Paid Sick Leave for Federal Contractors

From: Staffing

According to Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, certain employers that contract with the federal government are required to provide employees working on or in connection with those contracts with one hour of paid sick leave for every 30 hours they work and up to 56 hours of paid sick leave each year.

Covered Contracts

The paid sick leave requirements apply to the following new contracts and replacements for expiring contracts with the Federal Government starting January 1, 2017:

A procurement contract for construction covered by the Davis-Bacon Act (DBA).
A contract for services covered by the Service Contract Act (SCA).
A contract for concessions, including any concessions contract excluded from coverage under the SCA.
A contract in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

Contracts entered prior to January 1, 2017 are covered if, through bilateral negotiation, on or after January 1, 2017 any of the following apply:

The contract is renewed.
The contract is extended, unless the extension is made pursuant to a term in the contract as of December 31, 2016, providing for a short-term limited extension.
The contract is amended due to a modification that is outside the contract’s scope.

A new contract does not include the unilateral exercise of a pre-negotiated option to renew an existing contract by the federal government.

Subcontracts

The paid sick leave requirements also apply to subcontracts of covered prime or upper-tier contracts if the subcontract is one of the aforementioned four types of covered contracts, regardless of the subcontract value. Contractor obligations for ensuring compliance by subcontractors are consistent with obligations under DBA, SCA and the final rule implementing the minimum wage executive order.

Exceptions

The paid sick leave requirements do not apply to any of the following:

Federal Grant and Cooperative Agreement Act grants.
Contracts and agreements with and grants to Indian tribes under the Indian Self-Determination and Education Assistance Act.
Contracts that are subject only to the Davis-Bacon and Related Acts.
Contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the federal government that are subject to the Walsh-Healey Public Contracts Act.

Covered Employees

Employees covered by these paid sick leave requirements are those performing work on or in connection with covered contracts and whose wages under those covered contracts are governed by the DBA, SCA, or FLSA, including employees who qualify for an exemption from the federal Fair Labor Standards Act (FLSA) minimum wage and overtime provisions.

Employees performing in connection with a covered contract are those who are performing work activities that are necessary to the performance of a covered contract but who are not directly engaged in performing the specific services called for by the contract itself (such as, a security guard patrolling or monitoring a construction worksite where DBA-covered work is being performed or a clerk who processes the payroll for SCA contracts).

Note: The Department of Labor has proposed that employees performing in connection with covered contracts (rather than “on” covered contracts) and who spend less than 20 percent of their hours worked in a particular workweek performing in connection with such contracts are not covered by the accrual requirements. This will be clarified upon release of the final regulations.

Accrual of Paid Sick Leave

Contractors must permit an employee to accrue no less than one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. Hours worked includes all time for which an employee is or should be paid. For instance, hours worked is the time an employee spends working or in paid time off status, including time when the employee is using paid sick leave or any other paid time off provided by the employer.

Accrual Method

Contractors may choose either of the following accrual methods:

Provide employees with at least 56 hours of paid sick leave at the beginning of each accrual year (lump sum method). An accrual year is a 12-month period beginning on the date an employee’s work on or in connection with a covered contract began or any other fixed date chosen by the contractor, such as the date a covered contract began, the date the contractor’s fiscal year begins, a date relevant under state law, or the date a contractor uses for determining employees’ leave entitlements under the federal Family and Medical Leave Act (FMLA).
Allow employees to accrue one hour of paid sick leave for every 30 hours worked (accrual method).

Contractors must calculate an employee’s accrual of paid sick leave no less frequently than at the conclusion of each workweek.

Contractors are not required to allow employees to accrue paid sick leave in increments smaller than one hour for completion of any fraction of 30 hours worked. Specifically, an employee need only be permitted to accrue a full hour of paid sick leave after working a full 30 hours. For example, if an employee worked 40 hours on her first workweek on a covered contract, the first 30 of those hours would count toward the accrual of one hour of paid sick leave, and the 10 remaining hours would be added to hours worked for the same contractor in a future workweek or workweeks to reach the next 30 hours worked.

Cap on Accrual

Contractors may limit an employee’s annual paid sick leave accrual to 56 hours and may prohibit an employee from having more than 56 hours of paid sick leave available for use.

Carryover

Contractors are required to allow employees to carry over up to 56 hours of unused, accrued paid sick leave from one accrual year to the next. However, employers are not required to allow employees a total accrual of more than 56 hours of leave. Leave carried over from the previous accrual year does not count toward the 56-hour limit in the next accrual year, but contractors may limit employees’ amount of paid sick leave at any point in time to 56 hours. For example, if an employee carries over 16 hours of paid sick leave into a new accrual year, she must be permitted to accrue 40 additional hours of paid sick leave even if she does not use any paid sick leave while that accrual occurs. Once she has 56 hours of paid sick leave accrued, the contractor may prohibit her from accruing any additional leave unless she uses some portion of the 56 hours. If she uses, for example, 24 hours of paid sick leave in the same accrual year (such that she has 32 hours remaining available for use), she must be permitted to accrue up to at least 16 more hours (in addition to the 40 hours she has already accrued during the accrual year) for a total of 56 hours accrued in that accrual year. If she did so, she would then have 48 hours of paid sick leave (32 previously available hours plus 16 newly accrued hours) available for use and could be limited to that amount until the next accrual year.

Permitted Uses

An employee may use paid sick leave for time he or she would otherwise be working on or in connection with a covered contract if he or she is absent because of any of the following:

The employee’s or a family member’s physical or mental illness, injury, or medical condition. A family member is an employee’s child, parent, spouse, domestic partner, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.
The employee or a family member obtaining diagnosis, care, or preventive care from a health care provider.
The employee or a family member is a victim of domestic violence, sexual assault, or stalking, if the time absent from work is for any of the aforementioned purposes or to obtain additional counseling, seek relocation, seek assistance from a victim services organization, take related legal action, including preparation for or participation in any related civil or criminal legal proceeding, or assist a family member.

Contractors may not require an employee using paid sick leave find a replacement worker to cover any missed work time or for the fulfillment of the contractor’s operational needs. The law also requires employees using paid sick leave be provided the same pay and benefits they would have received had they not used paid sick leave.

Limits on Use and Incremental Use

Contractors may not limit either of the following:

An employee’s use of accrued paid sick leave over the course of a year.
The amount of leave an employee can use at one time.

However, an employee’s use of paid sick leave is limited by all of the following:

The amount of paid sick leave the employee has accrued.
The employee’s compliance with rules regarding requesting the use of paid sick leave.
The employee providing information verifying the need for use of paid sick leave.

Contractors are required to allow employees to use paid sick leave in increments of no greater than one hour. For example, if an employee needs to be an hour late for work because of a doctor’s appointment, her contractor would have to permit her to use only one hour of leave (rather than, for example, a full day). If an employee needs to be a half hour late for work because of the doctor’s appointment, then the contractor would not be required to allow the worker to use only half an hour of leave, but instead could require her to use one hour of accrued leave (provided the employee does not perform work at any point during that one-hour period).

Payout Upon Termination

Contractors are not required to make a financial payment to an employee for his or her unused, accrued paid sick leave upon a separation from employment.

Reinstatement

Paid sick leave must be reinstated for employees rehired by the same contractor or a successor contractor within 12 months after a job separation. This reinstatement requirement would apply whether the employee leaves and returns to a job on or in connection with a single covered contract or works for a single contractor on or in connection with more than one covered contract, regardless of whether the employee remains employed by the contractor to work on noncovered contracts in between periods of working on covered contracts.

This reinstatement requirement also applies if an employee is hired for a job on or in connection with a covered successor contract after working on or in connection with the predecessor contract, including when an employee is entitled to a right of first refusal of employment from a successor contractor under Executive Order 13495 (Nondisplacement of Qualified Workers Under Service Contracts).

Employee Request

Employees must request leave at least seven calendar days in advance if the need to use paid sick leave is foreseeable. Notice must be provided as soon as practicable if the need to use paid sick leave is unforeseeable.

Employees may request paid sick leave by any verbal or written method, including in person, by phone, via email, or with a note reasonably calculated to provide timely notice of the employee’s intent to take leave. Request are required to contain enough information for a contractor to determine whether it is a proper use of paid sick leave and contractors may ask narrowly tailored questions to make that determination. The request for leave should also provide an estimate of the timing and amount of leave needed.

A request to use paid sick leave is acceptable if the employee directs it to the appropriate personnel under a contractor’s policy or, in the absence of a formal policy, any personnel who typically receive requests for other types of leave on behalf of the contractor, such as a supervisor or human resources department staff. The request for leave does not need to contain extensive or detailed information about the reason for the leave and a contractor may not require such information. The employee would not need to specify all symptoms or details of the need for leave, nor would he or she need to specifically request to use paid sick leave or even use the words “sick leave” or “paid sick leave.”

However, contractors are permitted to deny an employee’s request to use paid sick leave if an employee has not complied with the notice requirements.

Response to Request

Contractors are required to respond as soon as is practicable after an employee’s request to use paid sick leave. The determination of when it is practicable for a contractor to provide a response will take into account the individual facts and circumstances; however, generally it is practicable for the contractor to respond to a request immediately or within a few hours. In some instances, such as if it is unclear at the time of the request whether the employee will be working on or in connection with a covered or noncovered contract at the time for which paid sick leave is requested, as soon as practicable could mean within a day or no longer than within a few days.

Certification

Only if an employee is absent for three or more consecutive, full workdays may a contractor require certification from a health care provider — or other documentation if the leave is related to domestic violence, sexual assault, or stalking — to verify the need for paid sick leave. Additionally, a contractor may only require certification or documentation if the contractor informed an employee before the employee returned to work that certification or documentation would be required.

Certification issued by a health care provider is any type of written document created or signed by a health care provider (or by a representative of the health care provider) that contains information verifying that the physical or mental illness, injury, medical condition, or need for diagnosis, care, or preventive care exists. Documentation related to domestic violence, sexual assault, or stalking may come from any person involved in providing the employee care, counseling, relocation assistance, legal assistance or victims services, which would include a health care provider, counselor, employee of a victim services organization, or attorney. The certification is not required to provide any of the following details:

Name the perpetrator of the domestic violence.
Nature of the acts that constitute domestic violence.
Addresses of the old or new homes.
Any other details beyond those sufficient to make clear that the time was used for a purpose that justifies the use of paid sick leave.

Contractors may require an employee provide certification or documentation within 30 days of the date leave begins. Contractors must also notify an employee of any denial of his or her request to use paid sick leave based on the certification or documentation within 10 calendar days of receipt (or 10 calendar days from the deadline where an employee fails to provide the certification or documentation). Contractors may contact the health care provider or other individual who created or signed any certification or documentation to authenticate the document or clarify its contents. Contractors may not request additional details about the medical or other condition referenced, seek a second opinion, or otherwise question the substance of the certification.

Interaction with Other Laws

In relation to other laws, contractors must continue compliance with all applicable federal or state laws, any applicable law or municipal ordinance, or a collective-bargaining agreement requiring greater paid sick leave or leave rights than those established under the executive order and implementing regulations.

Paid sick leave required by Executive Order 13706 is in addition to a contractor’s obligations under the SCA and DBA. A contractor may not receive credit toward its prevailing wage or fringe benefit obligations under those acts for any paid sick leave provided in satisfaction of the requirements of the executive order. If a contractor chooses to provide more paid sick time than is required by the executive order, then that additional paid sick time could count toward SCA or DBA obligations if it complies with the requirements under those statutes.

Contractor’s obligations under the executive order have no effect on their obligations to comply with, or ability to act pursuant to, the FMLA. Paid sick leave may run concurrently with unpaid FMLA leave under the same conditions as other paid time off pursuant to FMLA regulations. For time off that is designated as FMLA leave and for which an employee uses paid sick leave, all notices and certifications that satisfy the FMLA’s regulatory requirements would satisfy the request for leave and certification requirements of the proposed regulations.

Pre-Existing Leave Policies

A contractor’s existing paid time off (PTO) policy (if provided in addition to the fulfillment of SCA or DBA obligations, if applicable) will satisfy the requirements of the executive order if the paid time off fulfills all of the following requirements:

Is made available to all employees covered by the executive order.
Can be used for at least all of the same purposes as paid sick leave.
Is provided in a manner and an amount sufficient to comply with the rules and restrictions regarding the accrual of paid sick leave described in the regulations.
Is provided pursuant to policies sufficient to comply with the rules and restrictions regarding use of paid sick leave, requests for leave, and certification and documentation, at least with respect to any paid time off used for the required purposes.
Is protected by the prohibitions against interference, discrimination, recordkeeping violations, and waiver of rights described in the proposed regulations, at least with respect to any paid time off used for the required purposes.

Contracting Agencies

Contracting agencies are required to ensure that a clause regarding the paid sick leave requirements is inserted into covered contracts, including covered lower-tier contracts, and also ensure that lower-tiered contractors comply with the law.

Contractor-Provided Notice

Contractors are required to inform an employee, in writing, of the amount of paid sick leave that the employee has accrued, but not used, as follows:

No less than monthly.
At any time when the employee makes a request to use paid sick leave.
Upon the employee’s request for such information, but no more often than once a week.
Upon a separation from employment.
Upon reinstatement of paid sick leave.

A contractor’s existing procedure for informing employees of their available paid time off, such as notification accompanying each paycheck or an online system an employee can check at any time, can be used to satisfy or partially satisfy these requirements provided it is written (including electronically) and clearly indicates the amount of paid sick leave an employee has accrued separately from indicating amounts of other types of paid time off available.

Retaliation

Contractors may not in any manner interfere with an employee’s accrual or use of paid sick leave as required by the law. Additionally, a contractor may not discharge or in any other manner discriminate against an employee for any of the following:

Using, or attempting to use, paid sick leave.
Filing any complaint, initiating any proceeding, or otherwise asserting any right or claim.
Cooperating in any investigation or testifying in any proceeding.
Informing any other person about his or her rights.

Recordkeeping

Contractors are required to make and maintain the following records:

Copies of notifications to employees of the amount of paid sick leave accrued.
Denials of employees’ requests to use paid sick leave.
Dates and amounts of paid sick leave employees use.
Other records showing the tracking of employees’ accrual and use of paid sick leave.

Contractors are also required to maintain employees’ medical and other records, especially those relating to domestic violence, sexual assault, and stalking, separate from other records and confidential.

Enforcement

The U.S. Department of Labor is responsible for enforcement. Remedies available for violations of the executive order and regulations, including prohibitions on interference with the accrual or use of paid sick leave or discrimination for an exercise or attempted exercise of rights, include monetary damages, liquidated damages, and equitable relief.