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eLABORate: Obama Administration Orders Federal Contractors to Provide Paid Sick Leave

September 10, 2015

On September 7, 2015, President Obama issued an Executive Order requiring federal contractors to provide up to seven days (or 56 hours) of paid sick leave each year to covered employees working on contracts entered into on or after January 1, 2017 (the “Executive Order”). A link to the Executive Order can be found here: https://www.whitehouse.gov/the-press-office/2015/09/08/executive-order-establishing-paid-sick-leave-federal-contractors

The Executive Order applies to most government contracts, and, specifically, applies to the following categories of contracts or contract-like instruments: (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, including any concessions contract excluded by 29 C.F.R. § 4.133(b); or (4) contracts or contract-like instruments entered into with the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public. In addition, the wages of employees under any contract or contract-like instrument must be governed by the Davis-Bacon Act, the Service Contract Act, or the Fair Labor Standards Act, including employees who qualify for an exemption from its minimum wage and overtime provisions.

The Executive Order excludes a small subset of contracts, including: (1) grants; (2) contracts and agreements with and grants to Indian Tribes under the Indian Self-Determination and Education Assistance Act (Public Law 93-638), as amended; or (3) any contracts or contract-like instruments expressly excluded by the federal regulations to be issued in accordance with the Executive Order.

For covered employees, they must accrue paid sick leave at a rate of no less than one hour of paid sick leave for every 30 hours worked, with a cap of no less than 56 hours each year. The Executive Order requires accrued paid sick leave to carry over from one year to the next, and it must be reinstated for employees rehired by a covered contractor within 12 months after a job separation. However, the Executive Order does not require contractors to pay out accrued but unused leave on separation. Nevertheless, contractors may be subject to collective bargaining agreements, or state or local requirements, which impose such a requirement. The Executive Order does not replace or supersede those requirements or modify requirements under the federal Family Medical Leave Act or any state analog.

Covered federal contractors must provide paid sick leave upon the oral or written request of an employee that includes the expected duration of the leave, and is made at least seven calendar days in advance where the need for leave is foreseeable, and in other cases as soon as is practicable. Covered employees may use paid sick leave for a variety of absences, including: 

  1. physical or mental illness, injury, or medical condition; 

  2. obtaining diagnosis, care, or preventive care from a health care provider; 

  3. caring for a child, a parent, a spouse, a 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 needs for diagnosis, care, or preventive care described above in (1) and (2), or is otherwise in need of care; or 

  4. domestic violence, sexual assault, or stalking, if the time absent from work is for the purposes otherwise described above in (1) and (2), to obtain additional counseling, to seek relocation, to seek assistance from a victim services organization, to take related legal action, including preparation for or participation in any related civil or criminal legal proceeding, or to assist an individual related to the employee as described above in (3) in engaging in any of these activities. 

Federal contractors may not require a certification from a health care provider unless the employee absence is for three or more consecutive workdays.

A federal contractor can rely on an existing paid sick leave program where “the amount of paid leave is sufficient to meet the requirements [of the Executive Order]” and “may be used for the same purposes and under the same conditions described [in the Executive Order.]” 

Pursuant to the Executive Order, the Secretary of Labor must issue federal regulations by September 30, 2016.

The Executive Order undoubtedly imposes additional compliance and financial burdens on federal contractors. Federal contractors should review their leave policies to ensure compliance with this Executive Order, as well as other employment-related laws affecting federal contractors.