Weekly Compliance Digest – Paid Sick Leave for Federal Contractors
Establishing Paid Sick Leave for Federal Contractors
What is it?
Last week, the U.S. Department of Labor announced a final rule requiring federal contractors to provide paid sick leave to employees who work on or in connection with certain federal contracts. The rule will allow these workers to use paid leave if they are sick, need to take care of a sick family member or must see a doctor or take a family member to a medical appointment. The final rule implements Executive Order 13706, signed by President Obama on September 7, 2015. When fully implemented, the final rule will provide up to 56 hours of paid sick leave per year to an estimated 1.15 million employees of federal contractors, including an estimated 594,000 employees who currently receive no paid sick leave.
Who is affected?
Under the final rule, Executive Order 13706 applies to four major categories of contractual agreements:
- Procurement contracts for construction covered by the Davis-Bacon Act (DBA).
- Service contracts covered by the McNamara-O’Hara Service Contract Act (SCA).
- Concessions contracts, including any concessions contracts excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b).
- Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.
Furthermore, any subcontract of a covered contract that (like the upper-tier contract) falls into one of these four categories is subject to the paid sick leave requirements.
What are the requirements?
Under the final rule, employees can accrue 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. The rule also creates an option for contractors to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year rather than allowing the employee to accrue leave based on hours worked.
The rule provides that contractors may limit the amount of paid sick leave employees may accrue to 56 hours each year and must permit employees to carry over accrued, unused paid sick leave from one year to the next. The rule also allows contractors to limit the amount of paid sick leave employees have accrued to 56 hours at any point in time. Furthermore, contractors are required to reinstate employees’ accrued, unused paid sick leave if the employees are rehired by the same contractor within 12 months after a job separation unless contractors provide payment to employees for accrued, unused paid sick leave upon separation.
What is next?
The final rule was published in the Federal Register on September 30, 2016, and will take effect on November 29, 2016.
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