Executive Summary: President Obama has signed an Executive Order requiring federal contractors and subcontractors to provide employees with one hour of paid sick leave for every 30 hours worked, for at least 56 hours per year. The requirement will take effect for covered contracts entered into after January 1, 2017.

As mentioned in our August 6, 2015 Alert, an employee may use the leave for his or her own physical or mental illness, injury, medical condition, treatment or diagnosis as well as that of a spouse, child, parent, "or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship." An employee may also use the leave for absences from work resulting from domestic violence, sexual assault, or stalking, if the leave is for the reasons described above or to obtain additional counseling, seek relocation, seek assistance from a victim services organization or to take related legal action. The leave for domestic violence, sexual assault or stalking is available for the employee and for the employee to assist a related individual as described above.

Highlights of the EO's requirements include:

  • Accrued sick leave must be carried over from year to year;
  • Contractors must reinstate accrued sick leave for employees rehired by a covered contractor within 12 months after job separation;
  • Contractors are not required to pay a separating employee for unused sick leave upon separation;
  • Contractors cannot require the employee to find a replacement worker as a condition for using the paid sick leave;
  • Contractors covered by the Service Contract Act (SCA) or Davis-Bacon Act (DBA) will not receive credit toward their prevailing wage or fringe benefit obligations under these acts by providing the paid sick leave required by the EO;
  • A contractor's existing paid sick leave policy provided in addition to the fulfillment of the SCA or DBA requirements, which is made available to all employees, fulfills the requirements of the EO if it permits employees to take the same amount of leave as provided by the EO for the same reasons;
  • Employees must provide written or verbal notice of the need for leave at least seven days in advance if the leave is foreseeable and as soon as practicable when the need for the leave is not foreseeable;
  • A contractor may only require certification of the need for the leave for absences of three or more consecutive days, to be provided no later than 30 days from the first day of leave;  
  • Contractors may not interfere with or retaliate against employees taking or attempting to take leave or otherwise asserting rights under the EO;
  • Contractors must still comply with federal, state or local laws or collective bargaining agreement provisions that require greater paid sick leave than required by the EO.

Regulations to be Issued: The EO requires the Secretary of Labor to issue interpreting regulations by September 30, 2015, including providing exclusions, setting definitions and defining record-keeping obligations. To the extent practicable, these regulations should incorporate the definitions, procedures, remedies, and enforcement processes under the Fair Labor Standards Act (FLSA), the SCA, the DBA, the Family and Medical Leave Act, the Violence Against Women Act of 1994, and Executive Order 13658 of February 12, 2014, Establishing a Minimum Wage for Contractors.  

Covered Contracts: The EO applies to contracts and contract-like instruments (which will be defined in the DOL regulations) if the contract is:

  • a procurement contract for services or construction;
  • a contract for services covered by the SCA;
  • a contract for concessions, including any concessions contract excluded by Department of Labor regulations at 29 CFR 4.133(b); or
  • a contract or contract-like instrument entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public; and

the wages of employees under these contracts are covered by the DBA, the SCA or the FLSA, including employees who are exempt from the FLSA's minimum wage and overtime provisions.

For contracts covered by the SCA or DBA, the EO applies only to contracts at the thresholds specified by those statutes. For procurement contracts in which employees' wages are covered by the FLSA, the EO applies only to contracts that exceed the micro-purchase threshold as defined in 41 U.S.C. 1902(a), unless expressly made subject to this order pursuant to DOL regulations.

The EO leaves a number of questions unanswered, which most likely will be addressed by the DOL's regulations.