Federal Contractors awoke to a Labor Day game-changer. President Obama signed an Executive Order on Monday, September 7th, 2015 mandating paid sick leave for employees working on federal contracts. This new mandate will affect all federal contracts beginning in 2017.Adding up the numbers, it seems that a worker would accrue one hour of paid leave for every 30 they work. Over a year this could add up to about 7 days of paid leave per year. Many federal contractors provide a measure of paid leave for their employees. However, an estimated 300,000 workers who are not receiving paid sick leave will be covered under this executive order. Unlike FMLA, this mandate carries not minimum number of employees an employer must have for paid sick leave to apply. This means even small employers with only a few workers will have to begin tracking and paying this benefit to their workers in 2017.
The actual employer cost of this new requirement is not fully known. But, the impact will be felt as small employers who normally do not budget for such occurrences are required to pay-up for about a week’s worth of extra wages and tax per year.
Complicating the issue even more is the Department of Labor’s latest guidance on how to determine who really is an employee vs. an independent contractor. Federal contractors who use “contractors” to accomplish the mission of their contract with the feds will see heightened scrutiny now that they have one more federal law they could be breaking by misclassifying a worker. The Heat is On!
Under the mandate, paid sick leave must be allowed for reasons such as:
- A physical or mental 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
- An absence resulting from domestic violence, sexual assault or stalking
Paid sick time will carry over from one year to the next and be reinstated for employees rehired by a covered contractor within 12 months after a job separation. The paid sick time would have to be provided in response to an oral or written request made (if possible but not required) at least seven calendar days in advance. Certification by a health care provider for paid sick time may be required only for paid sick time for three or more consecutive workdays and be provided no later than 30 days from the first day of the leave. The order also provides that its mandate shall not excuse noncompliance with any law, ordinance or collective bargaining agreement that requires greater paid sick time or leave rights.
So, there ya go! 300,000 down only 44 million to go. That is about how many workers in America still have no paid sick leave protection under federal law. Over the past year many states and even localities have enacted paid sick leave mandates. But, many have not leaving millions without financial protection for time off due to illness or other circumstances. The president also plans to encourage Congress to enact legislation that would require businesses with more than 15 employees to offer seven days of sick leave as well.
Notable is the provision for paid leave usage due to domestic violence, sexual assault or stalking. This is a wonderful provision most states have also written into their paid sick leave laws and is a big step forward in supporting the eradication efforts of this silent epidemic that actually costs employers over a billion dollars annually.
OK! That’s you breaking news update for this Labor Day. Party On!
Until Next Time, Be Audit-Secure!