve here

Statewide any-reason leave, Chicago's dual paid leave ordinance, and Cook County's rules accrue differently. Ask a candidate to model an employee who works in Chicago two days a week and to state whether its timekeeping system stores biometric data, where consent records are held, and which party maintains the retention policy.

Common questions

Does a PEO retirement plan satisfy Illinois Secure Choice?

Yes. Offering a qualified retirement plan, including a PEO-sponsored 401(k), exempts you from the state auto-IRA mandate. Confirm the exemption is recorded with the state program so you do not receive enforcement notices for non-registration.

If the PEO timekeeping system scans fingerprints, who carries the BIPA risk?

The client cannot assume the vendor holds all responsibility. Illinois courts have allowed BIPA claims against employers using vendor timeclocks, and the statute reaches entities that collect or possess the data. Ask whether the system uses biometrics, where consent forms are stored, whether a retention policy applies, and how the contract allocates defense and indemnification.