New Executive Order Mandates Paid Sick Leave for Employees

On Labor Day, President Obama issued a new executive order mandating paid sick leave for employees working under federal contracts. The rules outlined in the order, to be further defined by the secretary of labor and Federal Acquisition Regulatory Council over the next several months, will apply to new federal contracts entered into after January 1, 2017. The U.S. Department of Labor will issue regulations concerning the executive order by September 30, 2016. Within 60 days after the Department of Labor issues its regulations, the Federal Acquisition Council will issue regulations concerning the clauses to be included in federal procurement solicitations and contracts.

Under the executive order, federal contractors, as well as their lower-tier subcontractors, must provide employees with one hour of paid sick leave for every 30 hours worked. Contractors must allow the paid sick leave to accrue to a maximum of no less than 56 hours per year, carry over from one year to the next, and be reinstated for employees rehired within a year of separation.

Employees may use the paid sick leave to cover absences resulting from:
1.      physical and mental illnesses;
2.      obtaining diagnosis and care from a health care provider;
3.      caring for family members (including a domestic partner or 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) and (2) above; or
4.      domestic violence, sexual assault, and stalking, if the time absent from work is for the purposes otherwise described in (1) and (2) above, to obtain counseling, to seek relocation, to seek assistance from a victim services organization, to take related legal action, including preparation for or participation in any related civil or criminal legal proceeding, or to assist an individual related to the employee.

Paid sick leave must be provided upon the oral or written request of an employee that includes the expected duration of the leave and is made at least seven calendar days in advance where the need for the leave is foreseeable, and in other cases as soon as practicable.

Contractors should know that their existing paid sick leave policies may satisfy the executive order’s requirements. Existing policies, however, must provide an equivalent amount of paid sick leave that may be used for the same purposes as set forth in the order.

There are a number of other important caveats. Contractors cannot make use of paid sick leave contingent on employees finding someone else to cover their absence. Moreover, contractors may only require verification of absences lasting three or more consecutive days. The verification must be provided no later than 30 days from the first day of the leave. The executive order does not require contractors to compensate employees for accrued paid sick leave upon their separation.

The executive order applies to contracts covered by the Service Contract Act, Davis-Bacon Act, and procurement contracts in which employees’ wages are governed by the Fair Labor Standards Act, at the thresholds provided in those acts. These thresholds are:
·         Davis-Bacon Act - applies to contracts exceeding $2,000 for the construction, alteration, and repair of public buildings through the employment of mechanics or laborers.
·         Service Contract Act - applies to contracts exceeding $2,500 for the furnishing of services through the employment of service employees.
·         Fair Labor Standards Act - applies to employees’ wages in procurement contracts exceeding $3,000.

If you have any questions about this executive order, including whether your company’s existing sick leave or paid time off policy will satisfy the order, or whether the order applies to your company, please contact a labor and employment attorney at Larkin Hoffman.


This alert is provided as a service to our clients and firm associates. While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice.