New Year Brings New Sick Leave
Requirements for Federal Contractors
IT IS ABOUT TIME federal contractor employees received
benefits equal to their in-house peers.
In November, the long-awaited final rule issued by the
U.S. Department of Labor mandated that federal contractors
provide paid sick leave to certain employees. The regulation covers both new federal contracts and replacements to
Although some cities and states require
that employers offer paid sick leave, no
federal law mandates the employment
benefit across the board. The United States is the only industrialized nation without paid leave.
This change spells good news for the estimated 1. 2 million
workers employed by federal contractors who eventually
will have access to paid sick leave, according to the Federal
Register. The action arguably will improve the overall health
and performance of the work force. Those who drag themselves to work coughing and sneezing—and infecting others—now can recuperate at home. The rule also brings the
benefits packages of these workers in line with other companies, ensuring that federal contractors remain competitive
The final rule applies to four major categories of contrac-
• Procurement contracts for construction covered by the
Davis-Bacon Act (DBA), or federally funded contractors and
subcontractors taking in more than $2,000 per contract for
their work. The rule does not apply to contractors that only
provide financial assistance.
• Service contracts covered by the McNamara-O’Hara Service Contract Act (SCA). Here, the rule applies to employers
included in procurement and nonprocurement contracts.
• Contracts for concessions where the government grants
an entity the right to use federal land or facilities. The rule also
applies to concessions contracts excluded from SCA coverage, such as government-operated souvenir shops or food and
lodging at national parks.
• Contracts connected to federal property or lands and
related to services for federal employees, their dependents or
the general public.
As with many laws and regulations, the fine details are not
always cut and dry. Some contractors might assume that the
rule does not apply to them if they do not fall into the defined
categories. They could be mistaken. Some might be affected
because of business connections or dealings with other contractors that are affected by the change. The rule also covers
individuals who are not directly engaged in contract work but
necessary to complete a contract, such as a human resources
specialist working for a cybersecurity contractor. Additionally, the rule does not apply to grants, contracts or agreements made with Native American tribes, or to contracts
regarding manufacturing or furnishing of materials, supplies
or equipment for the government.
There is more. The final rule does not apply to an employee
if a collective bargaining agreement (CBA) was ratified before
September 30 or if the contractor provides employees with
at least 56 hours of paid sick leave yearly. Where such CBAs
exist, the new mandate will not apply until 2020 or until the
agreement terminates, whichever is first. Also, if the CBA
provides less than 56 hours of leave, then the contractor must
make up the difference.
Generally, federal employees earn one hour of paid sick
leave for every 30 hours worked. However, there are some
factors that complicate this calculation. The government
actually differentiates between contractor employees who
are “engaged in,” “working on” and “in connection with” a
project. For example, those “in connection with” can estimate
hours worked as long as the estimate is reasonable and based
on verifiable information.
Employers can provide employees annual paid sick leave at
the beginning of each accrual year before the hours worked
have accumulated and must allow employees to build up
at least 56 hours a year. They must let staff use sick leave
in increments as small as one hour, but they can limit the
amount of paid leave used to what has actually been accrued.
Employers are not required to pay employees for unused sick
leave upon separation, but they may opt to do so in what is
called a “cash out.”
The onus of ensuring that employers follow the rule and
that the paid sick leave clause is included in all contracts and
solicitations falls to contracting federal agencies. Violations
mean that agencies must withhold payment to the contractor
and report the potential breach for investigation, adjudication
and possible sanction.
President-elect Donald Trump has not commented about
whether he intends to overturn the executive order signed by
President Barack Obama that led to this final rule.
Farisa Dastvar is the chief legal officer at Varyst, a legal
and contracts management services firm concentrating on
small and medium-size companies. She is a member of the
Northern Virginia Chapter of AFCEA. The views expressed
here are hers alone.
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go to http://url.afcea.org/January17
contact: Farisa Dastvar, firstname.lastname@example.org