Employees, Employers

Plain English Breakdown

The exact date this law will take effect is not specified in the summary text.

Employment Leave Compensation Act

This bill requires private employers to pay former employees for unused paid leave when an employee leaves their job.

What This Bill Does

• Requires private employers to give former employees money for any unused paid time off (like vacation or sick days) at the end of employment.
• Allows private employer policies to limit how much paid leave an employee can accumulate before using it, but does not allow employers to take away unused paid leave when an employee leaves.
• Applies only to new or changed contracts and policies made after this law goes into effect.

Who It Names or Affects

• Private sector employees who have unused paid time off at the end of their employment.
• Private employers who must pay former employees for unused leave.

Terms To Know

Paid leave

Time off from work that an employee is still paid for, like vacation or sick days.

Employer policy

Rules set by a company about how it runs its business and treats employees.

Limits and Unknowns

• This bill does not apply to government employers or collective bargaining agreements.
• The exact date this law will take effect is not specified in the summary text.

Official Summary Text

Unless otherwise provided by a collective bargaining agreement,
if
an employment contract or
private
employer policy provides for the accrual of paid leave, and an employee separates from service without using all of the employee's accrued paid leave,
then this bill requires
the
private
employer
to
compensate the former employee for the balance of such unused accrued paid leave, to be paid to the former employee as wages at the former employee's final rate of compensation. The
private
employer
must
pay su
ch wages in a lump sum no later than
30 days
after separation from service
.

This bill authorizes an
employment contract or
private
employer policy
to
include a limitation on the total amount of paid leave that an employee may accrue before being required to use such leave in order to resume acquiring paid leave
. However, an employment contract or private employer policy must not
provide for the forfeiture of accrued paid leave upon an employee's separation from service.

This bill clarifies that,

t
o the extent applicable, this
bill
applies to employment contracts executed, modified, or amended on or after the effective date of
this

bill.

Current Bill Text

SENATE BILL 2300
By Yarbro

HOUSE BILL 2004
By Hemmer
HB2004
011952
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 8 and
Title 50, Chapter 2, relative to employment.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 50, Chapter 2, Part 1, is amended by
adding the following as a new section:
(a) As used in this section:
(1) "Employer" does not include this state, a local government, or a
political subdivision of this state; and
(2) "Paid leave" means annual leave or paid vacation leave that
periodically accrues to the benefit of an employee.
(b) Unless otherwise provided by a collective bargaining agreement, whenever
an employment contract or employer policy provides for the accrual of paid leave, and
an employee separates from service without using all of the employee's accrued paid
leave, the employer must compensate the former employee for the balance of such
unused accrued paid leave, to be paid to the former employee as wages at the former
employee's final rate of compensation. The employer shall pay such wages in a lump
sum no later than thirty (30) days after separation from service.
(c) An employment contract or employer policy:
(1) May include a limitation on the total amount of paid leave that an
employee may accrue before being required to use such leave in order to
resume acquiring paid leave; and
(2) Must not provide for the forfeiture of accrued paid leave upon an
employee's separation from service.

- 2 - 011952

(d) To the extent applicable, this section applies to employment contracts
executed, modified, or amended on or after the effective date of this act.
SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.