By Susan Schoenfeld, JD, Senior Legal Editor

On February 2016, the U.S. Department of Labor (DOL) published its notice of proposed rulemaking (NPRM) to implement Executive Order (EO) 13706, Establishing Paid Sick Leave for Federal Contractors. EO 13706 requires parties that enter into covered contracts with the federal government to provide covered employees with up to 7 days of paid sick leave annually, including paid leave allowing for family care.

Part one, of this two-part article, focused on the new paid sick leave requirements for federal contractors, which contractors will be covered by the new rules, and the contract types and employees that will be eligible for paid sick leave under the new rule.

In part two, we provide information on when and for what reasons paid sick leave would be available, leave administration, accrual, carryover and other rules, new definitions under the EO, and what covered contractors with paid sick leave policies already in place can do to comply with the new rules.

Use of paid sick leave

The EO explains that an employee may use paid sick leave for an absence resulting from:

1. Physical or mental illness, injury, or medical condition of the employee;
2. Obtaining diagnosis, care, or preventive care from a healthcare provider by the employee;
3. Caring for the employee’s 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 need for diagnosis, care, or preventive care described in (i) or (ii); or
4. Domestic violence, sexual assault, or stalking if the time absent from work is for the purposes described in (i) or (ii) or to obtain additional counseling, seek relocation, seek assistance from a victim services organization, take related legal action, or assist an individual related to the employee as described in (iii) in engaging in any of these activities.<.li>

Accrual, frontloading, and carryover

Under the proposal, employees would accrue not less than 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract, to be calculated at the end of each workweek.

The proposal also creates an option for contractors to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year rather than allowing the employee to accrue the leave based on hours worked.

All covered contractors would be required to inform employees in writing of the amount of paid sick leave they have accrued no less than monthly and at other times.

Proposed definitions would bring expansive coverage

The DOL proposes expansive definitions of key terms in the EO and proposed rule. Notably:

A “physical or mental illness, injury, or medical condition” would be defined as “any disease, sickness, disorder, or impairment of, or any trauma to, the body or mind.” Treatment by a healthcare provider would not be required. Examples of covered conditions stated in the NPRM include “a common cold, ear infection, upset stomach, ulcer, flu, headache, migraine, sprained ankle, broken arm, or depressive episode.”

The DOL would define an “individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship” as any person with whom the employee has a “significant personal bond that is or is like a family relationship, regardless of biological or legal relationship.”

According to the DOL, the intention is that covered individuals will be broadly interpreted to include such relationships as ”grandparent and grandchild, brother- and sister-in-law, fiancé and fiancée, cousin, aunt and uncle, as well as a close friend, to the extent that the connection between the employee and the individual was significant enough to be regarded as having the closeness of a family relationship even though the individuals might not be related by blood or formally in law.”

Other examples of covered individuals include, for example:

• an individual who was a foster child in the same home in which the employee was a foster child for several years and with whom the employee has maintained a sibling-like relationship,
• a friend of the family in whose home the employee lived while she was in high school and whom the employee therefore considers to be like a mother or aunt to her, or
• an elderly neighbor with whom the employee has regularly shared meals and to whom the employee has provided unpaid caregiving assistance for the past 5 years and whom the employee therefore considers to be like a grandparent to him or her.

Maximum accrual, carryover, reinstatement, and payment for unused leave

The NPRM provides that contractors may limit the amount of paid sick leave employees may accrue to 56 hours each year and must permit employees to carry over accrued, unused paid sick leave from one year to the next. The DOL also proposes to allow contractors to limit the amount of paid sick leave employees have accrued to 56 hours at any point in time.

Under the proposal, contractors will be required to reinstate employees’ accrued, unused paid sick leave if the employees are rehired by the same contractor or a successor contractor within 12 months after a job separation. Contractors will not be required to pay employees for accrued, unused paid sick leave at the time of a job separation (“cash-out”).

In addition, under the NPRM, contractors must account for the use of paid sick leave in increments of no greater than 1 hour and must provide employees using paid sick leave with the same pay and benefits they would receive if they hadn’t used the leave.

Existing leave policies

According to the DOL, a contractor’s existing paid time off (PTO) policy (if provided in addition to the fulfillment of the McNamara-O’Hara Service Contract Act or the Davis-Bacon Act obligations, if applicable) will satisfy the requirements of the EO and the proposed regulations if the PTO:

• Is made available to all employees covered by the EO and proposed regulations;
• Can be used for at least all of the same purposes as paid sick leave;
• Is provided in a manner and an amount sufficient to comply with the rules and restrictions regarding the accrual of paid sick leave described in the proposed regulations;
• Is provided pursuant to policies sufficient to comply with the rules and restrictions regarding use of paid sick leave, requests for leave, and certification and documentation, at least with respect to any PTO used for the required purposes; and
• Is protected by the prohibitions against interference, discrimination, recordkeeping violations, and waiver of rights described in the proposed regulations, at least with respect to any PTO used for the required purposes.

In other words, under the NPRM, a contractor may use its PTO policy to satisfy its obligations under the EO, but only if the policy complies with EO’s requirements, as described above.

If, for example, a contractor does not permit an employee to use the PTO for reasons related to domestic violence, sexual assault, or stalking, its PTO policy would not satisfy its obligations under the EO.

In that case, the contractor could choose to amend its paid time off policy to include this reason for leave or could provide paid sick leave in addition to PTO. That PTO may be used for additional purposes, such as vacation, does not disqualify a PTO policy from satisfying the obligations under the EO provided that the PTO policy satisfies all the requirements summarized above and set forth in more detail in the proposed rule.

BLR will be following this development closely and reporting on any developments in upcoming articles.

Contractors that want to know more about the proposed paid sick leave rule can go to DOL’s NPRM website.