Federal Contractor Alert: White House Planning Another Executive Order -- This Time Mandating Paid Sick Leave

As revealed by the New York Times on August 5, 2015, the White House is presently circulating a draft Executive Order mandating paid sick leave benefits for employees of the vast majority of federal contractors. According to the draft, which is marked "Pre-decisional and Deliberative," the objective of the Executive Order is to "improve the health and performance of employees of Federal contractors" and "ensuring [Federal contractors] remain competitive employers in the search for dedicated and talented employees." Below are some key highlights of the draft Order:

Applicability

As drafted, the Executive Order would only apply to certain new federal contracts after the anticipated start date of January 1, 2017; and would apply to (1) construction contracts covered by the Davis-Bacon Act; (2) contracts for services covered by the Service Contract Act; (3) concessions contracts; and (4) contracts in connection with federal property or lands and related to offering services for federal employees, their families, or the general public. The proposed Order would also require subcontractors under such contracts to provide paid sick leave to any of their employees performing work on the contract.

Accrual and Carryover of Sick Leave

As provided in the draft, prime contractor and subcontractor employees would be entitled to accrued paid sick leave at a rate of one hour for every 30 hours worked. The draft does not appear to distinguish between part-time and full-time employees. Contractors would not be permitted to cap leave time accrued below 56 hours per year, i.e., seven days of leave. All accrued and unused sick time during a calendar year would carry over to the following years, and would be portable to a subsequent employer (so long as employed within 12 months of prior separation). 

Permitted Uses of Sick Leave

As currently styled, covered employees would be permitted to use paid sick leave for: (1) a physical or mental illness, injury, or medical condition; (2) obtaining diagnosis, care, or preventative care from a health care provider; (3) caring for a child, parent, spouse, domestic partner, or any other individual related by blood or affinity, and who has any of the needs listed in (1) or (2) above; and (4) absence resulting from domestic violence, sexual assault, or stalking, if the absence is a result of seeking medical attention, obtaining counseling, seeking relocation, seeking assistance from a victim services organization, or taking related legal action.

Requesting Leave

The draft proposal states that covered employees would have to request paid sick leave at least seven calendar days in advance "where the need is foreseeable" or, if not, "as soon as is practicable." Requests could be oral or in writing. In addition, covered employees would be expected to provide their employer with the expected duration of the leave. Federal contractors could only require health care provider certification if the absence is for three or more consecutive days and is related to a medical condition; or, where the absence is related to domestic violence, sexual assault, or stalking, from an "appropriate individual or organization."

Discrimination and Interference Prohibitions

Covered employers under the proposed Order would be prohibited from interfering or discriminating against any employee for using, or attempting to use, sick leave covered by the Executive Order. Additionally, the proposal prohibits employers from discriminating against an employee who assists another employee in asserting rights under the proposed Order.

Implementing Regulations

The draft Order requires the Secretary of Labor to issue implementing regulations by September 30, 2016, and for the Federal Acquisitions Regulatory (FAR) Council to follow suit 60 days thereafter. The Executive Order would only apply to contracts, and related subcontracts, where the contract solicitation is released after January 17, 2017.

Thoughts and Observations

When released, the proposed Order would continue the Obama Administration's recent imposition of labor-related mandates on the federal contracting community. Since early 2014, the Administration has issued Executive Orders mandating federal contractor minimum wage; pay transparency and reporting; as well as Executive Orders requiring contractors whose federal contracts exceed $500,000 to report prior adverse findings for violations of enumerated federal and state laws governing pay, discrimination and safety and preventing certain contractors from have pre-dispute arbitration agreements; prohibiting employers from maintaining policies prohibiting employees from discussing their wages; and LGBT non-discrimination requirements. Many of these actions have followed unsuccessful attempts by the White House to convince Congress to pass laws with similar mandates on all employers. Not likely coincidently, the four major trade associations representing the majority of federal service contractors, the Aerospace Industries Association, the National Defense Industrial Association, the Professional Services Council, and the Information Technology Industry Council, sent a letter dated August 3, 2015 to the White House, asking for at least a temporary halt to the Administration's efforts, arguing the Administration's actions have imposed significantly new and costly financial and regulatory burdens on the federal contracting community, many of which serve to increase the cost of services provided to the federal government. Notably, the draft Order does not cite any authority supporting the proposition that federal contract employees are any less healthy than other employees or that federal contractors are as a general proposition falling behind in the competition for the best and brightest employees. We would anticipate that a healthy debate will follow in the coming weeks and months as this Executive Order is released and implemented.

If you have any questions regarding how these Executive Orders affect your federal contracts or subcontracts, please contact Bret Wacker at bwacker@clarkhill.com | (202) 772-0906; Tom Brady at tbrady@clarkhill.com | (313) 965-8291; Jeff Gallant at jgallant@clarkhill.com | (313) 967-4071; or another member of Clark Hill's Government Contracts, Labor and Employment or Construction Practice Groups.