On September 30, 2016, the U.S. Department of Labor (DOL) published in the federal register the final rules implementing Executive Order 13706, requiring federal contractors to provide up to 56 hours (7 days) of paid sick leave (PSL). Federal contractors covered by EO 13706 are those that enter into a "new contract" that results from a solicitation that was issued on or after January 1, 2017 or the contract was awarded on or after January 1, 2017.
Below are some highlights of the rule. More detailed information is available on the DOL's website explaining EO 13706.
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Covered Contracts: Federal contracts covered by the new PSL requirement are:
- Procurement contracts for construction covered by the Davis-Bacon Act,
- Service contracts covered by the Service Contract Act,
- Concessions contracts, and
- Service contracts in connection with federal property or lands. (For instance, the following kinds of organizations would be considered a federal contractor under EO 13706 if they rent space in a Federal building: private fast food restaurant, child care center, credit union, gift shop, barber shop, health clinic, or fitness center.)
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Covered Employees: Any person engaged in performing that work "on" or "in connection with" a covered contract are entitled to PSL. This includes those registered in a bona fide apprenticeship program and both exempt and nonexempt employees.
An employee performs work "on" a contract if the employee directly performs the specific services called for by the contract.An employee performs work "in connection with" a contract if the employee's work activities are necessary to the performance of a contract but are not the specific services called for by the contract. For instance, a human resources professional that recruits for staff of a covered contract performs work "in connection with" the contract. Employees who work "in connection with" a contract for less than 20% of their work hours in a workweek are not entitled to accrue PSL during that particular workweek. Analysis of the 20% threshold must be performed on a workweek-by-workweek basis. Thus, if an HR professional spends 2 hours of a 40-hour workweek on recruiting for a covered contract, that person would not be entitled to accrue PSL during that workweek. However, if the HR professional spends most of his time for 2 weeks recruiting for a covered contract, then that person would be entitled to accrue PSL during those 2 weeks.
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Accrual of PSL: Employees must accrue at least 1 hour of PSL for every 30 hours worked on or in connection with a covered federal contract, up to 56 hours (7 days) in a year or at any point in time. Contractors must calculate each employee's accrued PSL each pay period or each month, whichever interval is shorter. For exempt employees, the contractor may track the exempt employees' actual hours worked or may assume the employees work 40 hours per workweek.
Rather than accruing PSL through the year, the contractor may choose to issue at least 56 hours of PSL at the beginning of each year.
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Carryover: The contractor must allow employees to carry over up to 56 hours of unused paid sick leave each year.
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Termination: Upon termination, employees are not entitled to a payout of their accrued PSL. However, should an employee be rehired by the same contractor to work on or in connection with a covered contract within 12 months, PSL must be reinstated.
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Permissible Reasons to Use PSL: An employee may use PSL while working on or in connection with a covered federal contract:
- Because of the employee's own illnesses or other health care needs, including preventive care;
- 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 who is ill or needs health care, including preventive care (Note: to verify the family or family-like relationship, the employee need only submit a "simple written statement from the employee" or provide a legal or other document proving the relationship); or
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For purposes resulting from being the victim of domestic violence, sexual assault, or stalking (or to assist a family member or loved one who is such a victim).
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Time Used for PSL: 1 hour is the shortest increment that employers must allow employees to use PSL. The contractor cannot charge the employee more PSL that the employee would have worked if the need for leave had not arisen. However, if it is physically impossible for the employee using PSL to begin or end work mid-way through a shift (e.g., flight attendant), the entire period that the employee is forced to be absent constitutes PSL.
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Employee Notice to Employer: The employee may give the contractor either oral or written notice of the need for PSL. For foreseeable leave, the employee must give at least 7 calendar days' advance notice. For unforeseeable leave, the employee must make the request as soon as is practicable ? this typically will be either the day the employee becomes aware of the need to use PSL or the next business day.
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Communication of Grants or Denials of PSL: When granting PSL, the contractor may communicate either orally or in writing. All denials of PSL, however, must be communicated in writing (including electronically) with an explanation for the denial.
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Certification: A contractor may require certification by a health care provider (or documentation from another source, if the leave is for purposes related to domestic violence, sexual assault, or stalking) only for absences of 3 or more consecutive full workdays. The employee has a minimum of 30 days from the first day of the 3 or more consecutive full workdays of PSL to provide the certification. While awaiting the certification, the contractor must treat the PSL as valid.
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Retaliation: Interference with the accrual or use of PSL and discrimination against any employee for the exercise of rights under the EO is prohibited.
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Multiemployer Plans: Contractors may fulfill their PSL obligations through a multiemployer plan; however, the contractor remains responsible for all violations of the PSL requirement.
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Unionized Employees: If a collective bargaining agreement ratified before September 30, 2016 provides, on an annual basis to a bargaining unit employee, at least 56 hours of paid sick leave (or vacation or other paid leave that can be taken for the employee's own sickness or health care), then the requirements of the Executive Order will not apply to the covered employee until the date the collective bargaining agreement terminates, or January 1, 2020, whichever is earlier. This delays the effective date for covered unionized employees. However, if a collective bargaining agreement does not provide at least 56 hours of sick leave for new hires, the employer must comply with the Executive Order with respect to those new hires.
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Integration with Current PTO Plans: The final rules offer additional guidance on how existing Paid Time Off ("PTO") policies may be used to satisfy the Executive Order. The guidance makes clear that employers who provide more than 56 hours of PTO per year can satisfy the Executive Order by making at least 56 hours of PTO available for any of the permitted uses of PSL, and that the "carved out" 56 hours of PTO is be subject to all of the Executive Order requirements relating to leave accrual, carryover, leave reinstatement, leave requests and notices, certifications, documentation, non-discrimination, and recordkeeping.