Final Paid Sick Leave Rule Promulgated for Federal Contractors

September 30, 2016

The Department of Labor finalized its paid sick leave rule applicable to federal contractors under Executive Order 13706 this week, adding to the growing maze of state and local paid leave laws with which multi-state employers must deal.  There are some improvements over the initial proposal—notably, DOL seeks to address the concerns the Association raised about PTO leave programs and collective bargaining agreements.  The most notable aspects of the final rule:
  • The requirement applies to any employee performing work on or in connection with new contracts and replacements for expiring contracts issued on or after January 1, 2017.
  • The rule requires contractors to provide one hour of paid sick leave for every 30 hours worked, up to 56 hours per year; and employees must be notified in writing of the amount of paid sick leave they have available, at the end of each pay period or each month, whichever is shorter.
  • Existing PTO leave policies are permissible as long as they provide employees with the same rights and benefits the final rule requires.  Notably, federal contractors do not have to provide separate paid sick leave if an employee uses all of his or her PTO time for vacation. 
  • If a collective bargaining agreement ratified before September 30, 2016 provides employees with at least 56 hours (or 7 days) of paid leave that can be used for reasons related to sickness or health care each year, the final rule will not apply until the CBA terminates or January 1, 2020, whichever is sooner.  However, if a CBA provides less than 56 hours of leave, contractors must make up the difference in a manner consistent with the final rule or the terms of the CBA.  
  • Complying with the state or local law is sufficient if the paid sick leave law meets or exceeds all of the requirements in the final rule.  If a state or local law is more generous, federal contractors must comply with it. 
  • Contractors have the option to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year, and to limit the total amount of accrued leave to 56 hours.  However, employees must be able to carry over any unused leave that was either front-loaded or accrued.
Over the past 10 years, 36 states, cities and municipalities have adopted paid sick-time laws that are, or will soon be, in effect—ten new laws in 2016 alone.  According to Vicki Shabo, vice president of workplace policy programs at the National Partnership for Women & Families, the patchwork of local laws is leading to increasing calls for national legislation.