New Federal Law Implementing Paid Sick Leave

Posted: October 20, 2016 | News

The U.S. Department of Labor published its Final Rule on September 30, 2016 granting paid sick leave to certain employees of federal contractors and subcontractors covered by the new law.  The Final Rule applies to certain new federal contracts and replacements for expiring contracts that result from solicitations issued on or after January 1, 2017, or that are awarded outside the solicitation process on or after January 1, 2017.  The Final Rule implements Executive Order 13706 signed by President Obama in September 2015.

There are four major categories of contractual agreements to which the new law applies:

  1. Procurement contracts for construction covered by the Davis-Bacon Act;
  2. Service contracts covered by the McNamara-O’Hara Service Contract Act;
  3. Concession contracts, including any concessions contracts excluded from the   McNamara-O-Hara Service Contract Act by 29 CFR 4.133(b); and
  4. Contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.  Certain narrow exclusions apply.

Any subcontract of a covered contract that falls into any of these four categories is also subject to the new paid sick leave requirements.  The Final Rule contains certain narrow exclusions from coverage, as well as a narrow exemption for employees who perform work necessary to the performance of a covered contract, but who are not directly engaged in performing the specific work called for by the contract, and who spend less than 20 percent of their work time performing work in connection with the contract.

An employee engaged in performing work on, or in connection with a covered federal contract (with narrow exception), must receive at least 56 hours of paid sick leave per year.  Employers may choose to offer the paid sick leave on an accrual basis, which provides one hour of paid sick leave for every 30 hours worked on, or in connection with, a covered contract, or the lump sum method which provides an employee with at least 56 hours of paid sick leave at the beginning of each accrual year.

Employees are entitled to carry over accrued but unused paid sick leave from one year to the next, but employers may limit the amount of accrued paid sick leave to a maximum 56 hours at any time. Employers are not required to payout unused sick pay at the time of termination.  However, if an employee is rehired by the same employer within 12 months, the accrued but unused time must be reinstated.

Employees may use paid sick leave for their own or for family care absences (including caring for the employee’s 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), as well as absences resulting from domestic violence, sexual assault, or stalking.  Certification of the absence is permitted under some circumstances.

Employers must notify eligible employees of the amount of accrued and available paid sick leave in writing at the end of each pay period or each month, whichever interval is shorter.

The Department of Labor estimates that the new law will provide paid sick leave to 1.15 million workers.   Employers who contract with the federal government directly, or indirectly as a subcontractor, are encouraged to review the Final Rule and revise their paid sick leave policies before January 1, 2017 if necessary.  The U.S. Department of Labor’s Fact Sheet on the Final Rule is linked here https://www.dol.gov/whd/govcontracts/eo13706/PaidLeaveFS.htm.

Colleen M. McCarthy

Colleen M. McCarthy, Esq. is a Partner and chairs the Firm’s Employment Practices Group. She has dedicated her practice to representing and protecting employers, with a particular emphasis on risk mitigation through preventative counseling and sound practical advice. For 15 years, Ms. McCarthy has counseled employers about the complicated employment laws that impact their businesses to ensure that they are in compliance, and to reduce the chance of costly litigation. Ms. McCarthy may be reached by phone at (949) 608-6900 or email cmccarthy@ferruzzo.com