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On Labor Day, the President signed an executive order that will, in effect, require federal contractors and their subcontractors to provide employees up to seven paid sick days each year starting in 2017. This paid leave requirement joins an assortment of similar state and local laws, and each has its own accrual rate, applicability and eligibility rules, as well as requirements for coordination with other paid leave programs. Employers have found that it is sometimes difficult to comply with these paid leave requirements, even when the employer already provides a generous paid leave program to its employees.

The Department of Labor is to issue regulations implementing the paid leave requirement, so changes in the details of implementation are likely. Even so, here are some highlights and notes regarding the executive order:

  • The requirement will be included in new federal contracts starting in 2017, and the White House has estimated that about 300,000 workers will begin receiving paid sick leave because of the new executive order.
  • Workers assigned to affected projects at federal contractors or subcontractors will earn at least one hour of paid sick leave for each 30 hours worked. That leave will carry over from year to year, but can be subject to a 56-hour cap on accruals. Accrued leave need not be cashed out at termination of employment, but must be reinstated upon reemployment within 12 months. Additional rules determine when leave can be taken, how much advance notice is needed and other factors.
  • Without attempting to fully describe the circumstances in which leave can be taken, it reaches beyond the illness of an employee to caring for family members, including an “individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.” The paid days may also be used in connection with recovery from domestic violence or sexual assault.
  • Interestingly, paid leave benefits required by the new executive order do not count toward any fringe benefits requirements included in federal contracts. (Under federal law, prevailing wage and fringe benefit requirements are included in many federal contracts, requiring minimum pay and expenditures for each employee. Complex rules determine which benefits count for this purpose and their value.) Excluding the new paid leave means that a contractor already providing paid leave that counts against a fringe benefit requirement must provide additional paid leave to meet the new paid leave requirement.
  • For employers with an existing paid leave policy, it will satisfy the requirements of the executive order only if the policy meets all of the requirements of the executive order. Federal contractors, like employers in jurisdictions with paid leave laws, may find that they have difficulty complying with the new requirement despite having a generous paid leave program.