POTUS Signs Executive Order on Paid Sick Leave for Federal Contractors

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As we reported rumors of a pending Executive Order (EO) regarding paid sick leave back in August, President Obama has since signed an EO, which requires federal contractors and subcontractors to provide up to 7 days (56 hours) of sick leave each year for their employees working on specific, covered contracts. The EO tasked the Secretary of Labor with issuing the final regulations by September 30, 2016, and would take effect starting January 1, 2017.

The EO will apply to employees whose wages are governed by the Davis-Bacon Act, the Service Contract Act or Fair Labor Standards Act (FLSA), including those that qualify for minimum wage and overtime exemptions under the FLSA.

For those covered employees, the EO will apply to new contract or contract-like instruments, if the contract is:

• A procurement contract for services or construction;
• A contract or contract-like instrument for services covered by the Service Contract Act;
• A contract or contract-like instrument for concessions, including any concessions contract excluded by DOL regulations;
• A contract or contract-like instrument entered into with the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

The EO also dictated that there be an hour of paid leave for every 30 hours of work; leave can be used for care for the worker or family members; unused leave can carry over from year to year; unused leave will be reinstated for employees rehired by a covered contractor within 12 months after a job separation; and payment for unused leave upon job separation is not required.

Employers who engage in federal contracting should begin now reviewing their sick leave policies and procedures to make sure they meet the minimum requirements of the EO, and should review and determine the expiration dates of all existing federal government contracts and, if necessary, start developing paid sick leave policies that comply with the EO for any employees who are not covered under existing paid sick leave policies. Employers should train supervisory and managerial employees, as well as HR personnel, on the EO’s requirements. Finally, smaller businesses will want to weigh the benefits of remaining a federal government contractor with the costs of providing paid sick leave, and proceed accordingly.

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Posted In: Government, Legal