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The Department of Labor Forces Contractors to Give Paid Sick Days

On September 7, 2015, President Obama signed an Executive Order requiring Federal contractors to establish paid sick leave for their employees and the Department of Labor (DOL) published the Final Rule today. The rule will require affected employers to provide 7 days of paid sick leave to their employees. The Federal government estimates approximately 600,000 employees will now be eligible for paid sick leave that did not have the benefit previously.

The good news is these regulations only apply to a portion of Federal Contractors. Employees of businesses that contract with the Federal government for construction, services and concessions will now be required to allow their workers to accrue one hour of paid sick leave for every 30 hours worked. Examples of these business include those that contract to provide day care in Federal office buildings, provide construction services funded by the Federal government and sell souvenirs in our national parks.

Specifically excluded from the requirements are those contracts that fall under the Walsh-Healy Public Contracts Act and employers who manufacture, provide materials and supplies or furnish equipment to the government. Those excepted from the requirement would include defense equipment manufacturers and others whose physical goods the Federal government purchases.

The bad news is many of the employers this regulation will affect are small businesses in retail, service and hospitality. A reading of the Final Rule demonstrates there is a significant administrative burden involved in the implementation of the Rule, which has a bigger impact on small businesses.

As an example, employee will accrue sick time for every 30 hours worked instead of the 40-hour basis for which certain employees earn overtime. Another requirement is the employee must be notified in writing at the end of each pay period of  their available sick time. Sick time can also be taken in increments as small as one hour. This is a significant recordkeeping burden for employers.

The Rule also supersedes collective bargaining agreements negotiated between the contractor and a union if the paid sick time falls short of the new requirement. This is great news for unions who gave up paid sick time in the course of negotiations to receive another benefit. They now have both.

Another interesting note is the number of reasons an employee may be considered sick according to the DOL:

  • physical or mental illness, injury, or medical condition of the employee;

  • obtaining diagnosis, care, or preventive care from a health 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 who seeks the above services

  • domestic violence, sexual assault, or stalking, if the time absent from work is for the purposes described in the first two bullets to obtain additional counseling, seek relocation, seek assistance from a victim services organization, take related legal action, or assist an individual related to the employee as above in engaging in any of these activities.

Employers will only be able to ask for certification from a medical or other provider for the absence after three consecutive days missed according to the new regulation. The minimum standard for an employee using the leave is as soon as is “practicable”. It also prevents employers from developing Paid Time Off (PTO) policies where the full allocation of paid time off may be taken for any reason. In practice, it seems possible the DOL just gave 600,000 employees the equivalent of seven days of vacation to take sporadically throughout the year.


Stacey Lennox

Stacey Lennox

Stacey Lennox spent 15 years in executive management for Fortune 500 companies before starting Buzz Strategies & focusing on small business success. And a bit of political activism. You can find her on Twitter at @Scotsfyre and hear her as an occasional guest on The Loftus Party podcast.

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