Beginning January 17, 2017, employers signing new federal contracts will provide employees up to seven (7) days of paid sick leave per year. President Obama signed the new Executive Order setting the requirement on September 7, 2015. The Department of Labor is responsible for rulemaking and employers should anticipate that there will be a Notice of Proposed Rulemaking and a 60-day period for public comments. The Department of Labor is expected to issue implementing regulations by September 30, 2016
The Executive Order applies to federal contractors and to subcontractors at all levels (this includes a subs’ sub, and that subs’ sub, etc.). Prime contractors and subcontractors must flow down the new sick leave requirement in all subcontracts.
The order does not displace state and local laws. Employers should be mindful of the state and local laws of the jurisdictions in which they operate. Examples of jurisdictions with such rules include California, Massachusetts, Washington, D.C., New York City, and Philadelphia.
How the Paid Sick Leave Works
The Executive Order requires that federal contractors offer at least 56 hours of paid sick leave to their employees each year. The paid sick leave will accrue based on hours worked. Employees will earn one hour of paid sick leave for every 30 hours worked until they reach 56 hours (7 days) of paid leave.
Unused paid sick leave will carry over from one year to the next.
The Executive Order does not require employers to pay out accrued but unused sick leave when an employee leaves the job. But, if a worker leaves and is rehired within 12 months, the contractor must reinstate any leave that was lost at the time worker left.
Employees may use the paid sick leave for various reasons including:
- to seek treatment for their own or a family member's (such as a child, parent, spouse, domestic partner or another loved one) physical or mental illness or injury;
- to obtain a diagnosis or preventive care for themselves or a family member; or
- to cover their own absences resulting from domestic violence, sexual assault or stalking.
Leave requests do not have to be formal; oral requests are allowed.
Employees should give notice as soon as practicable, and when possible give a seven (7) day notice. Employees must include the expected duration of the leave. For leaves three or more consecutive workdays, the employer can require a medical certification of the need for absence.
Employers cannot make the leave dependent on the employee to find a replacement to cover his shift or work.
The Executive Order states that employers may not interfere with or in any other way discriminate against employees for taking paid sick leave, but it does not set up a private right of action.
Employers should make sure they understand whether they are federal contractors (learn more about Federal Contractors) and that they understand the rules the Department of Labor ultimately issues. And, contractors not immediately affected should remain mindful of the potential future application of the rules to them. For instance, they may eventually enter into new contracts that are covered.
The new rules set a minimum. The rules do not preclude granting more paid leave, accruing all the paid leave at once at the start of the year (rather than accruing by hours worked), or paying out unused leave when an employee leaves.
Employers should evaluate their policies to ensure that there have clear, written policies in place establishing how much and how leave will accrue and how it will be treated on exit.
Finally federal contractors likely will start analyzing the effect on cost structure and pricing so that they determine whether they can include pricing strategies to recoup the anticipated costs of compliance.