The U.S. Department of Labor (DOL) released a final rule establishing 56 hours (or 7 days) of paid sick leave annually for certain federal contractors. The final rule implements an Executive Order originally signed by President Barack Obama in September 2015, providing covered employees with time off to care for themselves or a family member, or absences as they relate to domestic violence, sexual assault, or stalking.

Who Does This Apply to?

This final rule applies to new and replacement contracts with the Federal Government that result from solicitations issued on or after January 1, 2017. The contract agreements covered under this Final Rule are:

  • 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 Department of Labor’s regulations at 29 CFR 4.133(b); and
  • contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public

Employees who are not directly engaged in performing the specific work called for by the contract and who spend less than 20 percent of their hours worked in a particular workweek performing work in connection with such contracts are listed as being exempt from the rule’s accrual requirements.

What Should be Provided?

The Final Rule requires that covered employees accrue one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. Contractors are permitted to limit the amount of paid sick leave that covered employees may accrue to 56 hours each year but must allow the carryover of any accrued, but unused paid sick leave from year to year. Employees may use paid sick leave in increments as small as one hour and can only be limited to usage based on how much paid sick leave the employee has available. Contractors also have the ability to provide a lump sum of no less than 56 hours of paid sick leave at the beginning of each accrual year in lieu of an employee accruing based on their hours worked.

Next Steps

Employers who engage in contracted work with the Federal Government must prepare to comply with this new rule by January 2017. Contracting employers in California that are also subject to the Healthy Workplaces, Healthy Families Act of 2014, or any other local ordinance that provides paid sick leave, will need to examine their existing policy on paid sick leave to ensure it meets the requirements of the new rule. More information on the Final Rule can be found on the DOL website.