Final Federal Contractor Sick Leave Rule Published

October, 2016

By Ryan Orr, JD, HR and Compliance Consultant
Cascade Employers Association
[email protected]

On September 30, 2016, the Department of Labor issued its final rule regarding paid sick leave requirements for federal contractors.  The law applies to the following contracts and subcontracts entered into on or after January 1, 2017: Construction contracts covered by the Davis-Bacon Act; service contracts covered by the Service Contracts Act; concessions contracts; and contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.  The requirements do not apply to the furnishing of materials, supplies, articles, or equipment under the Walsh Healey Act.

Notable requirements of the final rule include:

  • One hour of sick leave must accrue for every 30 hours actually worked (does not include paid time off taken) on a covered contract or subcontract, up to 56 total hours per year. Contractors may also frontload 56 hours per year to employees.

  • All unused leave must be carried over at the end of a leave year. However, contractors may limit an employee to a total of 56 hours in the employee's leave bank at any given time. The only exception to this is if an employer frontloads 56 hours at the beginning of the year. In that instance, the employee would have the sum of the 56 hours of frontloaded time and any time carried over from the prior year.

  • Employees may use leave for their own illness or injury, a family member or a significant other's injury or illness, and for domestic violence/stalking/criminal assault reasons. Note that this is more expansive than Oregon's law because it would include care for individuals who are not legally related to the employee. Finally, the definition of illness or injury is to be broadly interpreted and include minor injuries or illnesses, such as a cold.

  • Contractors are not required to payout any unused sick leave upon termination, but an employee who is rehired within 12 months must have any prior leave balances reinstated.

  • Employees must give at least a 7-day notice for foreseeable leave situations, but if that is not possible or the leave situation is unforeseeable, employees need provide only as much notice as practicable.

  • Contractors may request medical certifications only after more than 3 consecutive full days of absences. Unlike Oregon law, contractors may not require a medical certification based on a suspected pattern of abuse.

  • PTO programs may satisfy the requirements of this rule even if the employee uses some or all of the time off for vacation.

  • Contractors must inform employees at least once per pay period of their sick leave balances. This is greater than Oregon's once per quarter requirement.

  • Contractors may not require employees to take leave in increments of greater than 1 hour.

Another particular provision of note involves the interaction of these requirements with state or local sick leave laws. The rule states that contractors must continue to follow any provisions of those laws that offer greater benefits to an employee. Notably, in Oregon, that would include Oregon's more expansive list of reasons for taking leave (OFLA-qualifying reasons and certain public health emergencies).

Additionally, there is a limited exception under the new rule allowing contractors to not provide sick leave to individuals not working directly on a contract, but providing services necessary to the performance of the contract (i.e. admin.), and who spend less than 20% of their time on work related to the contract. However, because there is no similar exception in Oregon, employers would still be obligated to provide at least 40 hours of sick leave to an employee who meets this exception because of the requirements of the Oregon Sick Leave law.

For additional information about your compliance obligations under the new federal contractor sick leave rule, contact Cascade today.


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