On September 30, 2016, the U.S. Department of Labor’s Wage and Hour Division (“DOL”) released a Final Rule Establishing Paid Sick Leave for Federal Contractors. The Rule implements Executive Order 13706 which requires contractors working on federal contracts to provide paid sick leave to certain employees.
The new requirements apply to contracts entered into on or after January 1, 2017. Contractors who disregard the new requirements can be subject to debarment, among other penalties.
The Final Rule in general:
- Requires that employees of contractors, or subcontractors, working on or in connection with federal contracts accrue not less than one hour of paid sick leave for every 30 hours worked.
- Allows contractors to limit sick leave accrual to 56 hours (i.e., 7 days) per year, but requires contractors to carry over an employee’s unused leave into the next year.
- Does not require contractors to pay out accrued but unused sick leave when an employee separates employment, but requires contractors to reinstate an employee’s accrued sick leave if an employee is rehired by a covered contractor within 12 months of separation.
- Allows employees to use their paid sick leave not only to care for their own physical or mental health but also to care for sick children, parents, spouses or partners, and for circumstances related to domestic violence, sexual assault, or stalking.
Unlike some state and local ordinances, the Final Rule does not provide any exemption for contractors who are signatory to a collective bargaining agreement or for those within the construction industry.
Areas that provide paid leave through a local vacation or other plan may meet their obligations via that plan as long as the benefit provided (leave) is at least as good as the paid leave required by the Final Rule. Specifically, the Final Rule includes a provision providing that a contractor may fulfill its obligations through a multiemployer plan that provides paid sick leave in compliance with the requirements of the Final Rule. However, this does not allow the employer to shift responsibility to the plan. The new provision also provides that regardless of what functions the plan performs each contractor remains responsible for any violation of the Final Rule that occurs during its employment of the employee.
SMACNA is currently working on more detailed guidance for SMACNA members who are federal contractors. Additionally, we anticipate that new information will be coming out over the next few months and SMACNA will continue to monitor and update SMACNA members as appropriate.