On September 29, the Department of Labor (DOL) announced its Final Rule extending paid sick leave benefits to employees of certain federal contractors and subcontractors, and which essentially implements Executive Order 13706 from September 2015. Here are some of the main features:
- Employers: The Final Rule will apply to any new contract (defined as new and replacement contracts entered into on or after January 1, 2017). Contracts and all associated subcontracts are covered so long as the contract falls into one of these four categories: (1) procurement construction contracts covered by the Davis-Bacon Act ; (2) service contracts covered by the Service Contract Act; (3) contracts for concessions, including concessions contracts excluded from SCA coverage by DOL regulations at 29 CFR 4.133(b); and (4) contracts involving Federal property/land and offering services for Federal employees, their dependents, or the general public.
- Employees: Covered employees are very broad and include any individual who performs “work on or in connection with” a covered contract. There is a narrow exception for employees who perform work in connection with covered contracts for less than 20 percent of hours worked in a workweek. There is also a carve out for employees covered by a collective bargaining agreement who are guaranteed the same number of paid sick leave hours required.
- Paid Leave Requirements: Employees must accrue paid sick leave at a rate of at least one (1) hour for every thirty (30) hours of work, up to fifty-six (56) hours per year. The Final Rule does not require that employers permit sick leave accrual when an employee is not working but otherwise is or should be paid, such as PTO or vacation. Employers are permitted to estimate the portion of an employee’s hours worked” performed in connection with a covered contract so long as the estimate is reasonable and can be verified.
- Use: An employee may use paid sick leave for an absence resulting from: (i) physical or mental illness, injury, or medical condition of the employee; (ii) obtaining diagnosis, care, or preventive care from a health care provider by the employee; (iii) caring for the employee’s 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 who has any of the conditions or need for diagnosis, care, or preventive care described in (i) or (ii); or (iv) domestic violence, sexual assault, or stalking, if the time absent from work is for the purposes described in (i) or (ii) or to obtain additional counseling, seek relocation, seek assistance from a victim services organization, take related legal action, or assist an individual related to the employee as described in (iii) in engaging in any of these activities. The Final Rule provides definitions of these terms.
- Administrative Details: (1) Employers can limit the amount of paid sick leave for use at any point in time to fifty-six (56) hours; (2) Employers may avoid the accrual rate calculations by front-loading employees with at least fifty-six (56) hours of paid leave at the beginning of each accrual year; (3) Employers must permit up to fifty-six (56) hours of earned, unused paid sick leave to carryover to the next year, regardless of whether the employer uses an accrual or front-loading system; (4) Employers may not set an annual or per event cap on paid sick leave use; (5) Employers are not required to notify employees of available sick leave balances upon employee request or request to use paid sick leave; instead employers must provide this notice once each pay period or each month (whichever is shorter), upon separation of employment and if the employee is rehired within twelve (12) months of separation; (6) Employers must permit employees to use paid sick leave in increments as small as one hour (with a narrow exception for employees whose work makes it physically impossible to leave or return to the job during a shift); (7) An employee’s request to use paid sick leave may be made orally or in writing; (8) A leave request must be made at least 7 calendar days in advance where the need for the leave is foreseeable, and in other cases as soon as is practicable; (9) An Employer is required to communicate any denial to use paid sick leave in writing, with an explanation, that cannot be based on whether the employee has found a replacement worker or on the contractor’s operational needs; and (10) Employers must reinstate accrued, unused paid sick leave if the employee is rehired within twelve (12) months of separation, unless the employer pays an employee for his or her earned, unused paid sick leave upon termination.