Coming Soon to a Federal Contractor Near You: Paid Sick Leave

21 March 2016 Labor & Employment Law Perspectives Blog

On Labor Day, September 7, 2015, President Obama signed Executive Order 13706Establishing Paid Sick Leave for Federal Contractors. The Executive Order requires that certain federal contractors and subcontractors (the same ones subject to the increased minimum wage requirements that became effective last year), provide 1 hour of paid sick leave for every 30 hours worked, up to 56 hours (7 days) in a year at any point in time. At the same time, the President directed the Department of Labor (DOL) to issue final regulations implementing the Executive Order by no later than September 2016.

Last month, on February 25, 2016, the DOL issued a Notice of Proposed Rule Making (NPRM), publishing proposed regulations implementing the Executive Order in the Federal Register and soliciting comments on those regulations. Initially, all comments were to be filed by March 28, 2016; however, due to increased interest, the DOL extended the comment period to April 12, 2016. In issuing the NPRM, the DOL remains on schedule to issue final regulations by no later than the September 2016 deadline set by the President – a deadline necessary to address a possible challenge to invalidate regulations passed in the sunset of the present administration.

It is anticipated that the Executive Order will require the provision of additional paid sick leave to approximately 828,000 employees, including some 437,000 who currently have no such benefits. The paid sick leave is to be made available for use by employees:

(i) For their own illness or other health care needs (including preventive care)
(ii) To care for a family member or loved one who is ill or needs health care (including preventive care)
(iii) For purposes resulting from being a victim of domestic violence, sexual assault or stalking – or to assist a family member or loved one who is a victim.

The paid benefits can be “use it or lose it,” and no vesting is required (therefore, employees will not be entitled to “cash out” the benefit at the time of termination). However, employers must allow for some carry over to a following year – but never more than the 56 total hours. The benefits are to be made available with any new contract or subcontract entered into following January 1, 2017.

As with most of the new regulations foisted on federal contractors, the proposed regulations also contain an anti-retaliation provision prohibiting any employer subject to the regulations from interfering with an employee’s exercise of rights under the regulations, and from discriminating against or retaliating against an employee who exercises a right under the regulations.

There have been a number of new rights, benefits and obligations required of federal contractors and subcontractors by President Obama’s administration: increased minimum wage, prohibition against discrimination based on sexual orientation or gender identity, prohibition against pay secrecy, pay equity requirements and reporting obligations, among others. And now, paid sick leave is about to see the light of day – and it will happen in 2016 – and be required to be satisfied starting as early as January 1, 2017. For more information, the DOL has published a Fact Sheet on the NPRM, as well as an overview of the Proposed Rule.

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