Capitol Hill

The Obama administration continues its avalanche of regulations placed on contractors who work on federal projects. This year alone, the administration added rules that increase the minimum wage and disclosure of labor violations. And now, a recently finalized rule will require federal contractors to provide paid sick leave to employees.

When the rule first was proposed, NRCA filed detailed comments and asked the proposed rule be withdrawn. NRCA highlighted a number of its members' concerns, including increased labor costs, compliance and paperwork burdens, adding an unknown variable into the bidding process and disruptions in daily operations. The final rule acknowledged a few of NRCA's concerns, but no changes were made. This is not surprising given this rule was a result of an Executive Order issued by President Obama.

The specifics

The rule goes into effect Jan. 1, 2017, and is estimated to provide paid sick leave to 1.1 million workers. NRCA members will be subject to this regulation through procurement contracts for construction on federal properties that adhere to the Davis-Bacon Act. Under this final rule, employees whose wages are determined by the Davis-Bacon Act, including employees who qualify for an exemption from the Fair Labor Standards Act's minimum wage and overtime provisions, will qualify for paid sick leave.

Employees will accrue one hour of paid leave for every 30 hours worked on or in connection with a covered contract and only be allowed to use this time while on a covered contract. Employees will not accrue any hours while working on private contracts. The rule allows for employees to accrue up to 56 hours of paid sick leave during the year. An employer can frontload the full 56 hours to employees at the start of the employment contract but is not required to do so. An employee is eligible to roll over a maximum of 56 hours to the following year.

Employees can use paid sick leave for a variety of reasons, including recovering from a personal illness or injury; doctor's appointments, including preventive visits; caring for an ailing family member (child, spouse or parent); and purposes resulting from being the victim or assisting a family member who is a victim of domestic violence, sexual assault or stalking. As noted, the mandate requires even those who work "in connection with" a covered contract to earn paid sick leave. This could be someone who is not directly at a job site but whose work is integral to the covered contract.

A compliance nightmare

Employers subject to the rule will have to address a host of issues. Employers are required to notify employees of this new benefit as well as the amount of paid sick leave hours earned each pay period. Employers also must allow employees to use leave in small increments, such as one hour. Upon separation of employment, accrued paid sick leave would not be required to be paid to the departing employee.

Businesses that already have a paid time-off benefit structure in place may continue their current policies as long as they meet the hours and reasons for taking leave detailed in the rule. Otherwise, employers will need to track employees' hours closely to ensure they are accurately counting which hours their employees are working on or in connection with a covered contract.

Hours earned also follow employees from contract to contract. If an employee works on a covered contract earning paid sick leave hours, moves to a noncovered contract for a few months and returns to a new covered contract, the hours earned at the first covered contract would be eligible to be used as long as the employee works for the same employer and the gap between covered contracts does not exceed 12 months.

The final rule works with existing agreements made through collective bargaining agreements and multiemployer plans. The final rule does not apply to employees working on contracts covered by a collective bargaining agreement that provides at least 56 hours of paid sick time or paid time off that can be used for health-related reasons until Jan. 1, 2020, or the date the collective bargaining agreement terminates, whichever is sooner. The final rule permits contractors to fulfill their obligations under the rule jointly with other contractors by using multiemployer plans to provide access to paid sick leave according to the final rule's requirements.

Be prepared

If you perform work on federal projects, review your current leave policy and prepare for the new requirements that go into effect Jan. 1, 2017.

Andrew Felz is NRCA's manager of federal affairs.