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DOL Issues Final Rule on Paid Sick Leave for Federal Contractors

On September 30, the Department of Labor (DOL) issued final regulations implementing Executive Order 13706 (EO) requiring federal contractors and subcontractors working on or in connection with covered contracts to offer their employees up to seven days of paid sick leave per year. Although DOL has made some minor revisions to the proposed rule, the final rule remains largely unchanged and will impose significant obligations on many employers.

Largely modeled after the Healthy Families Act, which has been introduced in every congress since 2004, the president’s EO will allow employees working “on” or “in connection with” federal contracts to earn a minimum of one hour of paid sick leave for every 30 hours worked, up to 56 hours per year. The proposed rule defined “hours worked” generously and in a significantly broader way than the definition under the Fair Labor Standards Act. However, the final rule narrowed the definition of “hours worked” to include only working hours and not time spent on paid leave.

It will allow workers to use their accrued leave for a variety of personal health-related reasons, to care for family members such as children, parents, spouses, domestic partners or other loved ones including a “close friend,” and for necessary absences due to domestic violence, sexual assault or stalking. Other stipulations of the EO state that, if possible, employees should ask for sick leave at least seven calendar days in advance or as soon as it is practicable and that a medical certification would be required if more than three consecutive days are taken off — the final rule includes self-certification to the list of acceptable sources for such absences. Furthermore, employees will be allowed to carry over any accrued leave from one year to the next and will have their sick leave reinstated if they are rehired by a covered contractor within 12 months after a job separation.

The implementation of the final rule follows previous executive actions the president has undertaken to raise the minimum wage for employees under federal contracts, to impose additional burdens and obligations on federal contractors and make it more difficult to win federal contracts (see more about the “blacklisting” regulations), and a huge push to expand overtime coverage to millions of workers (see CUPA-HR’s comments). According to Secretary of Labor Thomas Perez upon announcement of the final rule, “The next step is a federal earned sick time law such as the Healthy Families Act, and I am confident that it is a question of when, not if. I’m proud to be part of an administration that’s getting us closer to that day.”

DOL has published a number of resources on its website with details on the categories of federal contracts and employees that would be covered under the EO; obligations of DOL, covered federal contractors and other contracting agencies; requirements around the accrual and use of paid sick leave; and remedies and enforcement procedures around implementation of the EO. The new paid leave requirement will apply to new contracts and replacements of expiring contracts entered into with the federal government on or after January 1, 2017.

CUPA-HR and SHRM submitted joint comments on the proposal on April 12, 2016.

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