President Obama on Labor Day signed an executive order requiring federal contractors to offer their employees paid sick leave, including paid leave for family care.

Under the plan, “Helping Middle Class Families Get Ahead by Expanding Paid Sick Leave,” employees of federal contractors will earn 1 hour of paid leave for every 30 hours worked, up to 7 days of paid time off a year.   

Human Resources Legislation

INTELLIGENCE FOR HCM PROFESSIONALS

Stay Informed About Changing Compliance Regulations & Workforce Trends
Read the HR Legislation Blog to stay on top of complex HR & Payroll policy issues

President Obama Orders Paid Leave for Contractor Employees

Wed Sep 9, 2015

President Obama on Labor Day signed an executive order requiring federal contractors to offer their employees paid sick leave, including paid leave for family care.

Under the plan, “Helping Middle Class Families Get Ahead by Expanding Paid Sick Leave,” employees of federal contractors will earn 1 hour of paid leave for every 30 hours worked, up to 7 days of paid time off a year.

The White House projects that the executive order will give approximately 300,000 people working on federal contracts the ability to earn annual paid sick leave. Moreover, the White House says that “additional workers will gain access to more sick leave than they had before,” suggesting that new, government-mandated leave would be on top of any paid time off contractors presently offer.

The mandated paid leave would take effect with new contracts in 2017, presumably with contract boilerplate spelling out the formula of 1 hour of paid sick leave for every 30 hours worked.

Significantly, and like the present law Family & Medical Leave Act (FMLA), employees would be permitted to use the paid sick leave entitlement not only for their own illness but to care for a family member such as a child, parent, spouse, domestic partner “or another loved one.”

Executive Order Prompts Questions—

  • How will required paid leave affect contractor costs? The White House is confident that the new policy will involve little cost impact, saying that any additional expenses would be offset by improvements in the health and performance of contractor employees. Nevertheless, taxpayers could be on the hook for any higher leave costs.
  • Would the new paid leave be available to full-time employees only or also to part-timers? Under FMLA an eligible employee must have worked for the employer for at least 12 months and have worked at least 1,250 hours during the 12 months prior to the start of leave. Would the same eligibility requirements apply?
  • What if the federal contractor already offers paid sick leave? Would the new entitlement be in addition to any existing paid leave? And would a contractor be required to conform existing PTO policy to the new requirements, e.g., to extend leave to cover a family member’s illness?
  • Does the new leave mandate also apply to subcontractors, including small business subcontractors? Private sector employers who have fewer than 50 employees are exempt from the FMLA. It’s not clear that the small business exemption would apply to the new requirement.
  • For what illnesses would paid sick leave be available? The FMLA entitlement is available only in the case of employees or family members who have a “serious health condition.” Presumably that requirement would also apply to the new paid leave mandate.
  • What about intermittent paid leave? Would contractors be required to provide paid sick leave when employees take partial days of leave, e.g., one or two hours? FMLA does permit intermittent leave.

 

Obviously federal contractors will have these and other questions about how the new policy will be implemented. The good news is that federal agencies have over a year to iron out the details and work with contractors to address their concerns.

To be sure, federal contractors of all sizes will be perplexed by the new paid sick leave mandate. Equally perplexed no doubt will be federal contracting officers tasked with administering the new requirement.

In announcing the paid sick leave mandate President Obama has charted a new course for federal contractors, federal agencies and potentially hundreds of thousands of employees. He has also introduced a brand new compliance challenge for thousands of private sector employers.