If you’re a federal contractor that pays the higher minimum wage, final regulations require you to provide all employees who work on or in connection with federal contracts, including, with 56 hours or seven days of paid sick leave per year. Exception: Employees who spend less than 20% of their time working in connection with all federal contracts.
The regs become effective with new or renewing contracts signed on or after Jan. 1, 2017. (81 F.R. 67598, 9-30-16)
Accrual rates and front-loading. Employees accrue one hour of paid sick leave for every 30 hours they work on or in connection with a federal contract. Hours worked are defined in the Fair Labor Standards Act. If, say, they work 40 hours during a week, the remaining 10 hours are counted toward the next week’s accrual. Accruals are calculated by the earlier of monthly or at the end of every pay period. Employees must be informed of their accruals; notations on pay stubs will suffice.
Alternatively, you may front-load 56 hours of paid time off at the beginning of employees’ accrual years—a 12-month period that can begin on employees’ anniversary dates, the date a federal contract begins, the first day of your fiscal year or any other date you choose. Snag: Whatever accrual year you choose must be applied consistently to all similarly situated employees.
You don’t have to cash out terminating employees’ unused accrued leave, but employees who return to work within 12 months must have their leave reinstated. If you do cash them out, you don’t have to reinstate leave upon rehiring.
Carryovers and caps. Employees can carry over unused accrued time into the next year, and that time isn’t counted toward the next year’s accruals. However, you may cap employees’ accruals at 56 hours at any point in time. Employees who carry over 16 hours, for example, accrue 40 hours during the next year. If they take leave during that next year, their accruals kick in again, up to the 56-hour cap.
If you front-load employees’ time, and employees carry time over, you’re still on the hook for allocating 56 hours for the next accrual year, but the 56-hour cap also still applies.
Impact on other laws. You can satisfy your obligation to provide paid sick leave if your PTO plan is at least as generous as the regs and employees can use their time off for the same reasons. Likewise, you must continue to comply with a state or local paid sick leave law that’s more generous than these regs.
As for overlaps with the, the regs say that employees may substitute paid leave for unpaid (i.e., paid leave runs concurrently with FMLA leave). For time off that’s designated as FMLA leave, and for which employees use paid sick leave, all notices and certifications that are required under the FMLA apply to paid leave.