The United States Department Labor recently issued a Notice of Proposed Rulemaking to enforce President Obama’s September 2015 Executive Order establishing paid sick leave for federal contractors. Now that we have been able to digest the lengthy proposed rules, we wanted to share some of our thoughts about the proposed rules with you.

What do the proposed rules say?

The proposed rules require certain federal government contractors and subcontractors to annually provide their employees with up to seven (7) days of paid sick leave. The leave can be utilized for the employee’s own illness, to attend a doctor’s appointment, to care for a sick family member, or for absences related to domestic violence, sexual assault, and stalking.

If finalized, when will the proposed rule go into effect?

If the proposed rule is not challenged, it is expected that the rules will apply to certain contracts entered into with the federal government on or after January 1, 2017.

Will this proposed rule impact every federal contractor?

No. It will only impact four types of contractual agreements: 1) procurement contracts for construction covered by the Davis-Bacon Act; 2) service contracts covered by the Service Contract Act; 3) concessions contracts for services on federal lands (i.e. the snack stand at a national park); and 4) contracts in connection with federal property or land rentals/leases. So, if your company manufactures widgets for the federal government, the proposed rule likely does not apply to you. However, if your company is constructing a building for the federal government, providing a service to the federal government, renting space from the federal government or vice versa, your company is probably covered by the new rule.

Does the proposed rule apply to all employees or just the employees servicing federal contracts?

The proposed rule only applies to persons engaged in performing work on a covered federal contract. The regulations provide that an employee who spends more than 20% of his/her working time performing services in connection with a covered federal contract is also covered under these rules. However, as a matter of practice, it may be difficult to explain to your workforce why some employees are entitled to paid sick leave and others are not.

Under the rule, will employees automatically be entitled to paid sick leave?

No. The rule requires contractors to allow employees to accrue at least one (1) hour of paid sick leave for every 30 hours worked on a covered federal contract. The proposed rule envisions that contractors will be able to limit the amount of paid sick leave to 56 hours each year but must permit employees to carry over accrued, unused paid sick leave from one year to the next. Even though rollover is required, a contractor can prevent an employee from accruing additional sick leave in excess of 56 total hours.

The proposed rule requires the contractor to provide employees with at least a monthly update on the amount of paid sick leave the employee has accrued but not used. Employees will be permitted to take sick leave in increments of no greater than 1 hour.

How does an employee request paid sick leave under the proposed rule?

The proposed rule requires that the employee request (orally or in writing) the ability to take leave at least 7 calendar days in advance of foreseeable leave and as soon as practicable in all other cases. Worried the employee is faking it? The proposed rules only allow a contractor to require certification from a physician or other provider if the absence is for three or more consecutive days.

Is this really a big deal?

Assuming the new rules apply to your business, probably! Most American business already provide some type of paid time off or paid sick leave to their employees—and most provide in excess of seven (7) days. The Department of Labor estimates that this new proposed rule will only impact a relatively small number of people—about 437,000 employees—who currently receive no paid sick leave. But, because the proposed rule provides specific instructions regarding accrual, use, requests for leave, and rollover, this rule could impact how many employers administer their PTO and/or sick leave policies. The provisions regarding domestic violence, sexual assault, and stalking are also unique.  If certain requirements are met, a contractor’s existing paid sick leave or PTO policy could meet the requirements of the rule.

How can I let the federal government know my feelings on the proposed rule?

Provide comments by clicking on this link. You have until April 12, 2016 to do so.

Interested in learning more? Check out this Department of Labor Fact Sheet, shoot us an email, or give us a call. As this proposed rule moves toward final implementation, we are happy to assist you in developing a sick leave and/or PTO policy that complies with the President’s Executive Order.