On September 7, 2015, the President issued the Establishing Paid Sick Leave for Federal Contractors Executive Order (the “Order”) requiring federal contractors to provide up to 56 hours (7 days) of paid sick leave per year to their employees on new contracts entered into after January 1, 2017.  The White House anticipates that the Order will provide paid sick leave to approximately 300,000 people working on federal contracts who currently do not receive such benefits.

Applicability

Under the Order, employees working on the following types of contracts beginning in 2017 will be subject to the new paid sick leave requirement:

(1) procurement contracts for services or construction;

(2) contracts or contract-like instruments for services covered by the Service Contract Act;

(3) contracts or contract-like instruments for concessions; and

(4) contracts or contract-like instruments in connection with federal property or lands and related to offering services for federal employees, their families, or the general public.

In addition, for a contract falling into the above categories to be covered by the Order, the wages of employees must be governed by the Davis-Bacon Act, the Service Contract Act, or the Fair Labor Standards Act.  For any covered contract, subcontractors would also be required to provide paid sick leave to any employees performing work on the contract.

Accrual and Carryover of Sick Leave

The Order provides that covered employees will accrue paid sick leave at a rate of 1 hour for every 30 hours worked.  No contractor will be permitted to cap accrual at less than 56 hours per year, which equates to 7 days of leave.  Moreover, covered employees must be allowed to carryover all unused accrued sick time.  Additionally, paid sick leave must be reinstated for employees rehired by a covered contractor within 12 months after a job separation.

Uses of Sick Leave

Covered employees will be able use paid sick leave for a variety of purposes, including:

(1) a physical or mental illness, injury, or medical condition;

(2) obtaining diagnosis, care, or preventative care from a health care provider;

(3) caring for a child, parent, spouse, domestic partner, or any other individual related by blood or affinity, whose association with the employee is the equivalent of a family relationship, and who has any of the needs listed in (1) and (2) above; and

(4) absences resulting from domestic violence, sexual assault, or stalking, if the absence is a result of seeking medical attention, obtaining counseling, seeking relocation, seeking assistance from a victim services organization, or taking related legal action.

Requesting Leave and Certifications

The Order states that paid sick leave requests must be made, orally or in writing, at least 7 calendar days in advance where the need for leave is foreseeable, or as soon as practicable in other scenarios.  In addition, covered employees are expected to provide their employer with the expected duration of the leave.  If an employee is absent for 3 or more consecutive days on paid sick leave, the employer is permitted to request a certification from a health care provider (if the absence is related to a medical condition) or from an appropriate individual or organization (if the absence is related to domestic violence, sexual assault, or stalking).  The certification must be provided no later than 30 days from the first day of leave.

Prohibition on Retaliation and Interference

Covered employers will be prohibited from interfering or retaliating against any employee for using, or attempting to use, sick leave covered by the Order.  Additionally, the Order prohibits retaliation against any employee for assisting another employee in asserting his or her rights under the Order.

Implementation and Application

The Order mandates that the Department of Labor issue regulations by September 30, 2016.  The Order applies only to contracts entered into after January 17, 2017.

Key Takeaways

As the White House itself acknowledged, the President’s actions in issuing the Order “build on a number of previous steps taken by the President to expand access to paid leave.”  This Order represents the continuation of this Administration’s practice of imposing on federal contractors employee rights and benefits that it cannot obtain through Congressional action.  In the past 18 months alone, the Administration has imposed minimum wage, pay transparency and LGBT non-discrimination requirements on federal contractors.  With the Order, federal contractors will face significant new financial and regulatory burdens in addition to those already imposed on them over the past 18 months.  Even federal contractors that currently have paid leave policies will face regulatory burdens, as they will need to ensure that their programs comply with the new implementing regulations as well as any applicable state or local paid leave ordinance.

We will continue to monitor this issue and post on any new developments.