Federal contractors and subcontracts have become the next group of employers who will have to provide paid sick leave. On Labor Day, September 7, 2015, President Barack Obama signed an Executive Order granting paid sick leave for Federal contractors and subcontractors. The Executive Order goes into effect immediately and applies to all covered contractors where solicitation has been sought for contracts commencing on or after January 1, 2017.

The Executive Order establishes that all Federal contractors and subcontractors must include in all contract bids a clause stating that, as a condition of payment, all employees will earn one (1) hour of paid leave for every thirty (30) hours worked. The Executive Order applies to all procurement contracts for services or construction; all other contracts covered by the Service Contract Act or the Davis-Bacon Act; all contracts for concessions; and all contracts related to Federal property or lands.

The limit on the total accrual of paid sick leave per year cannot be less than fifty-six (56) hours.  The sick leave can be used for an employee’s absence resulting from:

  1. physical or mental illness, injury, or medical condition;
  2. obtaining diagnosis, care, or preventive care from a health care provider;
  3. caring for a child, a parent, a spouse, a domestic partner, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship who has any of the conditions or needs for diagnosis, care, or preventive care described in paragraphs (1) or (2) of this subsection or is otherwise in need of care; or
  4. domestic violence, sexual assault, or stalking if the time absent from work is for the purposes otherwise described in paragraphs (1) and (2), to obtain additional counseling, to seek relocation, to seek assistance from a victim services organization, to take related legal action, including preparation for or participation in any related civil or criminal legal proceeding, or to assist an individual related to the employee as described in paragraph (3).

Any paid sick leave accrued by a Federal contractor or subcontractor employee will carry over from year to year and must be reinstated for employees rehired by a contractor within twelve (12) months after a job separation. However, the contractor need not pay out any unused sick leave upon an employee’s departure from the company. The use of sick leave cannot be made contingent on whether the employee can find a replacement. The sick leave must be provided upon an oral or written request of the employee that includes the expected duration of the leave at least seven (7) calendar days before use when the leave is foreseeable and “as soon as practicable” in other cases.

Significantly, the paid sick leave required by the Order is in addition to a contractor's obligations under the Service Contract Act and the Davis-Bacon Act, and contractors may not receive credit toward their prevailing wage or fringe benefit obligations under those Acts for any paid sick leave provided in satisfaction of the requirements of this Order.

However, a contractor's existing paid leave policy provided in addition to the fulfillment of Service Contract Act or Davis-Bacon Act obligations, if applicable, and made available to all covered employees will satisfy the requirements of the Order if the amount of paid leave is sufficient to meet the requirements of the Order and if it may be used for the same purposes and under the same conditions described in the Order.

A contractor may only require a certification issued by a healthcare provider when an employee misses three (3) or more consecutive work days and may require that it be provided no later than thirty (30) days from the first day of leave. If the employee takes leave pursuant to paragraph (iv) above, the contractor may require documentation from an appropriate individual or organization but shall maintain all confidentiality related to the domestic violence, sexual assault, or stalking unless the employee consents or when disclosure is required by law.

The Executive Order also contains a non-retaliation provision which prohibits an employer from taking any discriminatory actions against an employee for taking or attempting to take paid sick leave or for assisting any other employee in doing the same. As for implementation, the Executive Order directs the Secretary of Labor to issue regulations which the Secretary deems necessary by September 30, 2016. Those regulations will set forth requirements for contractors as it comes to implementation and record keeping, will define terms, and will set forth any exclusions. The regulations will go into effect sixty (60) days after their issuance.

The Executive Order follows a national trend of states, counties and cities requiring private employers to grant similar amounts of paid sick leave to eligible employees.