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Government Contractors

Department of Labor Proposes Rule Implementing Paid Sick Leave

On September 7, 2015, President Obama signed Executive Order (“EO”) 13706, establishing paid sick leave for federal contractors. The EO requires federal contractors to establish a policy to provide at least seven paid sick days annually, including paid leave allowing for family care. The Secretary of Labor was given until September 30, 2016, to issue regulations on the EO, which goes into effect January 1, 2017.

On February 26, 2016, the Department of Labor (“DOL”) published its Notice of Proposed Rulemaking (NPRM) implementing EO 13706. The DOL predicts that the proposed rule will have a significant impact on federal contractors by providing paid sick leave to an estimated 828,000 employees, 437,000 of which currently receive no paid sick leave. Additionally, the proposed rule will add or expand upon a number of requirements established by EO 13706.

The EO requires that contractors allow employees to accrue a minimum of one hour for every 30 worked, up to seven paid sick days annually (56 hours), and that unused balances are to be carried over year to year. Expanding on this, the proposed rule states that contractors can cap accruement of sick-leave available to an employee so long as the limit is no lower than the 56-hour minimum. The proposal also includes an option for covered contractors to provide an employee with at least 56 hours of paid sick leave at the beginning of each calendar year, rather than allowing the employee to accrue the leave based on hours worked. If an employee leaves employment with a contractor and is rehired within 12 months, his or her accrued and unused sick leave must be reinstated.

The proposed rule applies to four categories of federal contracts:

  1. Procurement contracts for construction covered by the Davis-Bacon Act;
  2. Service contracts covered by the McNamara-O’Hara Contract Act (SCA);
  3. Concessions contracts, including any concessions contracts excluded from the SCA by DOL regulations; and
  4. Contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

EO 13706 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 of the solicitation process on or after January 1, 2017.

The NPRM originally requested interested parties to submit public comments on or before March 28, 2016. However, due to interest expressed in the matter, the DOL has decided to extend the period for submitting public comments to April 12, 2016.

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