The Employer's Legal Resource: DOL Proposed Rule Requires Paid Sick Leave for Employees of Federal Contractors

04.01.16

In late February, the DOL published proposed regulations mandating that federal contractors and subcontractors provide up to 7 days of paid sick leave annually to their employees. The public comment period expired on March 28, 2016, and the DOL has promised to issue a final rule on or before September 30. Here is a preview for those employers wanting to plan ahead.

Do the proposed regulations apply to your company? Employers likely already know if they are federal contractors or subcontractors, so the details of which employers are covered by the new regulations are not the subject of this article. The proposed regulations apply only to federal contractors or subcontractors.

What employees are covered? The proposed regulations apply to employees performing work "on or in connection with" covered federal contracts--meaning those employees who are either directly performing the specific services called for by the contract, or who are performing work activities that are necessary to the performance of a covered contract but not directly engaged in performing the specific services called for by the contract itself. Employees performing only in connection with covered contracts for less than 20 percent of their work hours in a given workweek are excluded from the proposed rule's requirements.

This may lead to the result that, in certain situations, federal contractors and subcontractors may be required to provide paid sick leave for some of their employees but not others (i.e., those who are performing work that is not in any way connected to a federal contract--such as a landscaper at the home office of a federal services contractor, the janitor at a federal construction contractor's headquarters, or a payroll clerk at a child care center that leases space in a federal building and has several other locations for which the clerk also handles payroll). Federal contractors who are obligated to comply with the proposed regulations regarding only some--but not all--of their employees are required to maintain adequate records clearly segregating covered and non-covered work. In the absence of sufficient recordkeeping, all of a federal contractor's employees will be presumed to be covered by the regulations' paid sick leave requirements. (Additionally, so me employers may ultimately choose to cover all of their employees for ease of administration or due to concerns such as morale among employees.)

What do the proposed regulations require? Generally speaking, the proposed regulations require that federal contractors and subcontractors provide covered employees with up to 7 days of paid sick leave annually. Employees must accrue not less than 1 hour of paid sick leave for every 30 hours worked. The term "hours worked" includes all time for which an employee is or should be paid, including both time an employee spends working and time an employee spends in paid time off status (such as paid sick leave or any other paid time off provided by the employer).

Federal contractor employers are prohibited from limiting the total accrual of paid sick leave at less than 56 hours annually for any covered employee. Accrued paid sick leave carries over from year to year for all covered employees (it cannot be forfeited) and previously accrued paid sick leave must be reinstated for employees who separate from employment for any reason but are rehired within 12 months. Employees on paid sick leave must receive the same pay they would receive if they had been present at work.

When can paid sick leave be used by employees? Paid sick leave may be used by an employee for an absence (of any duration) resulting from any of the following:

•Physical or mental illness, injury, or medical condition. Intended broadly to refer to any disease, sickness, disorder, or impairment of, or trauma to, the body or mind. Example include a common cold, ear infection, upset stomach, ulcer, flu, headache, migraine, sprained ankle, broken arm, or depressive episode.

•Obtaining diagnosis, care, or preventative care from a healthcare provider. Intended broadly to refer to receiving services from a healthcare provider, whether to identify, treat, or otherwise address an existing condition or to prevent potential conditions from arising. Examples include obtaining a prescription for antibiotics at a health clinic, attending an appointment with a psychologist, having an annual physical or gynecological exam, or receiving a teeth cleaning from a dental assistant.

•Caring for a family member. This includes a child, parent, spouse or domestic partner (including same-sex or opposite-sex cohabiting committed relationships), in-laws, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship. The DOL specifically noted that this is intended to be inclusive of non-nuclear family structures and mere family-like relationships. For example, an employee may use paid sick leave to be with a child home from school with a cold, to accompany his spouse to an appointment at a fertility clinic, or to provide non-medical caregiving to his grandfather with dementia and assist him in bathing, dressing, and eating when his usual personal care attendant is unable to keep her regular schedule.

•Domestic violence, sexual assault, or stalking. Includes employee's related absences for any of the following purposes: physical or mental illness, injury, or medical condition; to obtain diagnosis, care, or preventative care from a healthcare provider; or to obtain additional counseling, seek relocation, seek assistance from a victim services organization, or take related legal action including preparation for or participation in any civil or criminal legal proceeding, or assist another person related to the employee in engaging in any of these activities.

A federal contractor employer may not require an employee to use paid sick leave time in more than one hour increments (i.e., a full day if the employee is only absent for 2 hours) and the employer cannot place a limit on the amount of paid sick leave an employee can use at once or in a year. Employers cannot deny an employee's request for paid sick leave based on operational or staffing needs or make the use of paid sick leave contingent on finding a replacement worker.

When do the proposed regulations take effect? The DOL has promised to issue final regulations by September 30, 2016. Assuming there are no major substantive changes to the proposed rule, the paid sick leave requirement applies to new contracts (including modifications outside the original scope of the contract) or replacements for expiring contracts (including extensions and renewals) beginning January 1, 2017.

What else does your company need to know? Under the proposed regulations, federal contractors are required to incorporate paid sick leave provisions into any contracts--both with the federal government and with any lower-tier subcontractors engaged to provide services under the prime contract--as a condition of receiving payment under such contracts. The regulations also prohibit an employer from interfering with an employee's use or accrual of paid sick leave in any manner and from discriminating against an employee (including an applicant or former employee) for utilizing paid sick leave or engaging in any other activity protected by the regulations.

Practically speaking, for employers who have maintained separate sick leave and vacation policies, this may not require much change. However, for employers who have combined those programs into a Paid Time Off (PTO) program, you may need to give careful thought to how these rules will affect your program, especially the terms such as the fact that the paid sick leave cannot be forfeited, must be reinstated upon rehire within 12 months, etc.

By: Rebecca D. Stanglein, rstanglein@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment
litigation and counsels clients regarding everyday employment matters. 

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