• OFCCP Issues Proposed Paid Sick Leave Regulations for Government Contractors
  • March 21, 2016
  • Law Firm: Shawe Rosenthal LLP - Baltimore Office
  • On February 25, 2016, the Office of Federal Contract Compliance Programs issued a proposed rule to implement Executive Order 13706, which requires government contractors and subcontractors to provide their employees with paid sick leave.

    As discussed in our September E-Update, President Obama issued this Executive Order on Labor Day as a result of Congressional inaction on the issue of paid sick leave. The proposed rule details how the Executive Order will be implemented, and provides additional definitions and clarifications. The key provisions of the proposed rule are as follows:

    Coverage: The Executive Order applies to the following contract or contract-like arrangements that are entered into or renewed on or after January 1, 2017:
    • procurement contracts for construction covered by the Davis-Bacon Act (DBA);
    • both procurement and non-procurement service contracts covered by the Service Contract Act (SCA);
    • contracts to provide concessions (i.e. food, lodging, fuel, souvenirs, newspaper stands, and/or recreational equipment) on federal property; and
    • contracts to provide services (e.g. child care, dry cleaning, credit union, gift shop, barber shop, coffee shop, fitness center, etc.) in connection with federal property or lands.
    The following types of contracts are not covered by this proposed rule:
    • grants;
    • contracts, agreements, and grants to Indian Tribes under the Indian Self-Determination and Education Assistance Act;
    • Any procurement contracts for construction that are not subject to the Davis-Bacon Act (DBA);
    • Any services contracts, except those expressly covered by this rule, that are exempted from coverage under the Service Contract Act (SCA);
    • Any contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the Federal Government - i.e. those which are subject to the Walsh-Healey Public Contracts Act.
    The employees who are covered by the Executive Order are those engaged in performing work on or in connection with a covered contract and whose wages are governed by the Fair Labor Standards Act, the DBA, or the SCA. This includes employees who are exempt from the FLSA’s minimum wage and overtime provisions. The rule would exempt, however, those employees whose duties are necessary to a contract, but who are not directly engaged in performing the specific contract work and who spend less than 20% of their hours worked in a particular workweek performing contract-related work.

    Accrual of Paid Sick Leave: Covered employees will earn not less than 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract, up to 56 hours (7 days) per accrual year. Notably “hours worked” includes any time for which the employee is paid, including other paid leave and not just hours actually worked. The accrual is calculated at the end of each workweek. In the alternative, an employer may grant at least 56 hours of paid sick leave at the beginning of each accrual year. “Accrual year” means any 12-month period selected by the employer, which must be applied consistently to all employees.

    The employer must provide employees with written notice of the amount of sick leave accrued, separately from any other form of paid leave. The notice may be provided through any existing procedure for providing employees notice of their paid time off, such as on a paystub or through an online system. Notice must be provided at the following times:
    • No less than monthly;
    • When the employee requests to use paid sick leave;
    • Upon the employee’s request for the information, but no more than weekly;
    • Upon separation from employment; and
    • Upon reinstatement of paid sick leave.
    Any unused leave must be carried over to the next year, although accrual may be capped at 56 hours. It need not be paid out upon termination. If an employee is rehired within 12 months, including by a successor contractor, the accrued unused leave must be reinstated.

    Use of Paid Sick Leave: The leave may be used for the following reasons:
    • Physical or mental illness, injury, or medical condition (even those not requiring treatment by a health care provider or not considered a “serious health condition” under the Family and Medical Leave Act);
    • Obtaining diagnosis, care, or preventive care from a health care provider (interpreted broadly beyond physicians);
    • Caring for an injured or ill family member, or obtaining treatment for them; and,
    • In cases involving domestic violence, sexual assault or stalking: to obtain medical treatment or to care for physical or mental injuries, illness, or medical conditions; to obtain additional counseling; seek relocation; seek assistance from a victim services organization; take legal action; or to assist a family member with regard to any of these actions.
    “Family members” include: 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” regardless of biological or legal relationship.

    The employer is required to allow the use of paid sick leave only at times when the employee would be working on a covered contract. Thus, if the employee performed both contract and non-contract services for the employer, paid sick leave could be used only during the time the employee was scheduled to perform contract work.

    Paid sick leave may be used in increments of an hour or more. The employer cannot limit the amount of leave used at one time. The employee’s use of paid sick leave is subject to the amount accrued and compliance with the rules regarding requesting paid sick leave, as well as providing the appropriate verification of the need.

    Requesting to Use Paid Sick Leave: Requests to use paid sick leave may be written or oral. Although the employee does not need to specifically use the words, “sick leave” or “paid sick leave,” the request must contain sufficient information for the employer to determine whether it qualifies for paid sick leave. The employer may ask targeted questions in order to make that determination, but the employee does not have to provide detailed or extensive information about the reason for the leave, such as symptoms. The request should provide an estimate of the timing and amount of leave needed, and should be directed to the appropriate person as specified by an employer’s paid sick leave policy. If no policy exists, it should be directed to the person who typically receives requests for leave. Employees must provide 7 days’ notice where the need for leave is foreseeable; otherwise, notice must be provided as soon as practicable.

    Employers must respond to requests to use paid sick leave as soon as practicable. An employer may deny sick leave if the employee has not complied with the notice requirements - such as failing to provide notice for foreseeable need. It can also be denied if there is insufficient information in the request to allow the employer to determine if it qualifies for paid sick leave. Any denial must be made in writing, with an explanation for the denial. The employer must also provide the employee with an opportunity to provide a new, corrected request if there was insufficient information in the original request.

    Certification of Need for Leave: An employer may require certification from a health care provider or, in cases involving domestic violence, other relevant entity, only after 3 or more consecutive days of sick leave are used.

    As for health care provider certifications, it needs to contain only information verifying that the illness, injury, medical condition, or need for care exists. The employer may contact the health care provider only to authenticate the document or clarify its contents, and may not ask for any additional information. As under the FMLA, the employer’s representative contacting the health care provider cannot be the employee’s direct supervisor.

    For domestic violence certifications, no details about the domestic violence situation are required other than those sufficient to make clear that the use of the leave was used for an appropriate purpose.

    The employer must inform the employee that certification is required prior to the employee’s return to work. This certification must be provided within 30 days of the first day of leave.

    Employer’s Existing Policy: An employer’s existing paid time off policy will be considered sufficient if it meets the following requirements:
    • It applies to all employees covered by the Executive Order;
    • It can be used for all the identified purposes;
    • It complies with the accrual and amount of leave requirements;
    • It complies with the use, request, certification and documentation requirements; and
    • The use of leave is protected from interference or discrimination by the employer.
    Employee Protections: Employers may not discharge or discriminate against an employee who:
    • Uses or attempts to use paid sick leave;
    • Files a complaint, initiates a proceeding, or otherwise asserts any right under the Executive Order;
    • Cooperates in any investigation or testifies in any proceeding under the Executive Order; or
    • Informs any other person of their rights under the Executive Order.