SECTION 1. PAYMENT FOR CERTAIN UNUSED SICK LEAVE.

    (a) In General.--Chapter 55 of title 5, United States Code, is 
amended by adding at the end the following:

         ``SUBCHAPTER X--PAYMENT FOR CERTAIN UNUSED SICK LEAVE

``Sec. 5597a. Definitions
    ``For purposes of this subchapter--
            ``(1) the term `covered retirement system' means the 
        Federal Employees' Retirement System and the Foreign Service 
        Pension System; and
            ``(2) the term `employee' means an employee as defined by 
        section 2105 and an officer or employee of the United States 
        Postal Service or of the Postal Regulatory Commission, but does 
        not include a Congressional employee as defined by section 
        2107.
``Sec. 5597b. Lump-sum payment for certain unused sick leave
    ``(a) In General.--Any qualified employee who is separated from the 
service or is transferred to a position which is not subject to a 
covered retirement system shall be eligible to receive a lump-sum 
payment under this section.
    ``(b) Qualified Employee.--For purposes of this section, the term 
`qualified employee' means an employee who, immediately before such 
employee's separation or transfer (as described in subsection (a))--
            ``(1) is subject to a covered retirement system; and
            ``(2) satisfies the age and service requirements for 
        immediate or early retirement under such system.
    ``(c) Amount Payable.--
            ``(1) In general.--A lump-sum payment under this section 
        shall be equal to the amount of basic pay (including locality 
        pay) the employee would have received, for such employee's 
        period of compensable sick leave, if such employee had remained 
        in the service or not transferred until the end of such period.
            ``(2) Period of compensable sick leave.--For purposes of 
        this section, the term `period of compensable sick leave' means 
        a period equal in duration to 15 percent of the amount (rounded 
        to the nearest whole number of hours) by which the total number 
        of hours of accumulated and current accrued sick leave standing 
        to the employee's credit (as of the time of separation or 
        transfer) under a formal leave system, exceeds 500 hours.
            ``(3) Limitations.--In no event shall--
                    ``(A) any payment under this section exceed 
                $10,000; or
                    ``(B) any hours of sick leave be taken into account 
                under paragraph (2)(A) which are creditable in the 
                computation of any other compensation or benefit 
                provided for under any other statute.
    ``(d) Conditions for and Effect of Receiving a Payment.--A payment 
under this section--
            ``(1) shall be payable by the agency from which the 
        employee was separated or transferred, but only upon 
        application made in accordance with applicable regulations 
        under section 5597c;
            ``(2) terminates all rights of the employee with respect to 
        the hours of leave described in subsection (c)(2)(A) (and not 
        excluded by subsection (c)(3)(B)); and
            ``(3) terminates any right of the employee to receive any 
        other payment under this section, including with respect to any 
        sick leave subsequently accruing.
    ``(e) Application by a Survivor.--An application under this section 
may also be made by any person who, by virtue of subchapter VIII, is 
entitled to receive any payment which (but for subsection (d)(1)) would 
otherwise be due a deceased employee under this section.
    ``(f) Additional Rules.--A lump-sum payment under this section 
shall be considered pay for taxation purposes only. The period of 
compensable sick leave used in calculating any such payment shall not 
be extended due to any holiday occurring after the employee's 
separation or transfer.
``Sec. 5597c. Regulations
    ``Any regulations necessary for the administration of this 
subchapter shall be prescribed by the appropriate authority. For 
purposes of the preceding sentence, the `appropriate authority' is--
            ``(1) if the separation or transfer is from a position in 
        the executive branch, the Director of the Office of Personnel 
        Management;
            ``(2) if the separation or transfer is from a position in 
        the judicial branch, the Director of the Administrative Office 
        of the United States Courts; and
            ``(3) if the separation or transfer is from a position in 
        the legislative branch, the head of the office, agency, or 
        other establishment from which such separation or transfer 
        occurs.''.
    (b) Settlement of Accounts.--Section 5581(2) of title 5, United 
States Code, is amended--
            (1) by redesignating subparagraph (I) as subparagraph (J);
            (2) in subparagraph (H), by striking ``and'' after the 
        semicolon; and
            (3) by inserting after subparagraph (H) the following:
                    ``(I) payment for compensable sick leave under 
                section 5597b; and''.
    (c) Clerical Amendment.--The analysis for chapter 55 of title 5, 
United States Code, is amended by adding at the end the following:

          ``subchapter x--payment for certain unused sick leave

``5597a. Definitions.
``5597b. Lump-sum payment for certain unused sick leave.
``5597c. Regulations.''.
Entitles federal employees who satisfy age and service requirements for immediate or early retirement under the Federal Employees' Retirement System or the Foreign Service Pension System and who are separated from service or transferred to a position not subject to either of those retirement systems to a lump-sum payment for 15% of the amount of their accumulated sick leave exceeding 500 hours.

Prohibits such a payment from exceeding $10,000. Excludes hours of sick leave that are creditable in the computation of any other compensation or benefit.
To amend title 5, United States Code, to provide for a lump-sum payment for certain Federal employees who retire with a substantial amount of unused sick leave for which they would not otherwise receive any compensation or benefit, and for other purposes.