• DOL Issues Final Rule on Paid Sick Leave for Federal Contractor Workers
  • October 11, 2016
  • Law Firm: Shawe Rosenthal LLP - Baltimore Office
  • The Department of Labor has now issued its Final 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 2015 E-Update, President Obama issued this Executive Order on Labor Day 2015 as a result of Congressional inaction on the issue of paid sick leave. The Final Rule details how the Executive Order will be implemented, and provides additional definitions and clarifications. The key provisions of the Final 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 Final 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 (FLSA), the DBA, or the SCA. This includes employees who are exempt from the FLSA’s minimum wage and overtime provisions. The rule exempts, 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 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. “Hours worked” means hours actually worked, and not other paid time off (including sick leave under this Final Rule). The accrual is calculated at the end of each pay period or month, whichever is shorter. For employees whose time is not required to be tracked under other laws, such as FLSA-exempt employees, the employer may assume a 40-hour workweek. For employees working “in connection with” (but not on) a federal contract, the employer may estimate the number of covered hours worked.

    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: each pay period or monthly, whichever is shorter; upon separation of employment; and/or upon reinstatement of paid sick leave (if rehired within 12 months).

    Accrual may be capped at 56 hours. Any unused leave must be carried over to the next year, up to a maximum of 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, unless it was paid out upon termination.

    Use of Paid Sick Leave: The leave may be used for the following reasons:
    • Physical or mental illness, injury, or medical condition (regardless of whether it would be a “serious health condition” under the Family and Medical Leave Act);
    • Obtaining diagnosis, care, or preventive care from a health care provider (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” is an incredibly broad term and includes: 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. Also, the employer cannot require the employee to find a replacement worker to cover the missed time.

    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 at least 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. The employer must provide notice of the requirement to provide certification before the employee’s return to work. This certification must be provided within 30 days of the first day of leave. If it is not submitted, the employer may retroactively deny the leave within 10 calendar days of the deadline for the certification.

    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. The company representative making the contact should be a human resources professional, a leave administrator, or other management official. The direct supervisor should make contact only if there is no other appropriate individual to do so.

    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. It may be provided by anyone involved in providing or assisting with the purpose of the leave, including a health care provider, counselor, employee of the victim services organization, attorney, clergy, family member or close friend. Self-certification is also permitted.

    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, carryover, reinstatement, 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.
    If the employer provides more than 56 hours of PTO that may be used for sick leave purposes, it may choose to make all the PTO available for the purposes under the Final Rule. In the alternative, it may choose to track and record the amount of PTO used for sick leave purposes under the Final Rule, in which case only 56 hours of the PTO is subject to the protections of this Final Rule (e.g. documentation, certification, and recordkeeping).

    Collective Bargaining Agreements and Multi-Employer Plans: If a collective bargaining agreement exists that was ratified before September 30, 2016 and that provides at least 56 hours of paid sick leave, the requirements of the Executive Order and Final Rule will not apply until the date the CBA terminates or January 1, 2020, whichever is first. If the CBA provides less than 56 hours of leave that may be used for these purposes, the employer must make up the difference with leave that is subject to the requirements of the Executive Order and Final Rule.

    In some industries, such as construction, multiple employers may contribute to multi-employer plans negotiated pursuant to CBAs. Under such circumstances, an individual employer may meet its obligations under this Final Rule jointly with the other employers if the plan provides sick leave in compliance with the requirements of the Executive Order.

    Employee Protections: Employers may not discharge or discriminate against an employee who:
    • Uses or attempts to use paid sick leave under the Executive Order and Final Rule;
    • Files a complaint, initiates a proceeding, or otherwise asserts any right under the Executive Order and Final Rule;
    • Cooperates in any investigation or testifies in any proceeding under the Executive Order and Final Rule; or
    • Informs any other person of their rights under the Executive Order and Final Rule.
    Other Requirements: Employers must include a paid sick leave clause into any contracts with lower-tier subcontractors and ensure subcontractor compliance. In addition, employers must make and retain the following records:
    • copies of notifications to employees of the amount of paid sick leave accrued;
    • denials of employees’ requests to use paid sick leave;
    • dates and amounts of paid sick leave employees use; and
    • other records showing the tracking of employees’ accrual and use of paid sick leave.
    The employer must keep any medical records or records related to domestic violence, sexual assault and stalking separate from other records and confidential. Employers must also provide notice to employees of the sick pay requirements.