Federal Contractors Paid Sick Leave Requirement – January 1, 2017

December 2nd, 2016 by JBWK

Submitted by Attorney Jennifer L. Muse

The final rules implementing Executive Order 13706 mandating certain federal contractors and subcontractors to offer paid sick leave to their employees becomes effective January 1, 2017.  It only applies to “new contracts,” meaning either a contract entered into on or after January 1, 2017 or one that it renewed (or extended or amended in certain circumstances) on or after January 1, 2017.

Contractors will have to provide employees with one (1) hour of paid sick leave for every 30 hours worked, up to a maximum of 56 hours of paid sick leave per year.  Contractors can meet their obligations by crediting the employee with at least 56 hours of paid sick leave at the beginning of the year, rather than allowing the employee to accrue the leave based on hours worked.   Under either method, any unused, accrued paid sick leave must carry over from one year to the next.

Employees must be permitted to use paid sick leave for any of the following:

·       a physical or mental illness, injury or medical condition of the employee;

·       to obtain diagnosis, care or preventive care from a healthcare provider;

·       to care for a child, parent, spouse, domestic partner, or any other individual related by blood or affinity whose relationship is equivalent to a family relationship, who has need for diagnosis, care, or preventive care;

·       for absences related to domestic violence, sexual assault or stalking situations.

A contractor may, but is not required to, pay out an employee’s accrued paid sick leave upon termination of employment.  However, paid sick leave must be reinstated to an employee who is rehired by the same contractor within 12 months, unless the unused paid sick leave was paid to the employee on termination.

Contractors may use existing PTO policies to fulfil their obligation to provide paid sick leave if certain criteria are met.  The contractor must ensure that at least 56 hours of PTO accrue each accrual year, that the policy affords employees all the rights required by the final rules, and that the policy does not subject the use of PTO to conditions or restrictions (such as use, notice, availability, carryover, reinstatement, etc.) greater than those permitted by the final rule. 

Significantly for contractors with employees working on a Service Contract Act or Davis-Bacon Act contract with the federal government, the paid sick leave required by Executive Order 13706 is in addition to a contractor’s obligations under the SCA and DBA. Thus, a contractor may not receive a credit toward its prevailing wage or fringe benefit obligations under those laws for paid sick leave provided in accordance with the executive order and final rules.

However, be on watch for any actions the new President may take because this is an Executive Order, which could be revoked upon the new administration taking power.

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