DOL Requires Paid Sick Leave for Fed. Contractors

March 2, 2016

AA017956On Feb. 24, the Department of Labor (DOL) issued a proposed rule that requires federal contractors, subcontractors, and certain parties who contract with the Federal Government to offer their employees at least seven paid sick days per year.

The rule implements a September Executive Order from President Barack Obama. Specifically, on Sept.7, 2015, President Obama signed Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors. The Executive Order requires certain employers that contract with the Federal Government to provide their employees with up to seven days of paid sick leave annually, including for family care and absences resulting from domestic violence, sexual assault, and stalking. The Executive Order directs the Secretary of Labor to issue regulations to implement the Order’s requirements by Sept. 30, 2016 and to enforce it in contracts that begin in 2017.

The DOL estimates the rule will expand paid sick leave to 828,000 people, 437,000 of whom previously had no paid sick leave option. The DOL also estimates that the proposed rule will cost each small business $150-$650 for first year in implementation costs and payroll costs, and assumes a human resources workers will spend an additional fifteen minutes per affected employee annually on ongoing administrative costs.

The Department published a Notice of Proposed Rulemaking (NPRM) on Feb. 25, 2016, with a 30-day comment period, due to the DOL by March 28, 2016.

To read the comment on this rule, please click here. You can also find an Overview of the Proposed RuleFact Sheet, and FAQs.

While NSBA is still reviewing this proposed rule, any time a new rule is put in place employers endure the burden of upfront implementation costs, as well as recurring costs as employees gradually become covered. As each employee is affected, the business will need to spend time and resources updating their accounting systems used to track paid sick leave. Small businesses may even have to keep additional records for those affected employees and adjust scheduling—all of which adds to administrative costs. As it is, smaller businesses disproportionately face higher annual regulatory costs of $10,585 per employee per year. A small business’ ability to operate efficiently and free of unnecessary regulatory burdens is critical for it to compete and create jobs across the country.