When is the paid sick leave required for federal contractors?

Contracts resulting from federal government solicitations issued on or after Jan. 1, 2017, and contracts awarded outside the solicitation process on or after Jan. 1, 2017 (collectively, “new contracts”) may be subject to the federal sick leave Executive Order (“EO”) 13706 and the rules implementing it. 81 Fed. Reg. 67,598, 67,608. While President Trump repealed some of the Obama-era labor regulations for federal contractors, he left the sick leave EO in place. As part of his 2016 campaign, President Trump promised to impose a new sick leave benefit on most large employers. But he has yet to make any proposal to implement that campaign promise.

Meanwhile, sick leave EO covered federal contracts should include the clause at FAR 52.222-62. That makes federal contractors one of the test laboratories for sick leave requirements. When the EO applies, employees on covered contracts must be permitted to earn not less than one hour of paid sick leave for every 30 hours worked. The sick leave is ordinarily additional to any vacation/paid time off required by the other wage and hour laws. A covered contractor is not allowed to set a limit on the total accrual of paid sick leave per year, or at any point in time, at less than 56 hours. Paid sick leave accrued under the order will carry over from one year to the next and will be reinstated for employees rehired by a covered contractor within 12 months after a job separation. But, nothing in the order requires a covered contractor to make a financial payment to an employee upon a separation from employment for accrued sick leave that has not been used (except for the reinstatement requirement).

Paid sick leave earned can be used by an employee for an absence resulting from:

• physical or mental illness, injury, or medical condition;

• obtaining diagnosis, care, or preventive care from a health care provider;

• 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 or is otherwise in need of care; or

• domestic violence, sexual assault, or stalking, if the time absent from work is for the purposes otherwise described above, 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 engaging in any of these activities.

The sick leave EO requirements apply to both exempt and nonexempt Service Contract Act (“SCA”) and Davis-Bacon Act (“DBA”) covered employees (and certain specified other employees) working on the covered government contract. However, coverage is not limited to just the directly employed workers engaged in performance of the contract specified work. The requirements also apply to support workers who spend 20% or more of their time working in relation to the covered contract such as overhead and corporate staff like payroll, bookkeeping, and procurement folks. It is an executive order with an expansive reach.

Contractors should consult with counsel and make sure their leave policies comply with the sick leave EO requirements.