House File 40 - Introduced HOUSE FILE 40 BY HUNTER A BILL FOR An Act relating to payment of employees for time off and 1 vacation leave, making penalties applicable, and including 2 effective date and applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1567YH (2) 89 je/rn
H.F. 40 Section 1. Section 91A.2, Code 2021, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 6A. “Paid time off” means a benefit 3 provided by an employer that allows an employee to take time 4 off from work with pay without regard to the reason the 5 employee chooses to take the time off. 6 Sec. 2. Section 91A.2, subsection 7, paragraph b, Code 2021, 7 is amended to read as follows: 8 b. Vacation, holiday, paid time off, sick leave, and 9 severance payments which are due an employee under an agreement 10 with the employer or under a policy or practice of the 11 employer. 12 Sec. 3. Section 91A.4, Code 2021, is amended by striking the 13 section and inserting in lieu thereof the following: 14 91A.4 Employment suspension or termination —— calculation and 15 payment of wages. 16 1. If the employment of an employee is suspended or 17 terminated, an employee’s employer shall pay all wages 18 earned by the employee up to the time of the suspension or 19 termination, less any lawful deductions specified in section 20 91A.5, no later than the next regular payday after suspension 21 or termination, except as follows: 22 a. Earned wages that are the difference between a credit 23 paid against wages determined on a commission basis and the 24 wages actually earned on a commission basis shall be paid 25 by the employer not more than thirty days after the date of 26 suspension or termination. 27 b. If while employed, an employee earned paid time off 28 but did not earn vacation, an employer may reduce pay for 29 accumulated paid time off by up to one-third. 30 c. If while employed, an employee earned both vacation pay 31 and paid time off, payment for accrued paid time off is not 32 required. 33 2. An employer shall not adopt a policy or practice of 34 denying payment for vacation or for paid time off upon the 35 -1- LSB 1567YH (2) 89 je/rn 1/ 3
H.F. 40 suspension or termination of an employee’s employment unless 1 the employee’s employment was terminated by the employer 2 for misconduct as defined in the rules of the department of 3 workforce development pursuant to section 96.5, subsection 2. 4 3. Except as provided in subsection 1, upon suspension or 5 termination of an employee’s employment, the amount of pay owed 6 for accrued paid time off or accrued vacation shall be the 7 amount of pay the employee would have received if the employee 8 had not been suspended or terminated and had begun taking the 9 total amount of accrued paid time off or accrued vacation on 10 the date the suspension or termination occurred. 11 Sec. 4. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 12 immediate importance, takes effect upon enactment. 13 Sec. 5. APPLICABILITY. This Act applies only to the 14 suspension or termination of an employee’s employment that 15 takes place on or after the effective date of this Act. 16 EXPLANATION 17 The inclusion of this explanation does not constitute agreement with 18 the explanation’s substance by the members of the general assembly. 19 This bill relates to payments for accrued vacation time and 20 for accrued paid time off for all employees who are terminated 21 or suspended. 22 Current law requires an employer to pay accrued vacation pay 23 to a terminated or suspended employee only if the employer has 24 a policy, procedure, or contract that requires the employer to 25 do so. 26 The bill provides that if an employee is suspended or 27 terminated, upon request the employer must pay all earned 28 wages, now including paid time off, by the next regular payday. 29 The bill provides for an employee who earned paid time off 30 while employed but did not earn vacation, that the employer may 31 reduce the pay for the accrued paid time off by one-third. For 32 an employee who earned both vacation and paid time off while 33 employed, the employer is not required to make payment for the 34 paid time off. 35 -2- LSB 1567YH (2) 89 je/rn 2/ 3
H.F. 40 The bill prohibits an employer from adopting a policy or 1 practice to deny payment for accrued vacation or accrued paid 2 time off upon the suspension or termination of an employee 3 unless the employee’s employment ended due to misconduct. 4 Misconduct is defined in the department of workforce 5 development’s administrative rules. 6 The bill provides for the calculation and payment of an 7 employee’s accrued paid time off or vacation if the employee 8 is suspended or terminated. The amount of such pay owed to an 9 employee is the amount of pay equal to the accrued vacation or 10 paid time off as if the employee began taking the vacation or 11 paid time off the day the suspension or termination took place, 12 unless otherwise provided in the bill. 13 The bill defines “paid time off” as a benefit allowing an 14 employee to take time off from work with pay without regard to 15 the reason the employee chooses to take the time off. “Paid 16 time off” is also added to the definition of “wages”. 17 Unpaid wages or expenses, along with liquidated damages, 18 court costs, and attorney’s fees, may be recovered by the 19 employee or the commissioner by civil action under Code chapter 20 91A. An employer who violates Code chapter 91A is also subject 21 to a civil penalty of not more than $500 per pay period for each 22 violation. 23 The bill takes effect upon enactment. The bill applies only 24 to the suspension or termination of an employee’s employment 25 that occurs on or after that date. 26 -3- LSB 1567YH (2) 89 je/rn 3/ 3