DOL Issues Final Rule on Paid Sick Leave for Federal Contractors

The U.S. Department of Labor (DOL) has issued a final rule to implement Executive Order (EO) 13706, Establishing Paid Sick Leave for Federal Contractors. The EO was signed by President Barack Obama on September 7, 2015 and requires certain Federal contractors to provide their employees with up to 56 hours of paid sick leave annually, including paid leave allowing for family care.

The Final Rule specifies the contracts and employees covered by the EO, as well as rules for how sick leave will accrue, when it can be used and how the Department will ensure that covered employers comply with these new requirements.

The EO 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 Final Rule, the EO applies to four major categories of contractual agreements:

  1. Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
  2. Service contracts covered by the McNamara-O’Hara Service Contract Act (SCA);
  3. Concessions contracts; and
  4. Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.

The Final Rule provides that the EO applies to any person engaged in performing work on or in connection with a contract covered by the EO whose wages under such contract are governed by the SCA, DBA, or Fair Labor Standards Act (FLSA).

Under the Final Rule, employees accrue 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. The Final 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.

Under the Final Rule, an employee’s request to use paid sick leave may be made orally or in writing. A leave request must be made at least 7 calendar days in advance where the need for the leave is foreseeable, and in other cases as soon as is practicable. A contractor is required to communicate any denial of a request to use paid sick leave in writing, with an explanation for the denial.

Under the Final Rule, a contractor may require certification only for absences of three or more consecutive full days, and the employee must have received notice of the requirement to provide certification or documentation before he or she returns to work. If 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, certification must 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, documentation could be from a health care provider, counselor, representative of a victim services organization, attorney, clergy member, family member, or close friend; and self-certification is also permitted. Records relating to medical histories must be maintained as confidential records, and contractors are prohibited from disclosing any verification information and are required to maintain confidentiality about domestic abuse, sexual assault, or stalking, unless the employee consents or when disclosure is required by law.

The Final Rule also explains that a contractor’s existing paid time off (PTO) policy can fulfill the paid sick leave requirements of the EO as long as it provides employees with at least the same rights and benefits as the Final Rule requires. In other words, if a contractor provides 56 hours of PTO that meets the requirements described in the EO and the Final Rule but employees can use the leave for any purpose, the contractor does not have to provide separate paid sick leave even if an employee uses all of the time for vacation.

About John Garner

John Garner has over thirty five years of experience in employee benefits. He specializes in compliance, health care reform, the Health Insurance Portability and Accountability Act (HIPAA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Employee Retirement Income Security Act (ERISA). He helps clients with life, health, and disability benefits, cost containment, flexible benefits, and claim consulting.

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