Close up on a file tab with the word employees plus a note with the text sick leaves, blur effect at the background. Concept image for illustration of sick leave entilement.

New Executive Order Imposes Paid Sick Leave Requirement On Federal Contractors

President Obama issued an Executive Order on September 7, 2015 that continues two notable trends in employment law:  (1) executive orders imposing burdens on private employers that contract with the federal government, and (2) laws requiring employers to provide employees with paid sick leave.  The Executive Order, titled “Establishing Paid Sick Leave for Federal Contractors” (hereinafter the “Paid Sick Leave Executive Order”), requires employers with certain federal contracts to provide covered employees with up to seven days of paid sick leave each year.  The paid sick leave requirement goes into effect on January 1, 2017.  This is President Obama’s fifth executive order since 2014 impacting federal contractors.

Likewise, the momentum for legally-mandated paid sick leave is increasing across the country.  Currently, four states (California, Connecticut, Massachusetts, and Oregon) and many other local jurisdictions have passed paid sick leave legislation.  Notably, paid sick leave bills have stalled in Congress.  The Paid Sick Leave Executive Order, however, creates a paid sick leave entitlement for approximately 300,000 employees working on federal contracts.

These employees of federal contractors will accrue leave at a rate of one hour for every thirty (30) hours worked, up to a maximum of fifty-six (56) hours per year.  Employees can use paid sick time for an absence resulting from an injury, illness, medical condition, or medical care for themselves or a family member (or the equivalent thereof).  Employees can also use paid sick time for purposes relating to being the victim of domestic violence, sexual assault, or stalking.  Any earned paid sick leave that an employee does not use is “carried over” to the next year for future use.  Employers are not required to pay out any unused sick time upon separation of employment.

The Paid Sick Leave Executive Order also creates protections for employees who utilize paid sick time.  In that regard, employers cannot discipline employees for legitimate uses of such time.  This provision could conflict with certain employer attendance policies that treat all absences in the same manner regardless of the reason for the absence.

The Paid Sick Leave Executive Order tasks the Secretary of Labor with drafting regulations to implement these requirements.  Until those regulations are finalized, employers will not be able to determine with certainty whether their policies comply with the new requirements.  Nevertheless, employers with federal contracts should review their leave policies and be prepared to revise them, if necessary.

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