News & Events

Heads Up For Federal Contractors

Federal contractors and subcontractors need to be aware of two recent actions by the Administration that are sure to have an impact on their businesses.

Paid Sick Leave. First, on Labor Day, September 7, 2015, President Obama signed an Executive Order requiring federal contractors to provide paid sick leave for their employees, and to ensure that such provisions are included in subcontracts. The Order requires federal contractors and their subcontractors to allow employees to accrue sick leave at no less than one hour per every 30 hours worked, which must be allowed to be accrued up to 56 hours and carried over from year to year.

The time may be used for the employee’s physical or mental illness, injury or condition, including obtaining a diagnosis, care or preventative care from a health care provider. It also may be used to care for a child, parent, spouse, domestic partner, “or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.” In addition, the accrued sick leave can be used for issues related to domestic violence, sexual assault or stalking, if the leave is for illness, injury, diagnosis or care, or if it is: (1) to seek counseling; (2) to seek relocation; (3) to seek assistance from a victim services organization; (4) to take related legal action; or (4) to assist a relative, as defined above.

If an employee leaves or is terminated from employment, the federal contractor need not pay out any accrued sick leave, but accrued sick leave must be reinstated if the employee is rehired within twelve months. Accordingly, contractors will need to keep records so that such adjustments can be made.

Federal contractors will not be allowed to force employees taking sick leave to find replacements to cover for them while they are out.

Employees will be required to request leave orally or in writing, and provide the expected duration of the leave at least seven days in advance where foreseeable, and as soon as practicable otherwise. The federal contractor will only be allowed to require a doctor’s certification for absences of three or more consecutive work days, and must allow the employee up to thirty days to provide the certification.

Federal contractors may not interfere with or discriminate against any employee taking or trying to take sick leave, or asserting or helping another employee to assert any rights that are provided by this Executive Order.

The Executive Order requires that regulations concerning paid leave be issued by September 2016, with enforcement to begin within sixty days of the issuance of the regulations for contracts to be entered after January 1, 2017.

Non-Retaliation for Disclosure of Compensation Information. Previously, on April 8, 2014, President Obama issued Executive Order 13665 prohibiting federal contractors and their subcontractors from retaliating against employees for disclosing compensation information. Now, the Office of Federal Contract Compliance Programs (“OFCCP”) has issued its final rule to implement the Executive Order. The rule will be effective January 11, 2016, and requires that federal contractors and subcontractors not retaliate against employees for disclosing compensation information.

Under the regulations, compensation includes salary, wages, overtime, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and retirement. The term “compensation information” is broadly defined to include: “the amount and type of compensation provided to employees or offered to applicants, including, but not limited to, the desire of the contractor to attract and retain a particular employee for the value the employee is perceived to add to the contractor’s profit or productivity; the availability of employees with like skills in the marketplace; market research about the worth of similar jobs in the relevant marketplace; job analyses, descriptions, and evaluations; salary and pay structures; salary surveys; labor union agreements; and contractor decisions, statements and policies related to setting or altering employee compensation.” 41 C.F.R. § 60-1 (Fed. Reg. September 11, 2015).

Federal contractors and their employees may not discriminate against any employee or applicant for employment because the employee or applicant has inquired about, discussed, or disclosed his or her compensation, or the compensation of another employee or applicant. This does not apply, however, to employees who have access to compensation information as part of the employee’s essential job functions, unless the disclosure is in response to a formal complaint or charge, or in furtherance of an investigation, proceeding, hearing, or action, including an investigation by the employer, or where it is consistent with the federal contractor’s duty to provide information.

The regulations specify language that must appear in any subcontracts, as well as nondiscrimination language that must be posted and provided to any labor unions with which there is a collective bargaining agreement.

The regulations are effective beginning January 11, 2016.

If you have any questions about this or any other employment or labor law issue, please contact Whitney Rahman at (717) 509-7237 or at
**This update is provided for informational purposes only and
should not be construed as legal advice or as creating an
attorney-client relationship where one does not already exist**