New Rules for Paid Sick Leave for Federal Contractors Fast Approaching

On September 7, 2015, President Barack Obama signed Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors. The Executive Order requires certain employers that contract with the Federal Government to provide their employees with up to seven days of paid sick leave annually, including for family care and absences resulting from domestic violence, sexual assault, and stalking.

The order applies to new contracts and replacements for expiring contracts with the Federal Government that result from solicitations issued on or after January 1, 2017.

Under the proposal, 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’s regulations at 29 CFR 4.133(b); and
  • Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public

The Notice of Proposed Rulemaking (NRPM) contains certain exclusions.  Contracts that are not covered by the Executive Order include:

  • Grants;
  • Contracts and agreements with and grants to Indian Tribes under Public Law 93-638, as amended;
  • any procurement contracts for construction that are not subject to the DBA (i.e., procurement contracts for construction under $2,000); and
  • Any contracts for services, except for those otherwise expressly covered by the proposed rule, that are exempted from coverage under the SCA or its implementing regulations. The NPRM also provides that the Executive Order does not apply to contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the Federal Government, i.e., those subject to the Walsh-Healey Public Contracts Act.

Under the proposal, employees would accrue not less than one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract, to be calculated at the end of each workweek. The proposal 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 the leave based on hours worked. All covered contractors would be required to inform employees in writing of the amount of paid sick leave they have accrued no less than monthly.  The amount of paid sick leave an employee can accrue is limited to 56 hours each year and the employer must permit the employees to carry over accrued unused paid sick leave from one year to the next.

Paid sick leave under the order may be used for any absence resulting from:

  1. Physical or mental illness, injury, or medical condition of the employee;
  2. Obtaining diagnosis, care, or preventive care from a health care provider by the employee;
  3. Caring for the employee’s child, parent, spouse, domestic partner, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship who has any of the conditions or need for diagnosis, care, or preventive care described in (I) or (II); or
  4. Domestic violence, sexual assault, or stalking, if the time absent from work is for the purposes described in (I) or II) or to obtain additional counseling, seek relocation, seek assistance from a victim services organization, take related legal action, or assist an individual related to the employee as described in (III) in engaging in any of these activities.

Under the proposal, a contractor may only require certification for absences of three or more consecutive days. If the paid sick leave is used for the physical or mental illness, injury, or medical condition of the employee; obtaining diagnosis, care, or preventive care from a health care provider by the employee; or caring for the employee’s child, parent, spouse, domestic partner, or any other individual related by blood or affinity, the certification would be issued by a health care provider. If the paid sick leave is used for an absence resulting from domestic violence, sexual assault or stalking, the documentation provided would be from an appropriate individual or organization with the minimum necessary information establishing a need for the employee to be absent from work. The contractor would be prohibited from disclosing any verification information and would be required to maintain confidentiality about domestic abuse, sexual assault, or stalking, unless the employee consents or when disclosure is required by law.

You can view the Executive Order at: https://www.whitehouse.gov/the-press-office/2015/09/08/executive-order-establishing-paid-sick-leave-federal-contractors

For additional information or to discuss how this will impact your organization, please contact Terry Grant, KatzAbosch’s Government Contracting Practice Leader, at tgrant@katzabosch.com or 410.307.6426.

Terry

 

 

 

 

 

This article was provided by Terry Grant, CPA, CCIFP, CCA

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