Sec. 3. Earned annual leave
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An employer shall provide each employee employed by the employer not less than 1 hour of paid annual leave for every 25 hours worked. For purposes of complying with paragraph (1), an employer may not be required to provide more than 80 hours of paid annual leave to an employee during any 12-month period. Nothing in this section may be construed to preclude an employer from providing more than 80 hours of paid annual leave. An employee shall begin to earn paid annual leave at the commencement of employment of such employee.
For purposes of this section, where an employer is not required by the Fair Labor Standards Act of 1938 to maintain and preserve records of hours worked because an employee is exempt from minimum wage or overtime requirements under such Act ( 29 U.S.C. 213(a) ), the employee shall be deemed to work 40 hours in each workweek. Paid annual leave may be used by an employee for any reason. Subject to paragraphs
(2)and
(3)of subsection (c), an employee may use paid annual leave earned by the employee as it is accrued. An employee using paid annual leave shall be compensated, for the period that the employee is using such leave, at the regular rate at which the employee would have been paid for such period if the employee were not using paid annual leave. For the purposes of subparagraph (A), with respect to a tipped employee (as defined in section 3(t) of the Fair Labor Standards Act of 1938 ( 29 U.S.C. 203(t) )), such an employee shall be compensated, for the period that such employee is using paid annual leave, at a rate equivalent to the higher of— the Federal minimum wage; the applicable State minimum wage; the applicable local or municipal minimum wage; any other wage required by law; or the regular rate at which the employee is employed. An employer may loan paid annual leave to an employee for use by such employee in advance of the employee earning such annual leave. An employer may require an employee of such employer to reimburse the employer for any annual leave loaned under subparagraph
(A)that such employee has not earned at the time of separation. Such reimbursement shall be at the rate described in paragraph (3). An employer shall allow employees to use paid annual leave in increments of the smaller of— hourly increments; or the smallest increment of time that the employer’s payroll system uses to account for absences or use of other time. An employer shall maintain any employment benefits (as defined in section 101(5) of the Family and Medical Leave Act of 1993) provided to an employee during any period in which the employee takes paid annual leave, and such benefits shall be provided in the same manner as if the employee had continued in employment continuously for the duration of such leave. Subject to paragraphs
(2)and (3), an employee may use paid annual leave upon the verbal or written request of the employee. An employee shall provide notice to the employer to use paid annual leave. The Secretary shall create sample notices for the purpose described in subparagraph (A). An employer may not require an employee to provide notice in excess of 2 weeks in advance of the use of such leave. In the case of an unforeseeable use of leave, an employee shall not be required to provide the notice required under subparagraph (A). An employer may place limited, reasonable restrictions for the scheduling of paid annual leave for a bona fide business reason and may reject a scheduling request for such leave for a bona fide business reason, so long as the employer— provides other reasonable alternative times, as described in subparagraph (B), for the employee to schedule such leave; and and complies with the notice requirement described in subparagraph (C). A reasonable alternative time described in this subparagraph is a date other than the date the employee requested to use paid annual leave that is within 30 days of such date. In the case that an employer denies a request of an employee to use paid annual leave, the employer shall, not later than 5 business days after the day the employee made such request, provide to the employee a written notice— detailing the bona fide business reason for such denial; and that provides the reasonable alternative time described in subparagraph (B). Such reasonable alternative time may not be offered to prevent the use of paid annual leave that is set to expire. An employer may not require an employee to disclose the purpose or reason for which the employee is using paid annual leave. An employer shall permit an employee of such employer to carry over up to 40 hours of any accrued and unused paid annual leave to the following 12-month period. An employer may not require, as a condition of taking paid annual leave, that an employee search for or find a replacement employee to cover the hours during which the employee is using such annual leave. Not later than 180 after the date of enactment of this Act, the Secretary shall provide guidance to employers on compliance with paragraph (3), including defining the terms limited reasonable restriction, a bona fide business reason, and a reasonable alternative time. In the case that an employee separates from an employer and such employee has unused paid annual leave, the employer shall provide financial compensation at a rate that is the higher of— the average regular rate received by such employee during the last 3 years of the employee’s employment; or the final regular rate received by the employee. If an employee separates from employment with an employer and is rehired within 12 months after that separation by the same employer— in the case that the employee had paid annual leave in excess of 80 hours that was not compensated under paragraph (1), the employer shall reinstate such leave for the employee; and the employee shall be entitled to use such leave and earn additional paid annual leave at the recommencement of employment with the employer.
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