To Our Federal Contractor Clients
The U.S. Department of Labor recently published the proposed regulations to implement President Obama’s Executive Order 13706 that established paid sick leave for Federal Contractors. As you’ll recall, the Executive Order requires federal contractors and subcontractors to provide employees with not less than 1 hour of paid sick leave for every 30 hours worked on or in connection with covered contracts, up to 56 hours of paid sick leave per year. The Executive Order affects all federal contracts issued on or after January 1, 2017.
The Executive Order’s paid sick leave requirement applies to work on or in connection with “covered contracts.” This includes:
• federal contracts and subcontracts subject to the Davis-Bacon Act (DBA);
• federal contracts and subcontracts subject to the Service Contract Act (SCA); and
• federal contracts for concessions and for services on federal property.
Employees may use the paid sick leave for:
• their own illnesses and other health care needs;
• the care of a family member or loved one who is ill or needs health care; or
• purposes resulting from being the victim of domestic violence, sexual assault, or stalking, or
• to assist a family member or loved one who is such a victim.
‘Family member’ is defined in the proposed rule and includes:
• the employee’s child;
• domestic partner; or
• any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.
When the need for paid sick leave is foreseeable, an employee should make a request at least 7 calendar days in advance, or, if the need is not foreseeable, as soon as practicable. Employees can be required to provide sufficient information to establish that the absence qualifies for paid sick leave, and if feasible, the anticipated duration of the leave. However, unless the employee uses 3 or more full days of leave consecutively, the employer may not require certification from a health care provider or documentation to prove a claim of domestic violence, sexual assault, or stalking.
Interestingly, the proposed rule indicates that the paid sick leave must be tracked and provided to FLSA-exempt employees. Because employers typically don’t track hours exempt employees’ hours worked, the proposed rule allows the employer to assume that the exempt employees work 40 hours per week for purposes of calculating paid sick leave. Furthermore, any unused paid sick leave must carry over from one accrual year to the next. A contractor may pay out unused paid sick leave upon termination of employment. We generally would advise against this because if the employee is rehired within 12 months, the contractor must reinstate the employee’s accrued paid sick leave even if it had been paid out.
Keep in mind that this sick leave cannot be counted in the fringe benefit or prevailing wage obligation calculations. However, a contractor’s existing paid time off policy may satisfy the requirements of the Executive Order if the policy meets all of the requirements in the Executive Order.
Along with that, your Official Notice wall just got more crowded. Employers must post a notice provided by the Department of Labor that informs employees of their rights to paid sick leave. In addition, the proposed notice requires employers to notify employees of their accrued paid sick leave balances:
* at least once a month; and
* whenever the employee asks for that information; or
* asks to use paid sick leave; and
* upon termination of the employment.
So now is the time for Federal Contractors to take a look at their leave policies. Determine if your current policy and practices will suffice or if you’ll need to make changes in order to be ready for the Executive Order’s implementation in 2017.
Helsell Fetterman has been working with employers, including federal contractors, since 1890. At Helsell Fetterman, we are committed to your cause.