On Labor Day, President Obama signed an executive order requiring covered federal contractors to provide their employees with up to seven days of paid sick leave per year. The executive order will apply to new contracts beginning January 1, 2017. The executive order instructs the Secretary of Labor to issue regulations to implement the provisions of the executive order by September 30, 2016.

The executive order is similar to some state and local laws that already require employers to provide employees with paid sick leave. However, certain provisions of the executive order are more employee-friendly than some existing state or local laws. Federal contractors who already provide paid sick leave or other paid time off to their employees should review their policies when the regulations are issued to confirm whether changes to their existing policies must be made. While the executive order provides that an employer's existing paid leave policy may be sufficient to meet a federal contractor's obligations, the policy must be at least as generous to employees as the terms of the executive order.

Key provisions of the executive order include:

Employees of federal contractors are entitled to earn paid sick leave at a rate of no less than one hour per every 30 hours worked.

Paid sick leave can be used for: (1) an employee's own physical or mental illness, injury, medical condition, or obtaining diagnosis, care, or preventative care from a health care provider; (2) caring for 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" for one of the purposes described in (1); and (3) to obtain counseling, seek relocation, seek victim services organization, or take legal action in connection with domestic violence, sexual assault, or stalking.

  • Employees are permitted to carry sick leave over from one year into the next, and any accrued paid sick leave must be reinstated for an employee who separates from employment but is rehired within 12 months.
  • Federal contractors can cap the total amount of paid sick leave an employee accrues, but the cap cannot be less than 56 hours.
  • Federal contractors can require that an employee provide medical certification for absences of three or more consecutive workdays. Employees must be allowed 30 days from the first date of leave to provide this certification.
  • Sick leave does not have to be paid out to an employee upon termination of employment.

This executive order is the latest in a series of executive orders that President Obama has issued in the past two years imposing new requirements on federal contractors. Since February 2014, President Obama has also issued executive orders applicable to federal contractors regarding the minimum wage, employees' rights to disclose their compensation, sexual orientation and gender identity discrimination, and reporting labor law violations.