DOL issues final rule on paid sick leave for federal contractors

On September 7, 2015, President Obama signed Executive Order 13706, an order that requires federal contractors to provide paid sick leave to their employees. Last week, the U.S. Department of Labor issued its long-awaited final rule setting forth the details of that obligation. The rule will apply to all contracts issued on or after January 1, 2017.

The rule and its associated commentary are long and complicated, but its essence can be broken down into several key points. First, federal contractors must allow employees to accrue paid sick leave at the rate of one hour for every 30 hours of work. This results in at least 56 hours (or seven 8-hour work days) of paid sick leave per calendar year. Paid sick leave may be used for periods of incapacity due to physical or mental illness, as well as periods of time needed to seek treatment from a health care provider. Authorized visits to health care providers may include preventative care in addition to treatment for current illness or injury. Paid leave may also be used to care for a family member, or to deal with the consequences of domestic violence, sexual assault or stalking, including legal action relocation services.

Up to a total of 56 hours of accrued, unused sick leave must be carried over from year to year, but employers are not required to pay for unused sick leave when an individual’s employment is terminated. But, this rule does not preempt any state or local laws that provide for greater benefits to employees. Therefore, employers should consider the laws of the localities in which they perform work to identify any other obligations for paid leave, as well as the contours of any written policies that may be required to limit the carryover of those benefits. In certain circumstances, contractor employers will be required to reinstate the paid leave of employees that are rehired within 12 months of an employment separation, unless the balance of unused leave was paid to the employee in cash at their previous termination.

Under the new rule, employees can take up to two consecutive days of leave without providing a doctor’s certificate or other form of certification. This provision, coupled with the broad application of the rule to “close relationships” in addition to “family,” has caused employers to be understandably concerned about the potential for employee abuse of this new system. And, the new rule will create complications for employers that have employees who work on both federal and non-federal work assignments, or other employees who work in a general administrative support capacity, as opposed to employees who work directly on federal contracts.

The rule prohibits interference with employees’ attempts to use their new leave rights and also makes it unlawful to discriminate against employees who use their leave. The consequences of violating the rule can include suspension from federal contracting for up to three years, or possible debarment.