Proposed rule spells out paid sick leave requirements for federal contractors

by Tammy Binford

The U.S. Department of Labor (DOL) has released its proposed regulations implementing President Barack Obama’s Executive Order requiring paid sick leave for employees of federal contractors.

Executive Order 13706, signed on September 7, 2015, will apply to new contracts and replacements for expiring contracts that result from solicitations issued on or after January 1, 2017, or that are awarded outside the solicitation process on or after January 1, 2017.

Covered employers

The DOL estimates that approximately 437,000 workers will gain paid sick leave because of the Executive Order. But Burton Fishman, an attorney with Fortney & Scott, LLC, in Washington, D.C., said the new requirements are like taking a “look through the other end of the telescope” since most contractors, particularly the larger ones, are likely to already have paid time off (PTO) policies that provide employees with paid sick leave.

“I have a feeling that most federal contractors will already have a PTO system in place that will satisfy the requirements,” Fishman said after the proposed rule was published in the Federal Register on February 25.

It’s the smallest contractors, perhaps those with “the most fiscal stress,” Fishman said that are most likely to feel the impact. Often the smallest employers are exempt from government mandates, but that’s not the case for the paid sick leave Executive Order and another order requiring a new minimum wage for employees working on government contracts.

Even though the order covers all federal contractors, the proposed rule includes a narrow exemption related to employee eligibility. A fact sheet from the DOL explains that the proposed rule includes “a narrow exemption from coverage for employees who perform work duties necessary to the performance of a covered contract but who are not directly engaged in performing the specific work called for by the contract and who spend less than 20 percent of their hours worked in a particular workweek performing work in connection with such contracts.”

The exemption means that although the rule covers all contractors, employers won’t have to provide paid sick leave to employees who do minimal to no work on a contract, a provision Fishman said makes contractors’ administration of the order complicated.

How the leave will work

The DOL’s fact sheet explains that covered employees will accrue at least one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. Under the proposed rule, contractors also would be allowed to provide employees with at least 56 hours of paid sick leave at the beginning of each year instead of allowing them to accrue leave based on hours worked. The proposed rule requires contractors to inform employees in writing of the amount of paid sick leave they have accrued at least monthly.

The fact sheet also says the proposed rule allows contractors to limit the amount of paid sick leave employees may accrue to 56 hours each year. Under the proposed rule, contractors would be required to allow unused leave to be carried over from one year to the next. Also, the rule calls for contractors to reinstate employees’ accrued, unused paid sick leave if the employees are rehired by the same contractor or a successor contractor within 12 months after a job separation. Contractors would not be required to pay employees for accrued, unused paid sick leave at the time of separation.

Under the Executive Order, workers will be allowed to use paid sick time to care for themselves, a family member (such as a child, parent, spouse, or domestic partner), or other loved ones. It also will apply to absences resulting from domestic violence, sexual assault, or stalking. The fact sheet says the proposed rule includes definitions related to the use of leave.

The fact sheet also explains that paid sick leave is to be provided upon the oral or written request of an employee and that the request should be made at least seven calendar days in advance when the need for leave is foreseeable and as soon as practical in other cases. Under the proposed rule, the contractor would be required to communicate any denial of a request for leave in writing with an explanation for the denial.

Comment period

Interested parties may submit comments through March 28. Comments identified by Regulatory Information Number 1235-AA13 can be made electronically at Comments can be submitted by mail to Robert Waterman, Compliance Specialist, Wage and Hour Division, U.S. Department of Labor, Room S-3510, 200 Constitution Ave. NW, Washington, D.C. 20210.