Mandatory Paid Sick Leave

President Barack Obama issued an Executive Order on September 7, 2015, which requires federal contractors to provide paid sick leave to their employees. Under the Executive Order, eligible employees earn leave at the rate of one (1) hour of paid sick leave for every thirty (30) hours worked. An employee may accrue up to fifty-six (56) hours of paid sick leave at any point in time. The Executive Order applies to contracts entered into after January 1, 2017. The Department of Labor is expected to draft implementing regulations between now and September 30, 2016. While many federal contractors already offer paid sick leave benefits that are more generous than those required by this Executive Order, the allowed uses for sick leave under the Executive Order are significantly broader than those provided under current laws and regulations (including, for example the FMLA). 

Pursuant to the Executive Order, the new sick leave benefit may be used by an employee for an absence resulting from:

• the employee’s physical or mental illness, injury, or medical condition;
• the employee’s visit to a health care provider for diagnosis, care or preventative care;
• the employee caring for a child, a parent, a spouse, a domestic partner or any other individual related by blood or affinity who is in need of such care;
• domestic violence, sexual assault, or stalking, if the absence is for a purpose described in (i)  or above or to obtain counseling, to seek relocation, to seek assistance from a victim services organization, to take related legal action, including preparation for or participation in any related civil or criminal legal proceedings, or to assist an individual related to the employee as described in above in engaging in any of the activities described.

The accrued but unused paid sick leave (up to fifty-six (56) hours) carries over from year to year but need not be paid out upon termination. However, if an employee is rehired within twelve (12) months of separation, any accrued but unused leave must be reinstated. Notably, this paid sick leave is in addition to a contractor’s financial obligations under the Service Contract Act and the Davis-Bacon Act. Accordingly a contractor may not claim a credit for the cost of the sick leave provided towards their prevailing wage or fringe benefit obligations under either Act.

Like the FMLA, with regard to reasons (i), (ii) and (iii) above, a contractor may require that an employee submit, within thirty (30) days of the first day of leave, a certification from a health care provider for absences of three (3) or more consecutive work days. With regard to reason (iv) above, however, the Executive Order provides that for absences of three (3) days or more, the contractor may only require the minimum information necessary to establish a need for the employee to be absent from work. In addition, the contractor must keep the information it receives confidential unless the employee consents to the release or the release is required by law.

Pay Transparency Rule

On September 10 the Office of Federal Contract Compliance Programs announced a final rule regarding pay secrecy policies. The rule prohibits discrimination against employees and applicants who discuss, disclose or inquire about compensation. In addition, federal contractors will be required to include appropriate language in their handbooks prohibiting such discrimination.

As a result of this rule, any existing language in a handbook that prohibits such disclosures must be removed. The OFCCP has explained that the rule does provide employers with two defenses; a general defense, which could be based on the enforcement of a workplace rule that does not prohibit the discussion of compensation; and an essential job functions defense. The rule will be enforced by the OFCCP and will go into effect on January 11, 2016.

We will continue to provide updates about these new rules and regulations as additional information becomes available.          

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