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On September 29, 2016, the Department of Labor (“DOL”) issued a rule requiring federal contractors to provide sick leave for their employees. The rule takes effect on January 1, 2017. The rule will apply to new federal contracts, wholly or partially performed in the United States, issued on or after January 1. Exclusions from the rule include: grants, contracts and grants with Native American Tribes, procurement contracts for construction not covered under the Collective Bargaining Agreement and contracts valued under $2,500, which are exempted from coverage under the Service Contract Act The rule also has a temporary and limited exclusion for individuals whose covered work is governed by a collective bargaining agreement, with that exclusion expiring January 1, 2020 or when the CBA ends, as long as the CBA provides at least seven days of paid sick leave per year.


The new rule requires contractors to give their employees at least one hour of paid sick leave for every 30 hours worked on a federal contract, up to approximately seven 8-hour days. There is a broad set of circumstances under which employees can use their leave. Employees can use the leave for their own illnesses, preventive care, or other health care needs, or to care for family members who are ill or seeking preventive care, as well as for absences resulting from sexual assault, stalking, or domestic violence. Contractors are prohibited from retaliating or discriminating against their employees for using or attempting to use sick leave and cannot require the employee to find a replacement in order to take their sick leave.


The rule does allow employers flexibility as they start implementing the new leave time rule, due to the administrative burden of the new requirements. The rule allows employers and employees to frontload leave time or accrue it over time. Paid sick leave accruing under this rule carries over from one year to the next and can be reinstated for employees rehired by a contractor within 12 months after separation from the employer. Contractors are not required to reimburse accrued, unused sick leave to employees upon completion of a job or separation.


This rule provides sick leave for the first time to a significant number of employees of federal contractors. Federal contractors are encouraged to familiarize themselves with the rule and make arrangements to ensure that their leave policies are in accordance with the rule.

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