On September 29, 2016, the Department of Labor (“DOL”) released a final rule that requires federal contractors to provide their employees up to seven days of paid sick leave per year. This rule implements Executive Order 13706, which was signed by President Obama on September 7, 2015.

The final rule is set to be formally published in the Federal Register today. The rule will go into effect 60 days after publication and will apply to new solicitations issued on or after January 1, 2017.

The rule requires contractors to give their employees at least one hour of paid sick leave for every 30 hours of work on a covered federal contract, which must be allowed to accrue to at least 56 hours per calendar year (or seven eight-hour days). Employees will be allowed to use paid sick leave for their own illnesses, preventive care or other health care needs; to care for a family member who is ill or seeking preventive care; and for absences resulting from domestic violence, sexual assault or stalking. Notably, contractors may not discriminate or retaliate against employees for using or attempting to use sick leave, and are prohibited from requiring employees to find replacement workers in order to take sick leave.

To offset the administrative burdens associated with these new requirements, the rule allows contractors flexibility in how to best implement the paid sick leave requirement for their businesses. For example, contractors may frontload the sick leave for ease of administration or may allow their employees to accrue the leave over time. Paid sick leave accrued under the rule will carry over from one year to the next and will be reinstated for employees rehired by a contractor within 12 months after separation from a job. Contractors, however, are not required to pay accrued, but unused sick leave to employees upon separation from the job or completion of the project.

The rule is expected to provide sick leave for the first time (or at least supplement existing sick leave provisions) to approximately 850,000 employees of federal contractors. As demonstrated by the rule, the DOL is focused on expanding the rights and benefits afforded to employees of federal contractors. This has been a key issue for President Obama, who has issued numerous executive orders regulating the employment practices and obligations of federal contractors over the last eight years. Federal contractors should familiarize themselves with the rule and, if not currently offering paid sick leave, begin making arrangements to do so in accordance with the rule.