Stay Ahead of Sick Leave Laws

While federal projects can bring big revenue for asphalt professionals, the contracts also bring a host of compliance complications from prevailing wages to executive orders. Recently, the Obama administration announced the latest in a series of strategic moves to increase wages and benefits for American workers. Executive Order 13706 requires federal contractors to provide employees with up to seven days of paid sick leave per year.

Coverage and Requirements

The Executive Order applies to federal contracts for services or construction, among other types of federal contracts, entered into after Jan. 1, 2017. Covered contracts, which likely include federal highway contracts and subcontracts, will be required to include a clause. The contractor and any subcontractors must incorporate the clause into lower-tier subcontracts. In the clause, the contractor must certify that all employees performing work on the contract will receive the benefits required by the Order. Specifically, for work done on covered federal contracts:

• Employees must accrue at least one hour of paid sick leave for every 30 hours worked;
• Employees must be permitted to accrue at least 56 hours of paid sick leave per year;
• The accrued paid sick leave must be permitted to carry over from one year to the next;
• Accrued paid sick leave must be reinstated for employees rehired by a covered contractor within 12 months after a job separation; and
• Contractors will be required to keep and preserve records showing compliance with the Order.

Contractors are not, however, required to pay out accrued but unused sick leave to employees upon a separation of employment.

Contractors may not receive credit toward their prevailing wage or fringe benefits obligations under other laws, such as the Davis-Bacon Act, for any paid sick leave provided in satisfaction of the Order. In other words, the requirement to provide paid sick leave is in addition to, not instead of, other federal contract compliance requirements that are already in place and with which contracts already must comply.

Use and Documentation

Paid sick leave earned under the Order may be used by an employee for an absence resulting from any of the following:

1. The employee’s physical or mental illness, injury, or medical condition;
2. The employee obtaining a diagnosis, care or preventive care from a healthcare provider;

• The employee caring for a child, a parent, a spouse, a domestic partner, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship and who has any of the above conditions or needs in points one or two; or

1. If the employee is the victim of domestic violence, sexual assault or stalking, if the time absent from work is for the purposes described in points one and two, above, or to obtain additional 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 as described in point three above.

Employees are entitled to take accrued paid sick leave for the reasons identified above upon either oral or written request, made at least seven calendar days in advance, where the need for leave is foreseeable, and in other cases as soon as is practicable. Contractors may not require the employee to identify a replacement worker before taking paid leave. Contractors may only require certification from a healthcare provider for paid sick leave used for the purposes in points one through three, above, if the absence is for three or more consecutive workdays. In those circumstances, the employee must provide the certification within 30 days of the first day of the leave. If the employee requires three or more consecutive workdays for the purposes identified in point four, above, contractors may require documentation from an appropriate individual or organization with the minimum necessary information to establish a need to be absent from work. Contractors must maintain confidentiality of information obtained through this process.

Perhaps most importantly, contractors may not interfere with, retaliate against, or in any other way discriminate against an employee for taking, or attempting to take, paid sick leave required under the Order. Discouraging employees, either explicitly or implied, from using paid sick leave will be considered a violation of the Order.

The Secretary of Labor will issue additional regulations implementing and interpreting the Order on or before Sept. 30, 2016, and additional guidance will be available at that time. Contractors should, however, take steps to be prepared to comply with the Order beginning Jan. 1, 2017. Reasonable steps include budgeting, planning to document accrual and use of paid sick leave, including updating payroll software, and preparing a written paid sick leave policy. Also, the Order applies only to covered federal contracts, so contractors should begin thinking about whether employees will accrue paid sick leave only when working on those contracts, or for all hours worked, and if the former, how to handle tracking accrual of paid sick leave separately for work on federal contracts.

Although contractors have until next year to prepare to comply, note that a number of states, including Oregon and Massachusetts, have their own paid sick leave laws that are already in effect, and contractors are already required to comply with those laws.

As more of the workforce becomes covered by state and federal laws that require paid sick leave, those employers that do not already have a paid sick leave policy that meets or exceeds these requirements should give serious thought to adopting such a policy to avoid piecemeal compliance headaches in the future.

Jeremy Brenner exclusively counsels and represents employers in matters pertaining to their workforce, including wage and hour, harassment, discrimination, tort, and contract claims, non-compete disputes and labor matters. Brenner practices nationwide and represents businesses of all sizes, from “mom and pop” businesses to Fortune 100 corporations. Brenner can be reached at 314-342-4184 or Jbrenner@ArmstrongTeasdale.com.