Federal Contractor Paid Sick Leave Proposed Final Rule

Executive Order 13706 directed the Department of Labor to set paid sick leave requirements for federal contractors. The proposed final rule provides a clearer view of the regulations with which employers with federal contracts will need to comply as of January 1, 2017.

Which Federal Contractors Must Offer Paid Sick Leave?

Essentially, if a federal contractor or subcontractor is covered by the requirements within Executive Order 13658 that established a minimum wage for federal contractors, then that contractor must offer paid sick leave for workers on new contracts performed in the U.S. on or after January 1, 2017.

The paid sick leave requirements apply to any new contract that is a:

• Procurement contract for construction covered by the Davis-Bacon Act ($2,000 contract threshold).
• Services contract covered by the Service Contract Act ($2,500 contract threshold).
• Concessions contract wherein the Federal Government grants a right to use Federal property, including land or facilities, for furnishing services.

Contracts for the manufacture or supply of materials under the Walsh-Healey Public Contracts Act are exempt from the requirement.

Federal Contractor Paid Sick Leave Regulations

• Accrual Rate: One hour of paid sick leave for every 30 hours worked.
• Accrual Cap: 56 hours.
• First use availability: As the rules stand, there is no minimum length of employment or waiting period before workers with accrued time can begin to use it.
• Annual Carryover Limits: Workers with accrued paid sick leave hours can carry up to 56 hours over from one year to the next.
• Balance at Contract End or Worker Separation: Employers are not required to “pay out” for accrued paid sick time at the end of a contract or at the point of worker separation. However, if an employee with accrued time is reinstated within 12 months of job separation, then the accrued paid sick time must be available to the employee. The same can be said for workers whose work ends on a covered contract and work on any additional covered contracts within a 12-month period.

When Can Federal Contract Workers Use Paid Sick Time

After January 1, 2017, employees will be able to use accrued paid sick leave on covered contract work for themselves or family members with:

• Physical or mental illness, injury, or medical condition.
• Diagnosis, care, or preventive care needs.
• Counseling, assistance, or relocation needs resulting from domestic violence, sexual assault, or stalking.

Federal Contractor Paid Sick Leave Reporting and Notice Requirements

The regulations require covered federal contractors to display a notice from the Department of Labor in a prominent and accessible place at the worksite so it may be readily seen by employees.

Unlike the Minimum Wage Executive Order regulations, the Paid Sick Leave regulations require all covered contractors to display the poster, including DBA or SCA contracts.

Contractors must also provide the amount of accrued, unused paid sick leave in writing to employees on at least a monthly basis, or whenever workers request to view or use the paid sick time

Next Steps for Federal Contractor Paid Sick Leave Rules

The DOL is accepting comments online regarding the proposed final rule until March 28, 2016. The final rule will be released by the Department in September 2016, taking effect January 1, 2017.