Executive Order Would Require Federal Contractors to Provide Paid Sick Leave

By Cris Naser

On Sept. 7, 2015, President Obama signed Executive Order 13706 directing federal government executive departments and agencies to ensure that effective Jan. 1, 2017, new procurement contracts include a provision specifying that employees working on covered federal contracts earn up to seven days (56 hours) of paid sick leave each year. Workers will earn an hour of paid leave for every 30 hours of work and can use this leave to care for themselves or family members. The Department of Labor is further instructed to issue rules to implement this executive order by September 30, 2016. While it does not appear to us that this executive order will apply generally to banks, we must wait for the regulations before any determination can be made.

Covered Absences
Under E.O. 13706, paid sick leave earned may be used by an employee for an absence resulting from:

  • Illness, injury, or medical condition;
  • Obtaining diagnosis, care, or preventive care from a health care provider;
  • Caring for a child, a parent, a spouse, a domestic partner, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship who has need for diagnosis, care, or preventive care, or is otherwise in need of care; and
  • Domestic violence, sexual assault, or stalking.

Workers can carry over unused leave from year to year, and unused leave will be reinstated for employees rehired by a covered contractor within 12 months after a job separation.

Covered Contractors
E.O. 13706, at Section 6(d), expressly defines the four categories of federal contractors that will be covered. Specifically, E.O. 13706 applies only to:

  • A new contract or contract-like instrument … if:
    • It is a procurement contract for services or construction;
    • It is a contract or contract-like instrument for services covered by the Service Contract Act;
    • It is a contract or contract-like instrument for concessions, including any concessions contract excluded by Department of Labor regulations at 29 C.F.R. 4.133(b); or
    • It is a contract or contract-like instrument entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public. . .

Thus, the scope of E.O. 13706 appears to apply to “procurement contracts” related to traditional federal agency services and construction activities. These categories are the same as those in the executive order on minimum wage finalized last year. It is possible that banks with offices on federal buildings or military bases may be impacted by E.O. 13706, but we will have to see what the regulations say.