USDOL Requires Federal Contractors to Provide Paid Sick Leave to Employees

By Michael A. Shadiack & Lauren F. Iannaccone

On September 29, 2016, the United States Department of Labor (USDOL) adopted a “Final Rule” that requires federal contractors to provide up to 56 hours of paid sick leave per year to employees who work in connection with “certain” federal contracts.

The Final Rule applies to new and replacement contracts with the federal government that are solicited on or after January 1, 2017.  Applicable contracts include:

  1. a procurement contract for construction covered by the Davis-Bacon Act;
  2. a service contract covered by the McNamara-O’Hara Service Contract Act (SCA);
  3. a concessions contract (meaning any contract under which the federal government grants a right to use federal property, including land or facilities for furnishing services), including concessions contracts excluded from the SCA by the Department of Labor; and
  4. a contract entered into in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

Any subcontract that derives from one of the above four contracts would also be subject to the paid sick leave requirement. 

All covered employers must give “any person engaged in performing work on or in connection” with such a contract one hour of paid sick leave for every 30 hours worked on or in connection with the covered contract.  An employer can limit the amount of paid sick time accrued to 56 hours each year, however, the employer must permit employees to carry over accrued, unused paid sick leave from one year to the next.  Further, an employer that maintains a paid time off (PTO) policy does not need to provide an additional 56 hours of leave (or a separate paid sick leave benefit) on top of their PTO policy - as long as the policy is equivalent to or more generous than the leave required by the Final Rule.

The Final Rule allows employees to use paid leave if they are sick, need to take care of a sick family member, or must see a doctor or take a family member to a medical appointment.  Employees may also use paid sick leave for reasons related to domestic violence, sexual assault or stalking. 

Employees can use the paid sick leave time in small increments (as small as one hour).  An employer may request a certification or documentation of an employee’s need to use leave if the employee has been absent for three or more consecutive days, but only if the employee received notification that a certification is required before he or she returns to work.  The employer must also ensure compliance with any ordinance in a municipality in which it operates or conducts business, and which grants employees paid sick leave.  Presently, 13 municipalities in New Jersey maintain a paid sick leave ordinance: Jersey City, Newark, Passaic, East Orange, Paterson, Plainfield, Irvington, Montclair, Trenton, Bloomfield, Elizabeth, New Brunswick and Morristown.  Morristown is the most recent to join the list, with an ordinance taking effect on January 11, 2017.  Each ordinance has its own criteria as to applicability, and the terms and conditions of sick leave benefits to be provided to employees. 

The Final Rule was adopted to “implement” Executive Order 13706 signed by President Barack Obama on September 7, 2015, which gave employees of federal contractors paid sick leave. The USDOL was directed to issue regulations to implement the Order’s requirements by September 30, 2016.  Just one day before that deadline, the Final Rule was published.

For assistance in complying with the Final Rule or any municipal ordinance mandating paid sick leave, or drafting or revising a paid sick leave policy, please contact Connell Foley’s labor and employment law attorneys.