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Legal Updates

Federal Contractors Will Soon Face Paid Sick Leave Obligations Under Presidential Executive Order

In recent years, employers in a number of states — including Connecticut, Massachusetts, Rhode Island and, most recently, Vermont – have been saddled with expensive and often confusing obligations as a result of new laws requiring employers to provide paid sick leave to employees.

Now, by virtue of an Executive Order announced by President Obama, federal contractors and subcontractors across the nation will soon be faced with similar paid sick leave obligations.

In a speech last fall at an event sponsored by the AFL-CIO, the President announced an Executive Order requiring all federal contractors and subcontractors to provide their employees with up to seven days of paid sick time per year. This new obligation must be included in all federal contracts and subcontracts issued or awarded beginning January 1, 2017.

Given that President Obama will be leaving office later that same month, it is possible that the new administration will rescind or modify the Executive Order. Nonetheless, federal contractors and subcontractors would be wise to begin preparing to comply with the new sick leave obligations they are slated to face.

Administration’s Rationale For Mandatory Paid Sick Time

In a fact sheet published in conjunction with the Executive Order, the White House characterized mandatory paid sick time as a way to address the dilemma faced by workers who depend on their wages but also need time away from work to take care of their families or attend to their own health concerns. Further, according to the Administration’s fact sheet, paid sick time benefits employers and the economy as a whole by reducing employee turnover and decreasing the spread of illness, thereby “fostering a more productive workforce.”

Previous actions on President Obama’s part have reflected a similar emphasis on the issue of paid sick leave. In January 2015, the President signed a memorandum directing the federal government to advance up to six weeks of paid sick leave to federal employees under certain circumstances, including in connection with the birth or adoption of a child. The President has also called upon Congress to pass legislation that would give federal employees up to six additional weeks of paid parental leave and require all businesses with at least 15 employees to provide employees with up to seven days of paid sick leave annually. Both of these efforts, however, have stalled in the Republican-controlled Congress.

Requirements Of Executive Order

The major provisions of the paid sick leave Executive Order include the following:

Employer Coverage

The Executive Order applies to all federal contractors and subcontractors, regardless of the agency or department from which a contractor or subcontractor’s business arises.

Accrual And Use Of Sick Time

Under the Executive Order, each federal contractor or subcontractor will be required to allow all of its employees (including, presumably, part-time, seasonal, temporary, and casual employees) to accrue and use up to 56 hours of paid sick time per year. Employees must be permitted to accrue at least one hour of paid sick time for every 30 hours worked.

Paid sick time must be made available for absences resulting from:

(i) an employee’s physical or mental illness, injury, or medical condition;

(ii) an employee’s obtaining a diagnosis, care or preventive care from a health care provider;

(iii) an employee’s need to care for a 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”; or

(iv) domestic violence, sexual assault, or stalking, including seeking counseling, legal assistance, or relocation services.

Documentation Of Use Of Sick Time

When an employee uses paid sick time for any of the purposes detailed in items (i) through (iii) above, an employer will be permitted to require certification by a health care provider only if the employee is absent for three or more consecutive work days. If requested, the employee must provide such certification no later than 30 days from the first day of the leave.

For absences related to domestic violence, an employer will be permitted to request documentation from an appropriate individual or organization. The Executive Order specifies that the employer should request only the minimum information needed to support the employee’s absence from work. The employer must keep that documentation confidential, unless the employee consents to disclosure or if disclosure is required by law.

Carry-Over; Breaks In Service

The Executive Order provides that a covered employer must permit accrued, unused paid sick time to be carried over from one year to the next. (The Executive Order does not specify whether carry-over may be limited – for instance, to the 56 hours of paid sick time that employees will be entitled to accrue annually.)

Additionally, if an employee is rehired by a contractor or subcontractor within 12 months after a separation from employment, any accrued, unused paid sick time that the employee had as of his or her separation date must be reinstated.

Notification Of Use Of Leave

The Executive Order provides that where an employee’s need for sick leave is foreseeable, the employee must notify his or her employer (either orally or in writing) of the employee’s intention to take leave and the expected duration of the leave at least seven calendar days in advance. If the need for sick leave is not foreseeable, the employee must provide notice as soon as practicable.

No Right To Payout Upon Termination

Employees will not be entitled to be paid out for accrued, unused sick time upon separation from employment.

Enforcement

The Secretary of Labor will have authority to enforce the Executive Order, including by investigating potential violations of the new requirements. Federal contractors and subcontractors will be prohibited from interfering with employees’ rights to use paid sick leave or discriminating against employees based on their doing so.

Upcoming Regulations

The Executive Order provides that by September 20, 2016, the Secretary of Labor will issue implementing regulations. The regulations will, among other things, define terms used in the Executive Order and outline record-keeping requirements for contractors and subcontractors. Potentially, the regulations may address other important issues not covered in the Executive Order, such as (i) whether employees may use accrued sick time in increments smaller than one day; (ii) whether an employer may place a limit on annual carry-over of accrued, unused sick time; and (iii) whether an employer may deny use of paid sick time if an employee fails to provide sufficient notice for an absence.

Within 60 days after the Secretary of Labor has issued the regulations, federal agencies will take steps to ensure that all contracts issued or awarded after January 1, 2017 comply with the new requirements.

Interaction With State And Local Laws

Where the Executive Order provides a more generous paid sick time entitlement than state or local laws, it will supersede those laws. Conversely, the Executive Order will not displace state or local laws offering greater sick leave protections to employees.

Recommendations

In preparation for the effective date of the Executive Order, employers that are federal contractors or subcontractors should carefully review the Executive Order and, in consultation with experienced employment counsel, consider how their sick leave policies and practices may need to be revised.

Affected employers should also stay alert for clarifications as to the requirements to be imposed under the Executive Order, including the regulations that are slated to be issued in the fall of 2016.

Finally, all employers should closely monitor further developments in this area, as paid sick leave continues to be a growing topic of proposed legislation.