By: Connie Maniscalco on March 2nd, 2016

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Executive Order 13706 Review: How Federal Contractors Can Best Prepare

Risk Management | Benefits

Notice of Proposed Rulemaking: Establishing Paid Sick Leave for Federal Contractors

On Wednesday, February 24, 2016 the Department of Labor’s Wage and Hour Division announced the release of Notice of Proposed Rulemaking (NPRM) to implement Executive Order (EO) 13706 Establishing Paid Sick Leave for Federal Contractors.  Executive Order 13706 was signed by President Obama on Labor Day of 2015 and requires federal government contractors and subcontractors to provide up to seven days of paid sick leave a year to exempt and non-exempt employees working on government contracts.

paid sick leaveMore specifically:

  • One hour of paid sick leave would be accrued for every thirty 30 hours worked, up to 56 hours in a year or at any point in time;
  • Leave would be available for the employee’s own needs, to care for a family member, or to address needs if the employee or a family member or loved one is the victim of domestic violence;
  • Unused paid sick leave would carry over, and be reinstated should the employee leave and return to work within a year; and
  • Cash out of unused paid sick leave upon termination is not required.

These requirements would apply to employers entering into covered contracts after January 1, 2017.  The same government contractors with contracts covered by EO 13658, Establishing a Minimum Wage for Contractors will now also be required to follow the requirements of EO 13706.

So, what should you be doing now in anticipation of this new proposed rule?

5 Tips to Prepare for Paid Sick Leave:

  1. Review your current Paid Time-Off (PTO) policies or vacation and sick leave policies to establish the impact, if any, to the bottom line if your current policies do not meet these proposed thresholds.
  2. For any new business you are considering, ensure your fringe rate is sufficient to cover the additional costs that may be incurred due to this proposed rule.
  3. Ensure you have a technology solution if possible or at the very least have a process in place to capture the sick leave accrual based on hours worked by the affected employees.
  4. Re-evaluate your auditing processes or if need be, establish an auditing process to ensure sick leave balances are carried forward from one year to the next and the balances are correct.
  5. Communicate any proposed policy changes that may be required as a result of this proposed rule to Senior Management now.

The public comment period for this proposed rule is open until March 28th. If you are a government contractor potentially affected by this Executive Order, you can respond with questions and/or concerns now about the impact to your business and the federal contracting community.