Earned paid annual leave

(a) Earning of paid annual leave (1) Earning of annual leave An employer shall provide each covered employee employed by the employer not less than 1 hour of paid annual leave for every 25 hours worked by the covered employee. (2) Limitation (A) In general For purposes of complying with paragraph (1), an employer shall not be required to provide more than 80 hours of paid annual leave to a covered employee during any 12-month period. (B) Greater than 80 hours of paid annual leave In determining the amount of hours provided to a covered employee for purposes of limitation under subparagraph (A), an employer may not include— (i) any earned and unused paid annual leave that is carried over by the covered employee from a previous 12-month period under subsection (b)(5); (ii) any leave acquired by the covered employee through equitable relief provided under section 6 for a violation of section 5; or (iii) any leave reinstated to the covered employee under subsection (d)(2)(A). (C) Rule of construction This section shall not be construed to preclude an employer from providing more than 80 hours of paid annual leave. (3) Commencement of earning paid annual leave A covered employee shall begin to earn paid annual leave at the commencement of employment of such covered employee. (4) Overtime and minimum wage exempt employee For purposes of this section, a covered employee who is exempt from overtime and minimum wage requirements under section 13(a) of the Fair Labor Standards Act of 1938 (29 U.S.C. 213(a)) shall be deemed to work 40 hours in each workweek. (b) Use of paid annual leave (1) In general Paid annual leave earned under subsection (a)(1) may be used by a covered employee for any reason. (2) Timing Subject to paragraphs (2) and (3) of subsection (c) and except as provided in subsection (d)(2), a covered employee may use paid annual leave earned by the covered employee under subsection (a)(1) at any time after the leave is earned during, except as provided in paragraph (5), the 12-month period after the leave is earned. (3) Rate of compensation (A) In general Except as provided in subparagraph (B), a covered employee using paid annual leave earned under subsection (a)(1) shall be compensated, for the period that the covered employee is using such leave, at the regular rate at which the covered employee would have been paid for such period if the covered employee were not using the paid annual leave. (B) Tipped employee For the purposes of subparagraph (A), a covered employee who is a tipped employee shall be compensated, for the period that such employee is using paid annual leave earned under subsection (a)(1), at a rate equivalent to the greater of— (i) the minimum wage required under section 6(a) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)); (ii) the applicable State minimum wage; (iii) the applicable local minimum wage; (iv) any other wage rate required by Federal, State, or local law; or (v) the regular rate at which the employee is employed. (4) Loaning of annual leave (A) Loaned leave An employer may loan paid annual leave to a covered employee for use by such covered employee in advance of the covered employee earning such paid annual leave under subsection (a)(1). (B) Use of loaned leave Except as provided in subparagraph (C), paid annual leave loaned under subparagraph (A) shall be treated as if earned under subsection (a)(1). (C) Reimbursement for loaned leave (i) In general An employer may require a covered employee of such employer to reimburse the employer for any paid annual leave loaned under subparagraph (A) that such covered employee has not earned at the time of the termination of the employment of the covered employee. (ii) Rate Reimbursement under clause (i) shall be at the applicable rate described in paragraph (3). (5) Carryover An employer shall permit a covered employee of such employer to carry over not more than 40 hours of any earned and unused paid annual leave under subsection (a)(1) in a 12-month period to be used by the covered employee in the following 12-month period. (6) Increments of use of paid annual leave An employer shall allow any covered employee to use paid annual leave earned under subsection (a)(1) in increments of the smaller of— (A) an hour; or (B) the smallest increment of time that the employer’s payroll system uses to account for absences or use of other time. (7) Benefits retained during leave (A) In general An employer shall maintain any employment benefits provided to a covered employee during any period in which the covered employee takes paid annual leave, and such benefits shall be provided in the same manner as if the covered employee had continued in employment continuously for the duration of such leave. (B) Employment benefits For purposes of subparagraph (A), the term employment benefits has the meaning given such term in section 101 of the Family and Medical Leave Act of 1993 (29 U.S.C. 2611), except that a reference in such section to the terms employee and employer shall be considered a reference to a covered employee and employer (as such terms are defined in section 2), respectively. (c) Procedures for use of paid annual leave (1) In general Subject to paragraph (3), a covered employee may use paid annual leave earned under subsection (a)(1) upon a verbal or written notification by the covered employee to the employer of the covered employee as provided in paragraph (2). (2) Employee notification (A) Format of notice An employer may not specify whether the notification under paragraph (1) is provided through a verbal notice or a written notice. (B) Notice samples The Secretary shall create samples for verbal and written notices required under paragraph (1). (C) Timing of notice A covered employee shall provide notice regarding an intent to use paid annual leave under paragraph (1) on a day that is— (i) before the day on which the covered employee intends to use the paid annual leave; and (ii) not more than 14 days before the day on which the covered employee intends to use the paid annual leave. (D) Emergency or unforeseeable use of leave Notwithstanding subparagraph (C), an employer shall waive any notice requirement and allow the use of paid annual leave earned under subsection (a)(1) in the case of an emergency or a situation in which a covered employee can not provide timely notice to an employer for the use the paid annual leave. (3) Reasonable restrictions (A) In general Notwithstanding paragraph (1), an employer may— (i) place limited, reasonable restrictions regarding the scheduling of paid annual leave earned under subsection (a)(1) for a bona fide business reason; and (ii) reject a scheduling request under paragraph (1) for such leave for a bona fide business reason. (B) Limitation on rejection (i) In general An employer may not reject a request by a covered employee under subparagraph (A)(ii) unless the employer— (I) provides other reasonable alternative times, as described in clause (ii), for the covered employee to schedule such leave; and (II) complies with the notice requirement described in clause (iii). (ii) Reasonable alternatives (I) In general A reasonable alternative time described in this clause is a date other than a date a covered employee requests to use paid annual leave that is within 30 days before or after the date requested by the covered employee. (II) Expiration of paid leave An employer may not offer a reasonable alternative time described in this clause to prevent the use of paid annual leave that is set to expire. (iii) Denial notice In any case in which an employer rejects a request of a covered employee to use paid annual leave under subparagraph (A)(ii), the employer shall, not later than 5 business days after the day the covered employee made such request, provide to the covered employee a written notice— (I) detailing the bona fide business reason for such denial; and (II) that provides the reasonable alternative time described in clause (ii). (4) Purpose of use of paid annual leave An employer may not require a covered employee to disclose the purpose or reason for which the covered employee is using paid annual leave under subsection (a)(1). (5) Prohibition on finding cover An employer may not require, as a condition of using paid annual leave earned under subsection (a)(1), that a covered employee search for or find a replacement to cover the hours during which the covered employee is using such paid annual leave. (6) Guidance Not later than 180 days after the date of enactment of this Act, the Secretary shall provide guidance to employers on compliance with paragraph (3), including by defining the terms limited, reasonable restriction and bona fide business reason. (d) Procedures regarding leave for employee separation (1) Compensation In any case in which the employment of a covered employee is terminated and such covered employee has unused paid annual leave earned under subsection (a)(1) (including any leave carried over under subsection (b)(5)), the employer of the covered employee shall provide financial compensation, at the applicable rate described in subsection (b)(3), to such covered employee for all such paid annual leave earned by the covered employee that is unused as of the date of the termination. (2) Reinstatement If the employment of a covered employee with an employer is terminated and the covered employee is subsequently rehired by the employer within 12 months after that termination— (A) in a case in which the covered employee had paid annual leave (other than paid annual leave earned under subsection (a)(1) and compensated for under paragraph (1)) that was not compensated for by the employer at the applicable rate described under subsection (b)(3) (as if such paid annual leave was paid annual leave earned under subsection (a)(1)), the employer shall reinstate such paid annual leave to the covered employee; and (B) the covered employee shall be entitled to use such leave and earn additional paid annual leave under subsection (a)(1) at the recommencement of employment with the employer.