Covered Employees Entitled to 7 Days of Paid Sick Leave Annually

The U.S. Department of Labor (DOL) has issued final rules to implement Executive Order 13706, which requires certain parties that enter into covered contracts with the federal government to provide covered employees with up to 7 days of paid sick leave annually (among other things). Key highlights of the rules are presented below.

Coverage
The order applies to new contracts and replacements for expiring contracts with the federal government that result from solicitations issued on or after January 1, 2017 (or that are awarded outside the solicitation process on or after January 1, 2017). Under the final rules, the order applies to 4 major categories of contractual agreements:

• Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
• Service contracts covered by the McNamara-O'Hara Service Contract Act (SCA);
• Concessions contracts, including any concessions contracts excluded from the SCA by the DOL's regulations (section: 4.133(b)); and
• Contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

Note: Any subcontract of a covered contract that (like the upper-tier contract) falls into one of the 4 categories above is subject to the paid sick leave requirements.

The order applies to any person engaged in performing work on or in connection with a contract covered by the order whose wages under such contract are governed by the SCA, DBA, or federal Fair Labor Standards Act (FLSA), including employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions.

Sick Leave Accrual
Employees accrue 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. Accrual is calculated at the end of each pay period or each month, whichever interval is shorter.

The final rules also create an option for contractors to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year, rather than allowing the employee to accrue leave based on hours worked.

Notice and Recordkeeping Requirements
A contractor must notify all employees performing work on or in connection with a covered contract of the paid sick leave requirements by posting a notice provided by the DOL in a prominent and accessible place at the worksite so it may be readily seen by employees.

Additionally, a contractor and each subcontractor performing work subject to the order (and the law) must make and maintain during the course of the covered contract--and preserve for no less than 3 years thereafter--records containing specified information (section: section: 13.25(a)(1)-(15)) for each employee, and must make them available for inspection, copying, and transcription by authorized DOL representatives.

Interaction with Other Laws and Paid Time Off (PTO) Policies
The final rules explain how the paid sick leave requirements interact with contractors' obligations under other laws (e.g., the SCA, DBA, federal Family and Medical Leave Act, and state and local paid sick time laws). The rules also explain that a contractor's existing PTO policy can fulfill the paid sick leave requirements of the order as long as it provides employees with at least the same rights and benefits as the final rules require.

More information, including details on certification, use of leave, and additional contractor requirements, is available in the final rules. Facts sheets, FAQs, and other resources are also available by clicking here.

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