Leave Management, Policy, and Compliance

Ask the Expert: How Should Government Contractors Implement Paid Sick Leave Rule?

I am a government contractor and am concerned over the Executive Order that President Obama signed on protected sick leave. Do you have any insight on best practices on implementation of the order?

Answer from the experts at HR.BLR.com:

Thank you for your inquiry regarding the Executive Order requiring paid sick leave for employees of government contractors.

Contractors entering into federal contracts (mainly under the Service Contract Act and the Davis-Bacon Act) on or after January 1, 2017, must comply with the U.S. Department of Labor’s (DOL) new regulations requiring them to provide workers 56 hours of paid sick leave a year. The new paid leave requirements do not apply to preexisting contracts.

The coverage provisions are the same as those for the $10.10 hourly minimum wage requirements for federal contractors. Employees whose wages are governed by the Fair Labor Standards Act (FLSA) are also covered.

Contractors must provide 56 hours of paid sick leave annually to employees covered by the final rule. Employees must be able to take paid sick leave for absences resulting from a physical or mental illness, injury, or medical condition; to obtain a 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 close association with the employee is the equivalent of a family relationship; and for issues related to domestic violence, sexual assault, or stalking.

A contractor’s existing paid time off policy will satisfy the requirements of the rule if it covers the same conditions under the same circumstances. Contractors that already provide paid leave to their employees must ensure that their policies comply with the final regulations and that they can track the use of paid sick leave by covered employees.

Leave is accrued at a rate of one hour for every 30 hours worked. The required leave must be allotted in addition to vacation time provided for under a wage determination.

The DOL has issued a publication with FAQs on its final rule that implements EO 13706.  The publication gives a detailed explanation of the EO’s requirements and explains options such as “frontloading” at the beginning of an accrual year in lieu of having an employee accrue sick leave time.

Contractors should evaluate the policies and practices they have in place that may be affected by the final rule.  If a contractor already offers paid sick leave, it should be sure to update its policy to reflect all the absences covered under the rule (e.g., the definition of covered family members is very broad).  Contractors should also pay particular attention to their attendance policies and update the policies to ensure employees are not penalized for their use of paid sick leave.