Just a year after President Obama signed Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, the Department of Labor (DOL) announced its final rule mandating that federal contractors provide paid sick leave to employees who work “on or in connection with” federal contracts. The rule applies to new and renewed contracts with the federal government that are solicited and awarded on or after Jan. 1, 2017 (the rule contains a few narrow exclusions).

The rule explains that employees perform work “on” a covered contract when their work is directly related to the specific services called for by the contract (e.g., technicians wiring a public building). And employees perform work “in connection with” a covered contract when their work is not directly related to the services called for by the contract but is necessary to the performance of the contract (e.g., a security guard monitoring a construction worksite where covered work is being done).

The final rule permits eligible employees to take paid sick leave (1) for an employee’s incidents of physical or mental illness; (2) for the care of a sick family member; (3) for an employee’s visits to health care providers, including for preventive care; and (4) for an employee to take a family member to a medical appointment. The rule also permits paid sick leave to be taken for medical reasons or to obtain other services related to domestic violence, sexual assault and stalking.

Important highlights from the final rule include:

  • Both exempt and nonexempt employees are eligible for up to 56 hours of paid sick leave per year.
  • Contractors can choose to structure the permitted leave time as either accruable over time or available upfront.
  • For contractors that select the accrual method, employees can accrue one hour of paid sick leave for every 30 hours worked.
  • Contractors must permit employees to take paid sick leave in as little as one-hour increments.
  • Contractors must permit employees to carry over earned, unused paid sick leave from one year to the next.
  • Contractors are not required to pay employees accrued, unused paid sick leave at the time of job separation.
  • An existing Paid Time Off (PTO) policy can fulfill paid sick leave requirements – this means that contractors who provide 56 hours of PTO and otherwise meet the final rule’s requirements (e.g., permit leave to be taken in as little as one-hour increments), do not have to provide separate paid sick leave even if the employees use all their PTO for vacation.
  • Contractors must provide written notice to each employee of the amount of paid sick leave available, at the end of each pay period or each month, whichever is shorter.
  • Requests for leave may be made orally or in writing and at least seven calendar days in advance where foreseeable, and in other cases as soon as practicable.
  • Certification can be required only for absences of three or more consecutive full days.
  • The final rule does not affect contractors’ obligation to comply with the Family Medical Leave Act (FMLA), but paid sick leave can be made to run concurrently with unpaid FMLA leave.
  • The final rule does not supersede any state or local laws or collective bargaining agreements that offer greater sick leave rights.

The new rule outlines complaint procedures for suspected violations and contains enforcement mechanisms for investigations and complaint resolution. Remedies and sanctions for rule violations include payment of damages and debarment. For more details, see the Final Rule or visit the DOL’s Frequently Asked Questions page.