United States: Federal Contractors Beware: January 1 Brings New Paid Sick Leave And Minimum Wage Requirements

Paid Sick Leave Final Rule

In 2015, President Obama signed Executive Order 13706 (EO 13706), granting federal contractor employees 7 days (56 hours) of annual paid sick leave, which includes paid leave for family care. The EO directed the Secretary of the US Department of Labor (DOL) to prepare regulations for its implementation, which it did on February 25, 2016.

On September 29, 2016, after considering over 35,000 public comments, the DOL issued its Final Rule implementing EO 13706. Published in the Federal Register on September 30, 2016 (81 FR 67598) under new regulation 29 CFR Part 13 (Part 13), the new rule goes into effect on November 29, 2016 (60 days after publication) and applies to federal contracts issued on or after January 1, 2017. The DOL estimates it will provide paid sick leave to about 1.15 million workers.

As explained below, federal contractors holding certain government contracts will need to ensure compliance with Part 13. This means affected government contractors should immediately review, if they have not done so already, their sick leave and/or paid time off (PTO) policies and related processes in order to implement any changes needed to ensure compliance with the new regulation on day one.

Below is a brief summary of the contracts and employees covered under the new regulation, the rules for how sick leave is to accrue, when it can be used and how the DOL will ensure compliance.

Coverage

Which contracts are covered?

The Final Rule makes clear that EO 13706 and its new implementing regulation at Part 13 apply to four major categories of contractual agreements:

  • Procurement contracts for construction covered by the Davis-Bacon Act (DBA)
  • Service contracts covered by the McNamara-O'Hara Service Contract Act (SCA)
  • Concessions contracts, including any concessions contracts excluded from the SCA by the DOL's regulations at 29 CFR §4.133(b)
  • Contracts in connection with federal property or lands

Any subcontract of a covered contract is also subject to the paid sick leave requirements.

Part 13 contains exclusions for: (i) grants; (ii) contracts and agreements with and grants to Indian Tribes; (iii) any procurement contracts for construction not subject to the DBA; and (iv) contracts for services that are exempted from coverage under the SCA.

Who is covered?

Part 13 applies to any person performing work on or in connection with a covered contract whose wages are governed by the SCA, DBA or FLSA, including employees who qualify for an exemption from the FLSA's overtime provisions.

Paid sick leave requirements

Accrual

  • Accrual Rate - Eligible employees will accrue 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract.
  • Front-Loading - Contractors may provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year instead of requiring the employee to accrue leave based on hours worked.

Accrual cap / reinstatement / payment for unused leave

  • Accrual Cap - Contractors may limit to 56 hours the amount of paid sick leave employees accrue each year.
  • Cash Pay Out / Reinstatement - Contractors are required to reinstate employees' accrued-but-unused paid sick leave if the employees are rehired by the same contractor within 12 months after a job separation, unless the contractor pays employees for accrued, unused paid sick leave upon separation (which they are not required to do).

Use limitations

Part 13 establishes that employees may use accrued paid sick leave for the following reasons:

  • Physical or mental illness, injury or medical condition of the employee
  • Obtaining diagnosis, care or preventive care from a heath care provider by the employee
  • Caring for the employee's child, parent, spouse, domestic partner or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship
  • Obtaining counseling, relocating one's residence, seeking assistance from a victim organization or seeking legal redress relating to domestic violence, sexual assault or stalking

New Part 13 also sets out that, where the need for leave is foreseeable, a leave request must be made at least seven calendar days in advance, and in other cases as soon as practicable. A contractor is required to communicate any denial of a request in writing, with an explanation. A contractor may require certification only for absences of three or more consecutive full days, and the employee must receive notice of the requirement to provide certification before he or she returns to work.

Interaction with other paid-time-off policies and laws

Covered contractors may not use paid sick leave required by the EO (and now Part 13) to fulfill obligations under the SCA or DBA, and complying with the new rule will not have an effect on existing obligations under the FMLA. Part 13 also makes clear that contractors must comply with state and local paid sick leave laws as well as the EO and Part 13 (to the extent they conflict). In other words, where the requirements of an applicable state or local law and new Part 13 differ, satisfying both will require a contractor to comply with the requirement that is more generous to employees. This is of particular importance to contractors that operate within California, which has a number of municipalities setting sick leave law requirements that differ from those of Part 13 and the EO.

A contractor's existing PTO policy can fulfill the new paid sick leave requirements so long as it provides employees with at least the same rights and benefits as Part 13 requires.

Enforcement

Complaints under the new regulation may be filed with the Wage and Hour Division (WHD) of the DOL, and there is a mechanism for WHD investigations and informal complaint resolution. The new regulation also specifies remedies and sanctions for violations of the EO and its implementing regulations, including the payment of damages and debarment.

Minimum Wage Increase

On September 20, 2016, approximately one week prior to issuance of the Final Rule on paid sick leave, the DOL announced that, effective January 1, 2017, the minimum wage for federal contractors and subcontractors will increase to $10.20 per hour from the 2016 wage of $10.15 per hour. Tipped workers will receive a $0.95 increase over the current minimum wage of $5.85 per hour. These annual increases are required by EO 13658, issued in February 2014, which requires that the DOL raise the hourly minimum wage paid by certain federal contractors every calendar year based on inflation. The EO also requires that the minimum cash wage for tipped workers must continue to increase by $0.95 per year until it reaches 70% of the minimum wage paid to other hourly workers under EO 13658. These increases apply to the same subset of covered contracts described above.

Contractors should conduct a review of wages paid to ensure that by January 1, all wages meet the minimum requirements.

Dentons' Employment and Labor and Government Contracts team is available to help analyze the new regulation, and help you review and audit your sick pay and/or PTO policies and practices for compliance.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
26 Sep 2018, Conference, New York, United States

Dentons is delighted to support a global IT services and consulting firm Miratech as an event host partner at their annual conference called M-Force18 New York on September 27th. The event will be held at Dentons New York office in the heart of Midtown Manhattan, opposite Rockefeller Center.

2 Oct 2018, Seminar, Dallas, United States

We are pleased to offer a program of five sessions designed specifically for in-house counsel. Topics will include:

  • In-house corporate ethical issues
  • What recent Supreme Court decisions mean for business
  • Keeping lawyers out of your benefit plans
  • Litigation tactics for in-house counsel
  • Employment issues in the age of #MeToo
Similar Articles
Relevancy Powered by MondaqAI
Duane Morris LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Duane Morris LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions