On September 7, 2015, President Barack Obama signed an Executive Order establishing paid sick leave for federal contractors (the “Order”). The Order will only apply to certain new contracts solicited and entered into after January 1, 2017; however, it reflects a growing trend with respect to paid sick leave.
Paid Sick Leave Under the Executive Order
The Executive Order generally provides that employees on covered federal contracts can earn up to seven days or more of paid sick leave annually. The Order seeks to ensure that employees are able to earn paid sick leave in accordance with its provisions by requiring that new contracts, contract-like instruments, and solicitations include a clause specifying that payment is conditioned on compliance with the Order.
The Order will apply to covered contracts where the solicitation for the contract has been issued, or the contract has been awarded on or after January 1, 2017.
The Secretary of Labor is responsible for issuing regulations to carry out the Executive Order by September 30, 2016. In the absence of regulations, questions regarding the Order and its effects remain. However, some of the specific requirements include:
• All employees under a covered federal contract shall accrue at least one hour of paid sick leave for every 30 hours worked.
• Employees will be allowed to use paid sick leave to care for themselves, a family member, such as a parent, child, spouse, domestic partner or another loved one, and for absences resulting from domestic violence, sexual assault or stalking.
• Accrued sick leave must be carried over from one year to the next. It is unclear whether there will be an exception to this carryover requirement for policies that make all required sick leave available to employees at the beginning of the calendar year.
• Accrued but unused sick leave does not need to be paid to an employee upon termination of employment.
If a federal contractor already has a paid sick leave policy in place, it will satisfy the requirements of the Order if the amount of paid leave is sufficient to meet the Order’s requirements, i.e., at least seven days, and if it may be used for the same purposes and under the same conditions outlined by the Order.
Impact on Federal Contractors
The Order will apply only to certain new contracts and contract-like instruments. Current federal contractors and employers considering bidding on federal contracts should become familiar with the Order’s provisions to determine whether such contracts would render them subject to the Order. Additionally, they should consider the interaction between the Order and any applicable state or local law requiring paid sick leave, as the Order does not excuse compliance with any law requiring greater paid sick leave or other leave rights.
Attorneys in Leech Tishman’s Employment Practice Group are available to assist your organization with any questions regarding the Order, and can also provide guidance with respect to implementing and enforcing appropriate paid sick leave policies and procedures.
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