Paid Sick Leave for Federal Government Contractors

The U.S. Department of Labor recently issued a Notice of Proposed Rule making (NPRM) to implement Executive Order (EO) 13706, Establishing Paid Sick Leave for Federal Contractors. EO 13706, signed by President Obama on September 7, 2015, requires certain entities that contract with the Federal Government to provide their employees with up to seven (7) days of paid sick leave annually, which would include paid leave that allows for family care.

The EO would apply to all new contracts and replacements for expiring contracts with the Federal Government resulting from solicitations issued on or after January 1, 2017, or that are awarded outside the solicitation process on or after January 1, 2017. Coverage of contracts and employees under the DOL’s NPRM is nearly identical to coverage under the Minimum Wage Executive Order regulations, except that this proposal also covers employees who qualify for an exemption from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime provisions.

Under the proposed rule, the EO would apply to the following four 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 Department’s regulations at 29 CFR 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.

The proposal dictates that covered employees would accrue not less than one hour of paid sick leave for every 30 hours worked “on or in connection with” a covered contract. This accrual would be calculated at the end of each workweek. The proposal also allows contractors to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year as opposed to allowing the employee to accrue the leave based on hours worked.

The proposal provides that contractors must permit employees to carry over accrued, unused paid sick leave from one year to the next. The DOL also proposes to allow contractors to limit the amount of paid sick leave employees have accrued to 56 hours at any point in time.

According to the DOL, a contractor’s existing paid time off (PTO) policy (if provided in addition to the fulfillment of SCA or DBA obligations, if applicable) will satisfy the requirements of the Executive Order and the proposed regulations if the paid time off:

Is made available to all employees covered by the EO and proposed regulations;

Can be used for at least all of the same purposes as the paid sick leave;

Is provided in a manner and an amount sufficient to comply with the rules and restrictions regarding the accrual of paid sick leave described in the proposed regulations;

Is provided pursuant to policies sufficient to comply with the rules and restrictions regarding use of paid sick leave, requests for leave, and certification and documentation, at least with respect to any paid time off used for the required purposes; and

Is protected by the prohibitions against interference, discrimination, record keeping violations, and waiver of rights described in the proposed regulations, at least with respect to any paid time off used for the required purposes.

For more information, the Notice of Proposed Rule making can be viewed at