The Future of Paid Sick Leave

Legal experts say an executive order mandating paid sick leave for federal contractors could be a sign of things to come for all U.S. employers. Here’s what employers need to know.

By Jill Cueni-Cohen

The Department of Labor recently announced a proposed rule to implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors. Signed by President Barack Obama on Sept. 7, 2015, and set to go into effect on Jan. 1, 2017, this executive order requires certain parties that enter into contracts with the Federal Government to provide covered employees with "up to 7 days of paid sick leave annually, including paid leave allowing for family care."

This new rule will be one step closer to paid sick leave for all American workers, says Department of Labor Secretary Tomas Perez. "While we have a ways to go to ensure every worker in America has paid sick leave, the executive order will provide additional paid sick leave to an estimated 828,000 workers. Nearly 437,000 of those currently receive no paid sick leave," he says.

Permissible uses for paid sick leave are so broadly defined in this new rule that federally contracted employers will be expected to accept virtually any excuse an employee gives them for missing work. According to the Department of Labor, the rule is designed to be broad and covers ". . . any illness, injury or medical condition, regardless of whether it requires attention from a healthcare provider or whether it would be a ‘serious health condition’ that qualifies for use of leave under the Family and Medical Leave Act."

Should a Republican be voted into office, the rule could be a rescinded, but labor and employment lawyer Andrew Turnbull at the Washington office of Akin Gump advises all organizations that have anything to do with federal contracts to prepare for the rule to go into effect on Jan. 1, 2017."I don’t think this will be the same as the other executive orders, which were very politically charged," he says, noting that means there are a number of states and local jurisdictions that have already passed paid-sick-leave legislation, and there is a likelihood that this executive order could remain in place. "It is becoming the norm across the board."

Rachel Arnedt, vice president of the Aon Health & Benefits Legal Consulting Group in New York, agrees that paid sick leave has become a trendy way for state and local authorities to help people get through rough times without losing their jobs. "It started with California and has really exploded in the past three years," she says, adding that there are currently several states such as Oregon, Connecticut, Vermont and cities such as New York City, Washington, D.C., Philadelphia and Seattle and others have paid-sick-leave laws in place or plans to enact them.

"Approximately 30 jurisdictions already have paid-sick-leave laws," she says.

Arnedt says most countries around the world have some form of national paid sick leave for workers. "There have been national efforts [in the United States] to pass a federal law that mandates paid sick leave, but it never goes anywhere," she says, adding that an increasing amount of states and cities have been stepping up to fill the void. "Each time one of these laws passes, it’s driven by a large coalition of non-profit groups -- like those wanting to raise the minimum wage -- that work with several legislators to get these paid sick leave laws passed."

Even if your organization doesn’t have any government contracts, make sure your organization isn’t working with companies that contract with the government. "The goal is to bring in as many employees as possible," says John Bosco, an employment partner at the Dallas office of business-litigation firm León Cosgrove.

When bidding on government contracts, companies should build the cost of paid sick leave into their bids. Bosco says that federal contract regulations can cause some companies to rethink working for the government. "Employers have to look at it from a risk-tolerance perspective," he says, noting that, under the rule, an employee’s use of paid sick leave must not be contingent on the employee’s finding a replacement, and contractors won’t be able to limit an employee’s use of accrued paid sick leave over the course of a year. The contractor also would not be able to limit the amount of leave an employee can use at one time. "The law was made with good intent, but the ramifications for businesses -- especially smaller companies -- are far-reaching."

All organizations should perform a robust evaluation of existing policies and procedures regarding paid leave, he says, including sick leave, paid time off and flex programs.

"Determine if it’s necessary for your organization to make changes, including other wage-and-hour rules regarding reporting and record-keeping," he says, adding that the coverage and scope of benefits will be broader under this rule than what most companies have now.

Companies can also use this time to look at recent state and local legislative decisions already in place that they may not have addressed or implemented yet. 

"New requirements can go under the radar until a complaint crops up," he says. "Be proactive and ahead of the curve by making sure your organization is compliant with the rules that are already out there."

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Apr 19, 2016
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