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Executive Order Establishing Paid Sick Leave
09.28.15

While many employees celebrated Labor Day, President Obama issued an executive order requiring private enterprises that transact business with the federal government or the District of Columbia pay sick leave to employees who work under federal contracts. Executive Order 13703 is the latest in a string of the president’s employee-friendly executive orders. Last year, President Obama signed an executive order increasing the minimum wage for employees of federal contractors and subcontractors. That same year he amended an executive order that President Johnson issued to add sexual orientation and gender identity to the list of categories protected from discrimination. This year, President Obama’s most recent executive order targets sick leave.

Overview

Starting January 1, 2017, all contractors and subcontractors that transact business with the federal government or the District of Columbia must provide each employee working under a federal contract or subcontract 1 hour of paid sick leave for every 30 hours the employee works. This new mandate will allow some 300,000 employees to earn up to seven days or more of paid sick leave each year.

Employees may use the paid sick time to care for their own physical or mental illness, injury, or medical condition or they may use it to care for another’s. If the employee uses the time off to care for someone else that person must be a family member. Family members include children, parents, spouses, domestic partners, and anyone else related to the employee by blood or marriage.

“Sick leave” is somewhat of a misnomer. While the executive order  purports to establish paid “sick leave” for employees of federal contractors and subcontractors it allows employees to use the paid time off for more than the purposes mentioned above. In fact, employees may also take paid time off to handle domestic violence, stalking, and sexual assault matters.

Employee Notice

An employee must request paid sick leave at least a week before the need for the leave is foreseeable or in other instances, as soon as practicable. The request for leave can be either oral or in writing.

Medical Certification

An employer can only ask for medical certification if If an employee uses three or more consecutive days of paid sick leave. The certification can only be for leave taken for employee’s own medical condition or to care for a family member. Certification for leave taken due to domestic violence, stalking or sexual assault is limited. An employer may only ask for information necessary to establish need for the leave. That certification need not be from a medical provider but from an “appropriate individual or organization,” and an employer must not disclose any of the information that the employee provides to verify the need for his or her absence. 

What Happens with Unused Paid Sick Leave

The executive order recognizes that sometimes an employee will earn paid sick leave and not use it. Unused paid sick leave does not expire. Instead, it carries over from one year to the next and must be reinstated for employees who are rehired within 12 months of termination. However, employers are not required to pay employees for accrued and unused paid sick time when employee quits or is terminated.

Retaliation Provisions

The executive order also includes antidiscrimination and antiretaliation provisions. Specifically, it prohibits employers from discriminating or retaliating against an employee for taking or attempting to take paid sick leave.

Enforcement

The executive order vests in the Secretary of Labor the power to investigate potential violations of the act. Additionally, the Secretary of Labor must promulgate regulations to ensure contractors and subcontractors comply with the executive order. These regulations must be issued by September 30, 2016.

Implication for Employers

Many employers already have sick and family leave policies in place, but this executive order will require federal contractors to review their policies to ensure compliance with this order.  Unlike the Family and Medical Leave Act which only applies to employer with 50 or more employees within a 75 mile radius, all federal contractors despite their size must give paid sick leave to their employees who work on government contracts.    

This order will require federal contractors to make decisions on whether they will have different policies for employees who work on government contract versus employees who do not. To make matters more complicated, the language in the order does not address whether employees who work part time on government contracts will accrue paid leave based on all of their hours worked or just on the hours worked on a government contract. This will mean more administrative headaches for employers.

The order guarantees that employees who work on government contracts can get at least 56 hours (7 days) a year. But upon a closer reading, the language the order mandates that for every 30 hours worked, an employee must be given 1 hour of paid sick leave. If employers do not carefully draft their leave policies, an employee who works overtime or 40 hours a week could get more than 7 days a year of paid sick time.

Employer can prevent the accrual of more than 7 days a year by setting a limit on the amount of paid sick leave that can be accrued in a year. But the order requires employers to allow employees to carry over their unused accrues sick time. The language in the executive order suggests that employers cannot place a limit on the amount of unused sick time carries over from year to year. While an employee may only accrue 7 days a year, a long-time employee may accrue weeks of paid leave if that employee does not use his or her accrued leave for several years.

This executive order will create administrative challenges to employers. Employers must act quickly to review their leave policies for compliance with this new executive order. The order became effective immediately, and depending on the type of contract or when the solicitation for a contract was issued, some contractors may have to make these changes immediately. Employers that fail to include the required language risk having the government forgo payment under the contract.