Federal Contractors Required to Provide Paid Sick Leave

On September 30, 2016, the United States Department of Labor issued a final rule requiring federal contractors to give their employees at least seven days of paid sick leave each year. The rule will apply to federal contracts issued on, or after, January 1, 2017.

Covered contractors must permit employees to accrue not less than 1 hour of paid sick leave for every 30 hours worked "on or in connection with" a covered contract, up to 56 hours. Employees performing "on" a covered contract are those employees directly performing the specific services called for by the contract. Employees performing "in connection with" a covered contract are those who are performing work activities that are necessary to the performance of the contract but who are not directly engaged in performing the specific services called for by the contract itself. For example, a security guard patrolling a construction worksite, or a clerk who processes payroll for a covered contract would be considered to be performing work "in connection with" the contract.

Paid sick leave under the rule may be used for a wide variety of reasons not limited to the employee's own illness. An employee is allowed use paid sick leave for: 

1. a physical or mental illness, injury, or medical condition;
2. obtaining diagnosis, care, or preventive care from a health care provider;
3. caring 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 any of the conditions or needs for diagnosis, care, or preventive care described in (1) or (2) or is otherwise in need of care; and
4. domestic violence, sexual assault, or stalking, if the time absent from work is for the purposes described in (1) or (2) or to obtain additional counseling, seek relocation, seek assistance from a victim services organization, take related legal action, including preparation for or participation in any related civil or criminal legal proceeding, or assist an individual related to the employee as described in (3) in engaging in any of these activities.

A contractor may require certification issued by a health care provider – or other documentation if the leave is related to domestic violence, sexual assault, or stalking – to verify the need for paid sick leave, but only if the employee is absent for 3 or more consecutive full workdays.

Employees must be allowed to carry over paid sick leave an employee has accrued but not used from one year to the next. However, employers would not be required to allow total accrual of more than 56 hours of leave at any given time. Upon separation from employment, unused paid sick leave need not be paid out; however, paid sick leave must be reinstated for an employee rehired within 12 months after separation.

The Department of Labor will have the authority to investigate violations of the rule and employees may file complaints of alleged violations with the agency. Penalties for violations include payment of damages, suspension from federal contracting, and possible debarment.