United States: Anticipate Abuse Of Paid Sick Leave For Government Contractors

Last Updated: October 14 2015
Article by Summer Austin Davis

In an executive order released on Labor Day (one can only assume that the pun was intended), President Obama declared that all businesses that contract with the U.S. government will have to provide their employees with paid sick leave. The paid sick leave mandate will apply to federal contracts solicited or awarded on or after Jan. 1, 2017.

While most employers already offer their employees some form of sick leave, federal law does not require the provision of paid or unpaid sick leave. Although federal statutes protect employees with disabilities, as defined by the Americans with Disabilities Act, and those suffering from or caring for a family member with a serious health condition, as defined by the Family and Medical Leave Act, no federal statute requires employers to provide time off (paid or unpaid) for employees who are "sick." In this context, "sick" apparently means having a "physical or mental illness, injury, or medical condition" or "obtaining diagnosis, care, or preventive care from a healthcare provider," according to the new federal paid sick time mandate.

Until Labor Day 2015, employers implemented sick leave policies without prodding from the federal government. Theoretically, employers offer sick leave to employees to attract the best employees. Most employers probably want to provide incentives for sick employees to stay home so that they not only recover but do not infect other co-workers. Employers also recognize that they get more bang for their buck with a worker who is well versus a worker who is ill or worried about a sick family member or a newborn child. Case in point: In early August, Netflix Inc. announced that in addition to offering unlimited sick and vacation days, it would also allow employees to take unlimited paid parental leave.

Refusing to be upstaged by the private sector, on Sept. 7, 2015, President Obama signed an executive order requiring all businesses that contract with the federal government to begin providing "all employees, in the performance of the contract or any subcontract," paid sick leave beginning Jan. 1, 2017. To comply with the order, federal government contractors will have to provide at least one paid hour of sick leave for every 30 hours worked. That's almost 70 annual hours of paid sick leave for a person who works 40 hours per week. But don't panic — the executive order does allow federal contractors to mitigate employee accrual of paid sick leave by authorizing contractors to limit the maximum annual paid sick leave an employee can accrue to 56 hours. The Labor Day paid sick leave mandate not only applies to a covered employee's own sickness, but also to time the employee spends caring for a sick family member or other loved one. The mandate also covers absences resulting from domestic violence, sexual assault or stalking. The mandate does not require a medical certification to verify the covered sickness unless the employee is absent for three or more consecutive days.

Given that the mandate does not require the covered sickness to be serious, and given that the mandate applies to time spent caring for "any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship," the likelihood of employee abuse is high. What if an employee of a federal contractor works in Alabama but has a friend, whom the employee loves like a brother, who lives in Alaska and who believes he is being stalked? If the employee needs to be absent from work to care for the Alaskan loved one by offering emotional support via telephone every Friday and Monday, the Labor Day paid sick leave mandate technically requires the federal contractor to pay the employee for the time off (assuming the employee has accrued enough sick leave). No medical certification is required, and the employee can have a four-day weekend until his leave runs out. It seems that the only limitation to the applicability of the paid sick leave mandate is the employee's imagination.

Until now, sick leave policies have been tailor-made and determined solely by individual companies according to their goals and needs. The new federal mandate attempts to apply a one-size-fits-all policy to diverse companies in unrelated industries just because they happen to contract with the U.S. government. As a result, several questions about the federal paid sick leave mandate remain. For example:

  • Does the mandate apply to all employees regardless of his or her tenure with the company? What about temporary employees or probationary employees?
  • What about joint employers? For example, if an employee's salary is dually funded by two federal contractors, does the employee get to "double-dip" and accrue paid sick leave from each employer?
  • Although the mandate does not create a private right of action by the employee against the employer for the denial of paid sick leave, would denial be considered an adverse employment action or a material change in the terms and conditions of employment?
  • Can employers require employees to use accrued paid sick time in conjunction with leave taken under the Family and Medical Leave Act or leave provided as an accommodation under the Americans with Disabilities Act?

Federal contractors can expect some guidance next year. The executive order directs the secretary of labor to issue federal regulations necessary to carry out the order no later than Sept. 30, 2016. These regulations will, among other things, identify exclusions to the paid sick leave mandate where appropriate, define terms of the order and require federal contractors to maintain employee records that demonstrate compliance with the order and regulations. Hopefully, the regulations will provide some much needed clarity about exactly how the federal paid sick leave mandate will work.

In the meantime, if your company plans to contract with the federal government in 2017, here are some steps you can take now to ensure your company is on the path to being eligible for federal contract awards:

  • If your company already provides paid sick leave to employees, great! Review your paid sick leave policy and confirm that it follows the minimum requirements of the federal paid sick leave mandate.
  • If your company does not provide paid sick leave, draft a paid sick leave policy that complies with the minimum requirements of the federal paid sick leave mandate. Consider including a provision that sets the maximum amount of paid sick time that an employee can accrue at 56 hours.
  • Although the paid sick leave mandate only applies to employees and not independent contractors, recall that the U.S. Department of Labor recently declared its belief that thousands of workers are misclassified as independent contractors. Be careful not to rely solely on the labels your workers wear to determine whether the mandate applies to your company.

Despite the creation of the federal paid sick leave mandate, there is no immediate need to make any permanent changes to your company's sick leave policies. Remember, one fact is certain — in January 2017 a new president will be occupying the White House. Until then, companies should have a plan in place to provide employees working on federal contracts with paid sick leave, tweak the plan to comply with the applicable DOL regulations (which will be released next year), and wait to see whether our new president will enforce, amend or overturn the Labor Day paid sick leave mandate.

This article first appeared in Employment Law360 on September 22, 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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