On Labor Day, President Obama signed another Executive Order aimed at federal contractors. This time, certain federal contractors will be required to provide up to seven days of paid sick leave annually to their employees. These new requirements will not be effective until 2017.

Although many details of the paid sick leave mandate will not be known until implementing regulations are issued, the Order will obligate certain federal contractors and subcontractors to provide one hour of paid sick leave to both full-time and part-time employees for every thirty hours worked. Accrued paid sick leave must be carried over each year, and contractors cannot limit the accrual to less than 56 hours. In addition, employees who are rehired within a year of their separation must have their prior accrued leave time reinstated. However, employers will not be required to pay out accrued sick leave to employees who are being terminated.

The paid time off may be used for absences relating to

  • Physical or mental illness, injury, or a medical condition
  • Diagnosis or care from a health care provider
  • Care of a 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
  • Care, counseling, relocation, legal assistance, or civil or criminal legal proceedings related to domestic violence, sexual assault, or stalking of the employee or individual described in the preceding bullet.

The Executive Order applies only to a certain subset of federal contracts. Similar to the new minimum wage requirement that went into effect for some federal contractors this year, the paid sick leave mandate will apply only to

  • Procurement contracts for services or construction
  • Contracts for services covered by the Service Contract Act
  • Contracts for concessions, including concession contracts excluded by DOL regulations at 20 C.F.R. § 4.133(b)
  • Contracts entered into with the federal government in connection with federal property or lands and related to offering services to federal employees or the general public.

The requirement may apply only to employees working on the covered contract or subcontract, but we await regulations to determine which employees will be actually covered and when. To obtain the paid sick leave, employees must make an oral or written request with at least seven days' notice where the leave is foreseeable; otherwise, the notice must be provided "as soon as practicable." Employers can request medical certifications from employees only if the absence is for three or more "consecutive workdays."

The White House estimates that 40 percent of the private sector workforce does not receive paid leave. The Administration further calculates that approximately 300,000 workers will benefit from this Executive Order by receiving paid leave or by receiving an increase in the amount of paid leave to which they are currently entitled. Most large companies already provide at least seven days of paid leave to employees, so the impact of this directive will affect small and mid-size companies most significantly. In justifying this move, the White House's press release notes,

a body of research shows that offering paid sick days and paid family leave can benefit employers by reducing turnover and increasing productivity. Paid sick days would help reduce lost productivity due to the spread of illness in the workplace. These policies can benefit our economy by fostering a more productive workforce.

President Obama has previously called on Congress to pass legislation granting paid sick and family leave, and he renewed that request Monday.

When the Department of Labor issues a proposed rule for this Executive Order, we will provide a thorough summary.