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Another Executive Order for Federal Contractors: The Web of Paid Sick Leave Laws Gets More Complicated

By Erin Schilling

In an active year for federal contractors and subcontractors, President Obama continued the trend of mandating certain policies by fittingly signing a new executive order on Labor Day.  While federal legislation has yet to be implemented that would require all employers to provide paid sick leave, at least 25 other jurisdictions throughout the county have. Now, under the executive order, federal contractors and subcontractors across the country will have to offer their employees paid sick leave.

This new executive order requires contracting agencies and federal contractors and subcontractors to incorporate into their contracts and subcontracts as a condition of payment a clause that provides for  all employees performing any of the contract or subcontract earn at least 1 hour of paid sick leave for every 30 hours worked.  

Under the executive order, sick leave may be used by covered employees for 4 different broadly defined reasons:

  1. The employee’s own physical or mental illness, injury, or medical condition;
  2. The employee obtaining diagnosis, care, or preventive care from a health care provider;
  3. The employee caring for a child, parent, a spouse, a 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 needs care for either paragraphs 1 or 2 above or “is otherwise in need of care”; or
  4. Domestic violence, sexual assault, or stalking if the leave is for the purposes described in paragraphs 1 or 2 above.

Although final regulations will give more guidance on the order, the order itself explains many details.  Notably, the order makes clear that an employer’s existing paid leave policy that is made available to all covered employees will satisfy the requirements of the order so long as: (1) the amount of paid leave meets or exceeds 1 hour of paid sick leave for every 30 hours worked and (2) the leave may be used for the same reasons and under the same conditions of the order.

The executive order also answers some questions about how an employer is required to handle remaining sick leave at the end of a year and at the end of employment.  The order specifies that accrued leave shall carry over to the next year and shall be reinstated to the employee if he or she is rehired within 12 months of a job separation.  At separation of employment, an employer is not required to pay an employee for accrued, but unused sick leave under the order.  State or local law, however, may require such payment.

Fortunately, the order gives federal contractors and subcontractors time to consider and implement the requirement.  The final regulations implementing the order are not required to be issued until September 30, 2016, and the requirements of the order are not required to be entered into contracts and subcontracts until January 1, 2017.  

We will continue to monitor the issuance of implementing regulations for this order and new paid sick leave laws for other jurisdictions across the country, including California.