A draft executive order would require paid leave for employees of many federal contractors.  The “confidential” draft order, which was labeled “pre-decisional and deliberative,” was obtained and reported by The New York Times on August 5, 2015.

The draft order would require covered federal contractors and subcontractors to provide a minimum of 56 hours of annual paid leave to employees who are either sick or seeking medical attention, including paid leave for “family care,” which is defined broadly.  The draft order would also apply to absences from work as a result of domestic violence, sexual assault, or stalking, provided the absence is used for one of several enumerated purposes.  Unused leave would not expire and would instead carry over from year to year, with employees accruing at least one hour of paid leave for every 30 hours worked.  In addition, leave would need to be reinstated for employees rehired by a covered contractor within 12 months after a job separation.

Where the need to use leave is foreseeable, paid leave must be provided if the employee provides at least seven calendar days’ notice of the need for leave.  Contractors would be permitted to require medical certifications if the employee’s leave lasts three or more consecutive workdays; however, employees would have 30 days from the first day of leave to provide such a certification.

The draft order’s broad provisions have been compared to President Obama’s February 2014 minimum wage executive order, which was implemented earlier this year and significantly increased the minimum wage for federal contractor employees to $10.10 per hour.  Like the minimum wage executive order, the paid leave executive order would apply to all construction contracts covered by the Davis-Bacon Act, service contracts covered by the Service Contract Act, concession contracts, and contracts to provide services on federal property for federal employees, their dependents, or the public.

The draft order, however, makes clear that the new paid sick leave requirements are in addition to contractors’ existing obligations under the Davis-Bacon Act and Service Contract Act, and that the order would not affect existing requirements that contractors pay the “prevailing wage” of the area in which the work is being done.  Moreover, the draft order would prohibit employers from making paid leave contingent on the employee finding a replacement worker.

If the draft order is implemented, it would be President Obama’s thirteenth executive order pertaining to federal contractors.  The draft executive order, as well as the stream of recent executive orders that impose heightened requirements on companies conducting business with the federal government, reflects the administration’s desire to achieve its policy goals despite congressional gridlock.  While the draft order is intended to improve working conditions for employees of federal contractors, it may result in a significant increase in the cost of doing business with the government.  As we have discussed, four government contractor associations recently wrote a letter to the White House asking the administration to stop issuing directives pertaining to government contracting, noting that “nearly thirty cents of every contract dollar goes toward compliance with unique government regulations.”

If the draft order becomes final, affected contractors will need to expand their compliance policies, and should perhaps plan on an increased cost associated with such compliance.  For example, contractors will need to make sure that supervisors are adequately trained to handle requests for paid leave properly to avoid retaliation accusations and lawsuits.

The draft order directs the Department of Labor to promulgate regulations to enforce the executive order’s requirements by September 30, 2016.  If implemented, the draft order would take effect in 2017.