On Sept. 30, 2016, the Department of Labor’s (“DoL”) Wage and Hour Division published its final rule requiring covered federal contractors to provide employees with annual sick leave. The rule goes into effect starting with contract actions in 2017. Following is a short reminder of some of the key aspects of the new rule and its requirements:

  • Effective Date: The new paid sick leave requirements apply to covered contracts and associated subcontracts originating from solicitations issued on or after Jan. 1, 2017.
  • Covered Contracts:
    • Procurement contracts for construction covered by the Davis-Bacon Act (“DBA”).
    • Services contracts covered by the Service Contract Act (“SCA”).
    • Concessions contracts, including any concessions contract excluded from the SCA by the DOL’s regulations at 29 C.F.R. § 4.133(b).
    • Contracts in connection with federal property or lands and related to offering services for federal employees, their dependents or the general public.
  • Limits and Exclusions From Coverage: There are a number of limits and exclusions from coverage. For example, supplies contracts are not covered, portions of contracts performed outside the U.S. are not covered and employees performing work “in connection with” a covered contract for less than 20% of a work week are not covered.
  • Amount of Sick Leave Required: The rule requires federal contractors to provide one hour of paid sick leave for every 30 hours worked on, or in connection with, a covered federal contract, up to 56 hours or seven days in a year.
  • Covered Employees: Covered employees are any workers, whether full-time or part-time, engaged in performing work on, or in connection with, a covered contract whose wages under the contract are governed by the SCA, the DBA or the Fair Labor Standards Act (“FLSA”), including employees who are exempt under the FLSA. There is a narrow exception from the requirements for workers who perform duties necessary to the performance of a covered contract but who are not directly engaged in performing the work specified by the contract and who spend less than 20% of their hours worked in any work week performing work in connection with such contract.
  • Using PTO: Employers may use existing paid time off (“PTO”) policies to comply with the paid sick leave requirements, so long as they provide at least 56 hours of PTO. Employers need not provide separate paid sick leave.
  • Requests for Leave and Certification: Employees must request sick leave, orally or in writing, at least seven calendar days in advance where the need for the leave is foreseeable, and in other cases as soon as practicable.
  • Payout Upon Termination: Contractors are not required to pay out unused paid sick leave upon termination. However, contractors must reinstate unused paid sick leave if an employee is rehired within 12 months.

If you are a contractor or subcontractor anticipating work under a covered contract or subcontract originating from a solicitation issued on or after Jan. 1, 2017, you may want to read our full article for additional details about the rule’s requirements.