We are writing to alert you to yet another source of wage-hour and wage-payment claims.  EO 13706 mandates that government contractors and sub-contractors provide paid sick days in addition to any other PTO requirement (such as the vacation pay requirement contained in the Service Contract Act).  Failure to make payments could result in liability to the affected workers and also the risk of debarment proceedings.  While most employers focus upon their FLSA and state law obligations, those that perform work under federal government contracts have additional obligations and exposures.

The U.S. Department of Labor today released the final regulations implementing President Barack Obama’s Executive Order 13706, requiring up to seven days of paid sick leave for workers on federal contracts. We are analyzing the final Rule and will be providing future updates, but below are some of the key requirements.

Effective Date and Contracts Covered:

The paid sick leave requirements apply to the following types of contracts, and subcontracts, that result from solicitations issued on or after January 1, 2017:

(1) procurement contracts for construction covered by the Davis-Bacon Act (DBA);

(2) contracts for services covered by the Service Contract Act (SCA);

(3) contracts for concessions, including any concessions contract excluded from coverage  under the SCA; and,

(4) contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.

Employees Covered:

The paid sick leave requirements apply to any worker engaged in performing work on, or in connection with, a covered contract whose wages under the contract are governed by the SCA, DBA, or Fair Labor Standards Act (FLSA), including employees who are exempt under the FLSA.

Required Accrual of Paid Sick Leave

The final Rule allows employees to accrue 1 hour of paid sick leave for every 30 hours worked on, or in connection with, a covered federal contract, up to 56 hours (7 days) in a year or at any point in time.  The regulations provide requirements and guidance on leave carryover, use of sick leave, and the interplay between existing PTO policies, collective bargaining agreements, and state and local sick leave laws.