DOL Sick Leave Final Rule Expected

September 28, 2016

200334135-001The Department of Labor (DOL) is expected to release a final rule this week requiring federal contractors and subcontractors to provide their workers with at least seven days’ paid sick leave per year. The rule, which implements a,  2015 Executive Order, has completed the Office of Management and Budget (OMB) review process.

When the OMB completes its review of regulations it generally means one of three things: (1) the OMB approved the rule for final publication; (2) the OMB made revisions to the rule for review by the implementing agency prior to final publication; or (3) the OMB rejected the rule. It is unclear what action, if any, the OMB has taken with respect to the rule. However, the Executive Order requires the DOL to publish a final rule implementing the Order by Sept. 30, 2016 and to enforce it in contracts that begin in 2017. Therefore, many believe the OMB has approved the rule.

On Feb. 24, 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 leave annually, including for family care and absences resulting from domestic violence, sexual assault, and stalking. At that time, the DOL estimated that the rule would expand paid sick leave to 828,000 people, 437,000 of whom previously had no paid sick leave option. The DOL also estimated that the proposed rule would cost each small business $150-$650 for first year in implementation costs and payroll costs, and assumed a human resources workers will spend an additional fifteen minutes per affected employee annually on ongoing administrative costs.

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

NSBA was concerned with the proposed rule because 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.