United States: DOL's Final Rule On Sick Leave Takes Effect: Contractors Have Until Year's End To Comply

On September 29, 2016, the DOL released a final rule requiring federal contractors to provide seven days of paid sick leave annually. The rule implements a 2015 executive order from President Obama that we covered in greater detail here. More than 35,000 individuals and organizations submitted comments on the DOL's proposed rule.

The final rule comes at a time when state and local governments are enacting mandatory paid leave laws in a piecemeal manner across the country. According to Secretary of Labor Thomas Perez upon announcement of the final rule:

"The next step is a federal earned sick time law such as the Healthy Families Act, and I am confident that it is a question of when, not if. I'm proud to be part of an administration that's getting us closer to that day."

Covered Contracts

The DOL estimated that between 694,000 and 1.05 million employees of federal contractors will receive additional sick leave under the new rule – at an expected annual cost to contractors of around $380 million.

A covered contract would include any "new contract" or subcontract with the federal government that (1) is a procurement contract for construction covered by the Davis Bacon Act; (2) a contract for services covered by the McNamara-O'Hara Service Contract Act; (3) contracts for concessions (such as a concession stand in a federal park); or (4) a contract in connection providing services on federal property and lands to federal employees, their dependents or the general public.

A contract is considered a "new contract" if it is entered on or after January 1, 2017, which, according to the final regulations, would include a contract entered into prior to January 1, 2017 if the contract is renewed, extended or amended through negotiations after January 1, 2017 and the changes and/or extensions were not contemplated in the original contract.

Accrual and Carryover

The rule, which will apply to federal contracts issued on or after January 1, 2017, requires covered federal contractors to give employees at least one hour of paid sick leave for every 30 hours of work. Contractors must allow employees to use paid sick leave in increments of one hour. Although contractors may choose to allow increments of less than one hour, they are not required to do so.

Workers must be allowed to accrue up to at least 56 hours per calendar year. Up to 56 hours of paid sick leave carries over from one year to the next.

The rule allows a contractor using the accrual method to limit the amount of paid sick leave an employee is permitted to accrue to 56 hours in each accrual year. The rule also provides that sick leave carried over from the previous year shall not count toward the accrual cap. The rule also allows a contractor to limit an employee's leave available for use at any point in time to 56 hours. In other words, the rule allows for two caps on leave: an annual accrual cap of 56 hours and an available amount for use of 56 hours.

Permitted Uses

The rule provides that paid sick leave may be used for the following:

  • an employee's own physical or mental illness, injury, or medical condition;
  • for an employee to obtain diagnosis, care, or preventative care;
  • to care for a 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" who has an illness, injury, medical condition, or who needs to obtain diagnosis, care, or preventative care; or
  • for domestic violence, assault, or stalking situations resulting in an illness, injury or medical condition or the need for obtaining diagnosis, care, or preventative care, or to obtain additional counseling, seek relocation, seek assistance from a victim services organization, take related legal action for the employee or one of the above-listed individuals in domestic violence, assault or stalking situations.

Requests for Leave

Employees must make requests for leave at least seven calendar days in advance where the need for leave is foreseeable—or, short of that, as soon as practicable. However, paid sick leave must still be provided upon the employee's oral or written request. Some of the changes in the final rule make it easier for employees to request leave (e.g., an employee does not need to specifically reference the executive order or use the words "sick leave").

Medical Certification

The final rule permits contractors to require a certification issued by a health care provider or other appropriate documentation, but only if the sick leave lasted for three or more consecutive full workdays. Moreover, contractors may only require certification or documentation after informing the employee of the requirement before the employee returns from leave.

Impact on Existing Leave Policies

Existing paid leave policies (e.g., vacation, PTO) may be used to satisfy the requirements of the final rule if certain conditions are met. In general, such leave must be available to all covered employees in a manner that meets or exceeds the requirements of the final rule.

Ability to Frontload

Contractors may "frontload" leave by providing an employee with at least 56 hours of paid sick leave at the beginning of the accrual year. In contrast, under the accrual method, employees accrue one hour of leave for every 30 hours worked.

Frontloading is easier for employers to administer, but the downside for employers is that the frontloading may incentivize more absences and may result in the contractor providing more leave than required under the rule in the case of an employee who terminates during the course of the year.

That said, the rule does acknowledge that it will not always be appropriate to provide a new employee with 56 hours of paid sick leave under the front loading method. Contractors using the front loading method who hire an employee or newly assign the employee to work on or in connection with a covered contract after the beginning of the accrual year may provide the employee with a prorated amount of leave based on the number of pay periods remaining in the accrual year.

The rule gives the following example: if an employee was hired after one-third of the pay periods in the current accrual year had passed, that employee would be entitled to begin her employment with at least 37 hours (two-thirds of 56 hours, rounded to the nearest hour) of paid sick leave.

Payment upon Termination

Unused leave does not have to be paid out upon termination, but leave must be reinstated for employees rehired by a contractor within 12 months of a job separation.

Effect of Collective Bargaining

The final rule provides a temporary exclusion for employees under a collective bargaining agreement (CBA). This is a change from the proposed rule, which did not provide for a CBA waiver. The final rule provides that some requirements do not apply to employees covered by a CBA ratified before September 30, 2016, until the date the CBA terminates or January 1, 2020, whichever is sooner. This waiver only applies so long as employees are provided at least 56 hours per year of illness-related paid time off.

Retaliation Prohibited

Contractors are prohibited from retaliation under the new rule, which includes, but is not limited to interfering with an employee's accrual or use of leave and discriminating against an employee for taking or attempting to take paid sick leave.

Notice Requirements

Covered contracts and subcontracts entered into on or after January 1, 2017, except for those related to procurement subject to the Federal Acquisition Regulation ("FAR"), need to contain the sick leave contract clause set forth in Appendix A of the rule.

Finally, contractors must post a notice provided by the DOL in a prominent and accessible place at the worksite. Electronic postings may satisfy this requirement.

Conclusion

As the final rule's effective date of January 1, 2017 approaches, covered contractors and subcontractors should take immediate steps to identify any existing contracts and determine whether those contracts are subject to the final rule. If so, a contractors should closely review existing policies and work with counsel to identify any changes that need to be made before the new year.

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
 
In association with
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
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.