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Obama EO to require federal contractors to grant paid sick leave

September 8th, 2015  |  Lisa Milam

By Lisa Milam-Perez, J.D.

Emphatically commemorating the Labor Day holiday, President Obama on Monday issued an executive order requiring federal contractors to offer their employees up to 7 days of paid sick leave per year. The directive, issued on September 7, will benefit an estimated 300,000 employees of federal government contractors and subcontractors, including lower-tier subcontractors.

“We are the only advanced country on Earth that doesn’t guarantee paid sick leave or paid maternity leave to our workers,” the fact sheet notes, quoting the President’s last state of the union address by way of explanation. “And that forces too many parents to make the gut-wrenching choice between a paycheck and a sick kid at home.”

Requirements. Under the EO, employees of federal contractors and subcontractors will earn a minimum of 1 hour of paid sick leave for every 30 hours worked, according to a fact sheet released by the White House. A contractor may not limit annual paid sick leave accrual at less than 56 hours; contractors are free to offer more generous leave amounts at their discretion, however. Workers may use the paid sick leave to care for themselves or a family member, or for absences resulting from domestic violence, sexual assault, or stalking.

The paid sick leave requirement is in addition to a contractor’s obligations under the Service Contract Act and Davis-Bacon Act. Contractors may not receive credit toward their prevailing wage or fringe benefit obligations for any paid sick leave provided in satisfaction of the requirements of this order, the EO provides.

The EO also provides that contractors may not interfere with or discriminate against an employee for taking (or attempting to take) paid sick leave “or in any manner asserting, or assisting any other employee in asserting” their leave rights under the directive.

The EO directs the Secretary of Labor to issue regulations enforcing the EO by September 30, 2016, including setting forth exclusions from the requirements where appropriate, as well as recordkeeping requirements as needed to enforce the provision. The Secretary also will have authority to investigate potential violations of the EO and obtain compliance with the measure, including its proscriptions on discrimination or interference.

Rationale. According to the White House, the EO will bring benefits packages offered by federal contractors in line with leading firms, “ensuring they remain competitive in the search for dedicated and talented employees.” The directive also will “protect the public health of employees of federal contractors, their customers, and clients by ensuring employees are allowed to stay home when they have communicable diseases.”

An estimated 44 million private-sector workers—about 40 percent of the total private-sector workforce—lack access to paid sick leave, with low- and middle-income workers far less likely to have paid sick leave than high-income workers. And, while roughly 60 percent of workers can take unpaid, job-protected FMLA leave for more extended absences, many workers are without coverage for shorter-term health care needs, the White House pointed out, “and others may not be able to afford to stay home sick if it means the loss of pay.” The White House also cited research showing that employers enjoy reduced turnover and greater productivity by offering paid sick days and family leave. “These policies can benefit our economy by fostering a more productive workforce.”

As for the impact of such a mandatory directive? The administration pointed to the example of Connecticut, which in 2011 enacted a measure requiring most employers in the state to grant paid sick leave. And most Connecticut employers reported “no effects or modest effects of the new law on the bottom line.”

Calling on Congress. The President also was poised to “renew his call on Congress to pass legislation expanding paid sick and family leave,” according to the White House. He was slated to do so September 8 in Boston, where the city council last spring passed a paid parental leave ordinance, and where Massachusetts voters overwhelmingly approved state-wide paid sick leave, which took effect July 1.

Specifically, Obama once again will ask Congress to pass the Healthy Families Act, which would require employers with 15 or more employees to offer up to 7 paid sick days per year, or to pass other federal legislation “guaranteeing every working American paid family and medical leave to care for a new child, a seriously ill family member, or their own serious illness.” And he will urge other states and municipalities to follow the lead of Boston, and Massachusetts, and other state and local governments that have similarly expanded paid leave for private employees.

Also as part of the EO rollout, the DOL will release a report that explores “the costs to workers, families, businesses, and the nation of not taking action to expand paid family and medical leave to millions of workers without it.”

Building on prior steps. The EO builds on previous steps taken by the administration to expand access to paid employee leave, the White House noted. In January, by way of a presidential memorandum, Obama directed the federal government to advance up to 6 weeks of paid sick leave in connection with the birth or adoption of a child, or for other sick leave-eligible uses, and called on Congress to pass legislation giving federal employees 6 additional weeks of paid parental leave. Also, the president’s FY 2016 budget includes over $2 billion to encourage states to establish paid family and medical leave programs.

The administration also pointed to the Lilly Ledbetter Fair Pay Restoration Act—the first bill signed into law by Obama—and the President’s continued push for passage of the Paycheck Fairness Act. In addition, the White House cited several previous executive orders strengthening equal pay laws and promoting pay transparency, and ensuring federal contractor compliance with key labor and employment laws (known colloquially as the federal contractor “blacklisting” rule).

Mixed response. Not surprisingly, Obama’s directive grew a mixed reaction in Congress.

“I strongly support this Executive Order to expand access to paid sick days so the employees of federal contractors can take care of themselves and their families when they are sick,” said Sen. Patty Murray (D-Wash.), ranking member off the Senate HELP Committee. “Access to paid sick days is a basic worker right, and it is essential to increasing economic stability and security.” Murray pledged to continue pushing for passage of the Healthy Families Act, which would allow workers to earn up to 7 days of paid sick leave a year. “[N]o worker should have to sacrifice a day’s pay, or their job altogether, just to take care of themselves or their sick child.”

In a joint statement, House Education and the Workforce Committee Chairman John Kline (R-Minn) and Workforce Protections Subcommittee Chairman Tim Walberg (R-Mich) decried the President’s move, noting that Republicans have long championed comp-time legislation, which would allow workers to accrue paid time off (in lieu of overtime pay)—an approach that would meet the goals of employee flexibility to care for self and family “without more government mandates and executive orders.”

“Unfortunately, a commonsense solution has been stymied by Democrats beholden to union bosses who want to deny workers the right to choose what’s best for their families,” the Republicans charged. “This announcement reflects another missed opportunity to advance real reforms for working families, and it will make it even harder for small businesses to do business with the federal government.”

Equal pay reg. In its fact sheet, the White House also announced that the DOL will publish a final rule this week prohibiting federal contractors from discriminating against employees and job applicants who choose to discuss their compensation. The rule, which is being promulgated under an April 2014 Obama EO, does not compel workers to discuss their pay, but it serves to encourage pay transparency, making it easier for workers to spot pay discrimination and seek appropriate remedies.