National Day of Mourning for President Carter

This past Sunday saw the passing of President Jimmy Carter. On Monday (December 30), President Biden issued an Executive Order directing that “[a]ll executive departments and agencies of the Federal Government shall be closed on January 9, 2025, as a mark of respect for James Earl Carter, Jr., the thirty-ninth President of the United States.”

Some aspects of Government, however, can never be shuttered. Accordingly, the President authorized [t]he heads of executive departments and agencies [to] determine that certain offices and installations of their organizations, or parts thereof, must remain open and that certain employees must report for duty on January 9, 2025, for reasons of national security, defense, or other public need.” Where facilities are not closed and/or employees are directed to report to work, it’ll pretty much be business as usual—at least from the perspective of showing up and getting paid for work. Likewise, if a federal contractor is required to continue operations, work will go on as-is for the contractor and its employees.

However, most federal employees will get the day off and receive administrative leave pay for January 9. That federal employees will receive pay is a relatively clear matter of long-standing federal policy. However, that’s not the case for contractors. There are no Federal Acquisition Regulation provisions that direct federal contractors to give paid leave to employees who cannot report to work because an agency is closed. Likewise, there are no Department of Labor (“DOL”) regulations that require contractors to furnish paid leave pursuant to the Service Contract Act or the Davis-Bacon Act.

DOL’s Field Operations Handbook offers scant guidance at section 14j05(c):

(c) If the applicable WD does not include a paid holiday provision for any day declared by the U.S. President to be a holiday, or for any work day where the Federal facility is closed such as due to inclement weather, the contractor is not required to pay covered service employees who take that day off. Any pay provided would be a matter of discretion for the contractor, and contract payments for such time not worked would be a procurement matter within the purview of the contracting agency.

Thus, absent specific contract provisions that provide direction for declared holidays or other closures, granting paid leave to idled nonexempt contractor employees is a matter of business judgment as far as DOL is concerned. For example, one could choose not to provide paid leave for the day but allow workers to use a vacation day if they wish to receive pay for the holiday. Taking this approach will be the least-cost course of action. If that’s the path a contractor chooses, they should bear in mind that employers may not dock an exempt worker’s pay for the day off, else they’ll fail the salary basis test.

Alternatively, a contractor may furnish leave pay if it so chooses. However, absent contract provisions that speak to this circumstance, most fixed price contractors may have to bear the cost without additional compensation from the Government. Firms that have cost reimbursement contracts might be able to recover the cost so long as it is allowable under applicable provisions. The viability of a request for compensation will hinge on the contract’s terms.

Thus, read your contract carefully. Some agencies (for example, NASA and the State Department) have provisions in their supplemental acquisition regulations that address the potential availability of compensation for facility closures; others may have contract-specific provisions. Likewise, do review the Wage Determination or Collective Bargaining Agreement applicable to your contract as either of these might require paid leave for declared holidays. If that’s the case, a price adjustment might be available under the SCA Price Adjustment Clause (see, e.g. FAR 52.222-43).