[Federal Register Volume 81, Number 37 (Thursday, February 25, 2016)]
[Proposed Rules]
[Pages 9592-9671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03722]
[[Page 9591]]
Vol. 81
Thursday,
No. 37
February 25, 2016
Part II
Department of Labor
-----------------------------------------------------------------------
29 CFR Part 13
Establishing Paid Sick Leave for Federal Contractors; Proposed Rules
Federal Register / Vol. 81 , No. 37 / Thursday, February 25, 2016 /
Proposed Rules
[[Page 9592]]
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Office of the Secretary
29 CFR Part 13
RIN 1235-AA13
Establishing Paid Sick Leave for Federal Contractors
AGENCY: Wage and Hour Division, Department of Labor
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document proposes regulations to implement Executive
Order 13706, Establishing Paid Sick Leave for Federal Contractors,
signed by President Barack Obama on September 7, 2015, which requires
certain parties that contract with the Federal Government to provide
their employees with up to 7 days of paid sick leave annually,
including paid leave allowing for family care. Executive Order 13706
explains that providing access to paid sick leave will improve the
health and performance of employees of Federal contractors and bring
their benefits packages in line with model employers, ensuring that
Federal contractors remain competitive employers and generating savings
and quality improvements that will lead to improved economy and
efficiency in Government procurement. The Executive Order directs the
Secretary of Labor (Secretary) to issue regulations by September 30,
2016, to implement the Order's requirements. This proposed rule
therefore defines terms used in the regulatory text, describes the
categories of contracts and employees the Order covers and excludes
from coverage, sets forth requirements and restrictions governing the
accrual and use of paid sick leave, and prohibits interference with or
discrimination for the exercise of rights under the Executive Order. It
also describes the obligations of contracting agencies, the Department
of Labor, and contractors under the Executive Order, and it establishes
the standards and procedures for complaints, investigations, remedies,
and administrative enforcement proceedings related to alleged
violations of the Order. As required by the Order and to the extent
practicable, the proposed rule incorporates existing definitions,
procedures, remedies, and enforcement processes under the Fair Labor
Standards Act, the Service Contract Act, the Davis-Bacon Act, the
Family and Medical Leave Act, the Violence Against Women Act, and
Executive Order 13658, Establishing a Minimum Wage for Contractors.
DATES: Comments must be received on or before March 28, 2016.
ADDRESSES: You may submit comments, identified by Regulatory
Information Number (RIN) 1235-AA13, by either of the following methods:
Electronic Comments: Submit comments through the Federal e-
Rulemaking Portal http://www.regulations.gov. Follow the instructions
for submitting comments.
Mail: Address written submissions to Robert Waterman, Compliance
Specialist, Wage and Hour Division, U.S. Department of Labor, Room S-
3510, 200 Constitution Avenue NW., Washington, DC 20210.
Instructions: Please submit only one copy of your comments by only
one method. All submissions must include the agency name and RIN,
identified above, for this rulemaking. Please be advised that comments
received will become a matter of public record and will be posted
without change to http://www.regulations.gov, including any personal
information provided. Comments that are mailed must be received by the
date indicated for consideration in this rulemaking. For additional
information on submitting comments and the rulemaking process, see the
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION
section of this document. For questions concerning the interpretation
and enforcement of labor standards related to government contracts,
individuals may contact the Wage and Hour Division (WHD) local district
offices (see contact information below).
Docket: For access to the docket to read background documents or
comments, go to the Federal e-Rulemaking Portal at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Robert Waterman, Compliance
Specialist, Wage and Hour Division, U.S. Department of Labor, Room S-
3510, 200 Constitution Avenue NW., Washington, DC 20210; telephone:
(202) 693-0406 (this is not a toll-free number). Copies of this
proposed rule may be obtained in alternative formats (large print,
Braille, audio tape or disc), upon request, by calling (202) 693-0675
(this is not a toll-free number). TTY/TDD callers may dial toll-free 1-
877-889-5627 to obtain information or request materials in alternative
formats.
Questions of interpretation and/or enforcement of the agency's
regulations may be directed to the nearest WHD district office. Locate
the nearest office by calling the WHD's toll-free help line at (866)
4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time
zone, or log onto the WHD's Web site for a nationwide listing of WHD
district and area offices at http://www.dol.gov/whd/america2.htm.
SUPPLEMENTARY INFORMATION:
I. Electronic Access and Filing Comments
Public Participation: This proposed rule is available through the
Federal Register and the http://www.regulations.gov Web site. You may
also access this document via the WHD's Web site at http://www.dol.gov/whd/. To comment electronically on Federal rulemakings, go to the
Federal e-Rulemaking Portal at http://www.regulations.gov, which will
allow you to find, review, and submit comments on Federal documents
that are open for comment and published in the Federal Register. You
must identify all comments submitted by including ``RIN 1235-AA13'' in
your submission. Commenters should transmit comments early to ensure
timely receipt prior to the close of the comment period (date
identified above); comments received after the comment period closes
will not be considered. Submit only one copy of your comments by only
one method. Please be advised that all comments received will be posted
without change to http://www.regulations.gov, including any personal
information provided.
II. Executive Order 13706 Requirements and Background
On September 7, 2015, President Barack Obama signed Executive Order
13706, Establishing Paid Sick Leave for Federal Contractors (the
Executive Order or the Order). 80 FR 54697.
Section 1 of Executive Order 13706 explains that the Order seeks to
increase efficiency and cost savings in the work performed by parties
that contract with the Federal Government by ensuring that employees on
those contracts can earn up to 7 days or more of paid sick leave
annually, including paid leave allowing for family care. 80 FR 54697.
The Order states that providing access to paid sick leave will improve
the health and performance of employees of Federal contractors and
bring benefits packages at Federal contractors in line with model
employers, ensuring that they remain competitive employers in the
search for dedicated and talented employees. Id. The Order further
states that these savings and quality improvements will lead to
improved economy and efficiency in Government procurement. Id.
Section 2 of the Executive Order establishes paid sick leave for
Federal contractors and subcontractors. 80 FR 54697. Section 2(a)
provides that
[[Page 9593]]
executive departments and agencies (agencies) shall, to the extent
permitted by law, ensure that new contracts, contract-like instruments,
and solicitations (collectively referred to as ``contracts''), as
described in section 6 of the Order, include a clause, which the
contractor and any subcontractors shall incorporate into lower-tier
subcontracts, specifying, as a condition of payment, that all
employees, in the performance of the contract or any subcontract
thereunder, shall earn not less than 1 hour of paid sick leave for
every 30 hours worked. Id. Section 2(b) prohibits a contractor from
limiting the total accrual of paid sick leave per calendar year, or at
any point, at less than 56 hours. Id.
Section 2(c) explains that paid sick leave earned under the Order
may be used by an employee for an absence resulting from: (i) physical
or mental illness, injury, or medical condition; (ii) obtaining
diagnosis, care, or preventive care from a health care provider; (iii)
caring for a child, a parent, a spouse, a domestic partner, or any
other individual related by blood or affinity whose close association
with the employee is the equivalent of a family relationship who has
any of the conditions or needs for diagnosis, care, or preventive care
described in (i) or (ii) or is otherwise in need of care; or (iv)
domestic violence, sexual assault, or stalking, if the time absent from
work is for the purposes described in (i) or (ii), to obtain additional
counseling, to seek relocation, to seek assistance from a victim
services organization, or take related legal action, including
preparation for or participation in any related civil or criminal legal
proceeding, or to assist an individual related to the employee as
described in (iii) in engaging in any of these activities. 80 FR 54697.
Section 2(d) provides that paid sick leave shall carry over from
one year to the next and shall be reinstated for employees rehired by a
covered contractor within 12 months after a job separation. Id.
Under section 2(e), the use of paid sick leave cannot be made
contingent on the requesting employee finding a replacement to cover
any work time to be missed. 80 FR 54698. Section 2(f) provides that the
paid sick leave required by the Order is in addition to a contractor's
obligations under the Service Contract Act and Davis-Bacon Act, and
contractors may not receive credit toward their prevailing wage or
fringe benefit obligations under those Acts for any paid sick leave
provided in satisfaction of the Order's requirements. Id.
Section 2(g) explains that an employer's existing paid sick leave
policy provided in addition to the fulfillment of Service Contract Act
or Davis-Bacon Act obligations, if applicable, and made available to
all covered employees will satisfy the requirements of the Executive
Order if the amount of paid leave is sufficient to meet the
requirements of section 2 and if it may be used for the same purposes
and under the same conditions described in the Executive Order. Id.
Section 2(h) of the Order establishes that paid sick leave shall be
provided upon the oral or written request of an employee that includes
the expected duration of the leave, and is made at least 7 calendar
days in advance where the need for the leave is foreseeable, and in
other cases as soon as is practicable. Id.
Section 2(i) addresses when a contractor may require employees to
provide certification or documentation regarding the use of leave. 80
FR 54698. It provides that a contractor may only require certification
issued by a health care provider for paid sick leave used for the
purposes listed in sections 2(c)(i), (c)(ii), or (c)(iii) for employee
absences of 3 or more consecutive workdays, to be provided no later
than 30 days from the first day of the leave. Id. It further provides
that if 3 or more consecutive days of paid sick leave is used for the
purposes listed in section 2(c)(iv), documentation may be required to
be provided from an appropriate individual or organization with the
minimum necessary information establishing a need for the employee to
be absent from work. Id. The Executive Order notes that the contractor
shall not disclose any verification information and shall maintain
confidentiality about domestic abuse, sexual assault, or stalking,
unless the employee consents or when disclosure is required by law. Id.
Section 2(j) states that nothing in the Order shall require a
covered contractor to make a financial payment to an employee upon a
separation from employment for unused accrued sick leave. 80 FR 54698.
Section 2(j) further notes, however, that unused leave is subject to
reinstatement as prescribed in section 2(d). Id.
Section 2(k) prohibits a covered contractor from interfering with
or in any other manner discriminating against an employee for taking,
or attempting to take, paid sick leave as provided for under the Order,
or in any manner asserting, or assisting any other employee in
asserting, any right or claim related to the Order. Id.
Section 2(l) states that nothing in the Order shall excuse
noncompliance with or supersede any applicable Federal or State law,
any applicable law or municipal ordinance, or a collective bargaining
agreement requiring greater paid sick leave or leave rights than those
established under the Order. Id.
Section 3(a) of the Executive Order provides that the Secretary
shall issue such regulations by September 30, 2016, as are deemed
necessary and appropriate to carry out the Order, to the extent
permitted by law and consistent with the requirements of 40 U.S.C. 121,
including providing exclusions from the requirements set forth in the
Order where appropriate; defining terms used in the Order; and
requiring contractors to make, keep, and preserve such employee records
as the Secretary deems necessary and appropriate for the enforcement of
the provisions of the Order or the regulations thereunder. 80 FR 54698.
It also requires that, to the extent permitted by law, within 60 days
of the Secretary issuing such regulations, the Federal Acquisition
Regulatory Council (FARC) shall issue regulations in the Federal
Acquisition Regulation (FAR) to provide for inclusion in Federal
procurement solicitations and contracts subject to the Executive Order
the contract clause described in section 2(a) of the Order. Id.
Additionally, section 3(b) states that within 60 days of the
Secretary issuing regulations pursuant to the Order, agencies shall
take steps, to the extent permitted by law, to exercise any applicable
authority to ensure that contracts or contract-like instruments for
concessions and contracts entered into with the Federal Government in
connection with Federal property or lands and related to offering
services for Federal employees, their dependents, or the general
public, entered into after January 1, 2017, consistent with the
effective date of such agency action, comply with the requirements set
forth in section 2 of the Order. 80 FR 54699.
Section 3(c) specifies that any regulations issued pursuant to
section 3 of the Order should, to the extent practicable and consistent
with section 7 of the Order, incorporate existing definitions,
procedures, remedies, and enforcement processes under the Fair Labor
Standards Act, 29 U.S.C. 201 et seq. (FLSA); the McNamara-O'Hara
Service Contract Act, 41 U.S.C. 6701 et seq. (SCA); the Davis-Bacon
Act, 40 U.S.C. 3141 et seq. (DBA); the Family and Medical Leave Act, 29
U.S.C. 2601 et seq. (FMLA); the Violence Against Women Act of 1994, 42
U.S.C. 13925 et seq. (VAWA); and Executive Order
[[Page 9594]]
13658, Establishing a Minimum Wage for Contractors, 79 FR 9851 (Feb.
20, 2014) (Executive Order 13658 or Minimum Wage Executive Order). Id.
Section 4(a) of the Executive Order grants authority to the
Secretary to investigate potential violations of and obtain compliance
with the Order, including the prohibitions on interference and
discrimination in section 2(k) of the Order. 80 FR 54699. Section 4(b)
further explains that the Executive Order creates no rights under the
Contract Disputes Act, and disputes regarding whether a contractor has
provided employees with paid sick leave prescribed by the Order, to the
extent permitted by law, shall be disposed of only as provided by the
Secretary in regulations issued pursuant to the Order. Id.
Section 5 of the Executive Order establishes that if any provision
of the Order, or applying such provision to any person or circumstance,
is held to be invalid, the remainder of the Order and the application
of the provisions of such to any person or circumstances shall not be
affected thereby. Id.
Section 6(a) of the Executive Order provides that nothing in the
Order shall be construed to impair or otherwise affect (i) the
authority granted by law to an executive department, agency, or the
head thereof; or (ii) the functions of the Director of the Office of
Management and Budget (OMB) relating to budgetary, administrative, or
legislative proposals. 80 FR 54699. Section 6(b) states that the Order
is to be implemented consistent with applicable law and subject to the
availability of appropriations. Id. Section 6(c) explains that the
Order is not intended to, and does not, create any right or benefit,
substantive or procedural, enforceable at law or in equity by any party
against the United States, its departments, agencies, or entities, its
officers, employees, or agents, or any other person. Id.
Section 6(d) of the Executive Order establishes that the Order
shall apply only to a new contract or contract-like instrument, as
defined by the Secretary in the regulations issued pursuant to section
3(a) of the Order, if: (i) (A) It is a procurement contract for
services or construction; (B) it is a contract or contract-like
instrument for services covered by the Service Contract Act; (C) it is
a contract or contract-like instrument for concessions, including any
concessions contract excluded by Department of Labor (Department)
regulations at 29 CFR 4.133(b); or (D) it is a contract or contract-
like instrument entered into with the Federal Government in connection
with Federal property or lands and related to offering services for
Federal employees, their dependents, or the general public; and (ii)
the wages of employees under such contract or contract-like instrument
are governed by the DBA, SCA, or FLSA, including employees who qualify
for an exemption from the FLSA's minimum wage and overtime provisions.
80 FR 54699.
Section 6(e) states that, for contracts or contract-like
instruments covered by the SCA or DBA, the Order shall apply only to
contracts or contract-like instruments at the thresholds specified in
those statutes. 80 FR 54699-700. Additionally, Section 6(e) provides
that for procurement contracts in which employees' wages are governed
by the FLSA, the Order shall apply only to contracts or contract-like
instruments that exceed the micro-purchase threshold, as defined in 41
U.S.C. 1902(a), unless expressly made subject to the Order pursuant to
regulations or actions taken under section 3 of the Order. 80 FR 54700.
Section 6(f) specifies that the Order shall not apply to grants;
contracts and agreements with and grants to Indian Tribes under the
Indian Self-Determination and Education Assistance Act (Pub. L. 93-
638), as amended; or any contracts or contract-like instruments
expressly excluded by the regulations issued pursuant to section 3(a)
of the Order. Id. Section 6(g) strongly encourages independent agencies
to comply with the Order's requirements. Id.
Section 7(a) of the Executive Order provides that the Order is
effective immediately and shall apply to covered contracts where the
solicitation for such contract has been issued, or the contract has
been awarded outside the solicitation process, on or after: (i) January
1, 2017, consistent with the effective date for the action taken by the
FARC pursuant to section 3(a) of the Order; or (ii) January 1, 2017,
for contracts where an agency action is taken pursuant to section 3(b)
of the Order, consistent with the effective date for such action. 80 FR
54700. Section 7(b) specifies that the Order shall not apply to
contracts or contract-like instruments that are awarded, or entered
into pursuant to solicitations issued, on or before the effective date
for the relevant action taken pursuant to section 3 of the Order. Id.
III. Discussion of Proposed Rule
A. Legal Authority
The President issued Executive Order 13706 pursuant to his
authority under ``the Constitution and the laws of the United States of
America,'' expressly including 40 U.S.C. 121, a provision of the
Federal Property and Administrative Services Act (Procurement Act). 80
FR 54697. The Procurement Act authorizes the President to ``prescribe
policies and directives that [the President] considers necessary to
carry out'' the statutory purposes of ensuring ``economical and
efficient'' government procurement and administration of government
property. 40 U.S.C. 101, 121(a). Executive Order 13706 delegates to the
Secretary the authority to issue regulations ``deemed necessary and
appropriate to carry out this order.'' 80 FR 54698. The Secretary has
delegated his authority to promulgate these regulations to the
Administrator of the WHD. Secretary's Order 01-2014 (Dec. 19, 2014), 79
FR 77527 (published Dec. 24, 2014).
B. Stakeholder Engagement
As part of the development of this proposed rule, the Department
has engaged stakeholders who have an interest in the Executive Order to
solicit their views regarding implementation of the Order's paid sick
leave requirements and important issues to address in this rulemaking.
In particular, the Department held listening sessions regarding the
Order with worker advocates and business representatives in October and
November 2015.
C. Overview of the Proposed Rule
The Department's notice of proposed rulemaking (NPRM), which would
amend Title 29 of the Code of Federal Regulations (CFR) by adding part
13, proposes standards and procedures for implementing and enforcing
Executive Order 13706. Proposed subpart A of part 13 addresses general
matters, including the purpose and scope of the rule, sets forth
definitions of terms used in the proposed part, and describes the types
of contracts and employees covered by the Order and part 13 and
excluded from such coverage. It describes the paid sick leave
requirements for contractors established by the Executive Order,
including rules and restrictions regarding the accrual and use of such
leave. It also prohibits interference with the accrual or use of paid
sick leave provided pursuant to the Executive Order or part 13,
discrimination for the exercise of rights under the Executive Order or
part 13, and failure to comply with the recordkeeping requirements of
part 13. Finally, proposed subpart A includes a prohibition against
waiver of rights.
Proposed subpart B establishes the obligations of the Federal
government (specifically, contracting agencies and the Department)
under the Order, and proposed subpart C establishes the
[[Page 9595]]
obligations of contractors under the Order, including recordkeeping
requirements. Proposed subparts D and E specify standards and
procedures related to alleged violations of the Order and part 13,
including complaint intake, investigations, remedies, and
administrative enforcement proceedings. Proposed appendix A contains a
contract clause to implement Executive Order 13706.
The following section-by-section discussion of this proposed rule
presents the contents of each section in more detail. The Department
invites comments on any issues addressed in this NPRM.
Subpart A--General
Proposed subpart A of part 13 describes the purpose and scope of
the proposed rule, and it sets forth definitions of terms used in the
proposed rule, descriptions of the types of contracts and employees
covered by the Order and part 13 and excluded from such coverage, and
rules and restrictions regarding the accrual and use of paid sick
leave. Proposed subpart A also prohibits interference with the accrual
or use of the paid sick leave required by, and discrimination for the
exercise of rights under, the Executive Order or part 13, as well as
violations of the recordkeeping requirements of part 13. Finally,
proposed subpart A includes a prohibition against waiver of rights.
Section 13.1 Purpose and Scope
Proposed Sec. 13.1(a) explains that the purpose of the proposed
rule is to implement Executive Order 13706 and reiterates statements
from the Order that the Federal Government's procurement interests in
economy and efficiency are promoted when the Federal Government
contracts with sources that provide paid sick leave to their employees.
It explains that the Order states that providing access to paid sick
leave will improve the productivity of employees by improving their
health and performance and will bring benefits packages offered by
Federal contractors in line with model employers, ensuring they remain
competitive in the search for dedicated and talented employees. As
stated in proposed Sec. 13.1(a), it is for these reasons that the
Executive Order concludes that the provision of paid sick leave under
the Order will generate savings and quality improvements in the work
performed by parties who contract with the Federal Government, thereby
leading to improved economy and efficiency in Government procurement.
The Department believes that, by increasing the quality and efficiency
of services provided to the Federal Government, the Executive Order
will improve the value that taxpayers receive from the Federal
Government's investment.
Proposed Sec. 13.1(b) sets forth the general position of the
Federal Government that providing access to paid sick leave on Federal
contracts will increase efficiency and cost savings for the Federal
Government, and it explains the general requirement established in
Executive Order 13706 that new contracts with the Federal Government
include a clause, which the contractor and any subcontractors shall
incorporate into lower-tier subcontracts, requiring, as a condition of
payment, that the contractor and any subcontractors provide paid sick
leave to employees in the amount of not less than 1 hour of paid sick
leave for every 30 hours worked on or in connection with covered
contracts. Proposed Sec. 13.1(b) also specifies that nothing in
Executive Order 13706 or part 13 shall excuse noncompliance with or
supersede any applicable Federal or State law, any applicable law or
municipal ordinance, or a collective bargaining agreement requiring
greater paid sick leave or leave rights than those established under
the Order or part 13.
Proposed Sec. 13.1(c) outlines the scope of this proposed rule and
provides that neither Executive Order 13706 nor part 13 creates any
rights under the Contract Disputes Act or creates any private right of
action. The Department does not interpret the Executive Order as
limiting existing rights under the Contract Disputes Act. This
provision also implements the Executive Order's directive that disputes
regarding whether a contractor has provided paid sick leave as
prescribed by the Order, to the extent permitted by law, shall be
disposed of only as provided by the Secretary in regulations issued
under the Order. The provision specifies, however, that nothing in the
Order or part 13 is intended to limit or preclude a civil action under
the False Claims Act, 31 U.S.C. 3730, or criminal prosecution under 18
U.S.C. 1001. Finally, this paragraph specifies that neither the Order
nor part 13 would preclude judicial review of final decisions by the
Secretary in accordance with the Administrative Procedure Act, 5 U.S.C.
701 et seq.
Section 13.2 Definitions
Proposed Sec. 13.2 defines terms for purposes of part 13. Section
3(c) of the Executive Order instructs that any regulations issued
pursuant to the Order should ``incorporate existing definitions'' under
the FLSA, SCA, DBA, FMLA, VAWA, and Executive Order 13658 ``to the
extent practicable and consistent with section 7 of this order.'' 80 FR
54699. Because of the similarities in language, structure, and intent
of the Minimum Wage Executive Order and Executive Order 13706, many of
the definitions provided in this proposed rule are identical to or
based on definitions promulgated in the Minimum Wage Executive Order
Final Rule. Pursuant to section 4(c) of the Minimum Wage Executive
Order, those definitions were largely based either on the language of
the Order itself or the definitions of relevant terms set forth in the
statutory text or implementing regulations of the FLSA, SCA, or DBA; in
addition, some definitions were based on definitions published by the
FARC in section 2.101 of the FAR, 48 CFR 2.101, or definitions set
forth in the Department's regulations implementing Executive Order
13495, Nondisplacement of Qualified Workers Under Service Contracts
(Executive Order 13495 or Nondisplacement Executive Order), at 29 CFR
9.2. 79 FR 60637. Definitions relevant because of provisions of
Executive Order 13706 that do not appear in Executive Order 13658 are
largely based on definitions set forth in the statutory text or
implementing regulations of the FMLA or the VAWA, as well as
regulations issued by the U.S. Office of Personnel Management (OPM) at
5 CFR part 630, subparts B and D, which govern the accrual and use of
sick leave by employees of the Federal government.
The definitions discussed in this proposed rule would govern the
implementation and enforcement of Executive Order 13706. Nothing in the
rule is intended to alter the meaning of or to be interpreted
inconsistently with the definitions set forth in section 2.101 of the
FAR for purposes of that regulation.
The Department proposes to define accrual year to mean the 12-month
period during which a contractor may limit an employee's accrual of
paid sick leave to no less than 56 hours.
The Department proposes to define the term Administrative Review
Board as the Administrative Review Board within the U.S. Department of
Labor.
The Department proposes to define the term Administrator to mean
the Administrator of the Wage and Hour Division. As proposed, the term
also includes any official of the Wage and Hour Division authorized to
perform any of the functions of the Administrator under part 13.
The Department proposes to define as soon as is practicable to mean
as soon as both possible and practical, taking
[[Page 9596]]
into account all of the facts and circumstances of the individual case.
This definition is derived from the definition of ``as soon as
practicable'' in the FMLA regulations. 29 CFR 825.302(b).
The Department proposes to define certification issued by a health
care provider as any type of written document created or signed by a
health care provider (or by a representative of the health care
provider) that contains information verifying that the physical or
mental illness, injury, medical condition, or need for diagnosis, care,
or preventive care or other need for care referred to in proposed Sec.
13.5(c)(1)(i), (ii), or (iii) exists. This definition allows employees
to provide as certification a greater range of documents than would
suffice to demonstrate that a serious health condition exists for
purposes of FMLA. See 29 CFR 825.305, 825.306. For example, under this
proposal, a note from a hospital nurse stating that an employee needed
to have surgery and would need at least 3 days to recover before
returning to work would meet the definition, as would a note from an
employee's parent's doctor stating that the parent is in need of daily
caretaking. A contractor may not require that an employee or the
individual for whom the employee is caring have seen the health care
provider in person in order to accept the certification.
The Department proposes to define child to mean (1) a biological,
adopted, step, or foster son or daughter of the employee; (2) a person
who is a legal ward or was a legal ward of the employee when that
individual was a minor or required a legal guardian; (3) a person for
whom the employee stands in loco parentis or stood in loco parentis
when that individual was a minor or required someone to stand in loco
parentis; or (4) a child, as described in paragraphs (1) through (3) of
the definition, of an employee's spouse or domestic partner. This
definition is adopted from the definition of ``son or daughter'' in the
OPM regulations governing leave for Federal employees. 5 CFR
630.201(b). The Department notes that this proposed definition is
deliberately broader than the definition of ``son or daughter'' in the
FMLA, which includes only minor children or adult children ``incapable
of self-care because of a mental or physical disability.'' 29 CFR
825.102. It is intended that employees be permitted to use paid sick
leave for a broader range of purposes than those for which they can use
FMLA leave, including to care for an employee's child of any age.
The Department proposes a definition of concessions contract or
contract for concessions identical to the definition of those terms in
the Minimum Wage Executive Order Final Rule. See 79 FR 60722 (codified
at 29 CFR 10.2). Specifically, the term is proposed to mean a contract
under which the Federal Government grants a right to use Federal
property, including land or facilities, for furnishing services;
examples of such contracts noted in the definition are those the
principal purpose of which is to furnish food, lodging, automobile
fuel, souvenirs, newspaper stands, and/or recreational equipment. This
proposed definition is not limited based on the beneficiary of the
services; the proposed definition encompasses contracts regardless of
whether they are of direct benefit to the Federal Government, its
property, its civilian or military personnel, or the general public.
See 29 CFR 4.133; see also 79 FR 60638. The proposed definition
includes, but is not limited to, all concessions contracts excluded by
Departmental regulations under the SCA at 29 CFR 4.133(b). See 79 FR
60638.
The Department proposes to define contract and contract-like
instrument collectively for purposes of the Executive Order in the same
manner as it did in the Minimum Wage Executive Order implementing
regulations. See 79 FR 60722 (codified at 29 CFR 10.2). Specifically, a
contract or contract-like instrument is defined in this proposed rule
as an agreement between two or more parties creating obligations that
are enforceable or otherwise recognizable at law. This definition
includes, but is not limited to, a mutually binding legal relationship
obligating one party to furnish services (including construction) and
another party to pay for them. The proposed definition of the term
contract broadly includes all contracts and any subcontracts of any
tier thereunder, whether negotiated or advertised, including any
procurement actions, lease agreements, cooperative agreements, provider
agreements, intergovernmental service agreements, service agreements,
licenses, permits, or any other type of agreement, regardless of
nomenclature, type, or particular form, and whether entered into
verbally or in writing. The proposed definition of the term contract
would be interpreted broadly to include, but not be limited to, any
contract that may be consistent with the definition provided in the FAR
or applicable Federal statutes. This definition would include, but
would not be limited to, any contract that may be covered under any
Federal procurement statute. The Department specifically proposes to
note in this definition that contracts may be the result of competitive
bidding or awarded to a single source under applicable authority to do
so. The proposed definition also explains that, in addition to
bilateral instruments, contracts include, but are not limited to,
awards and notices of awards; job orders or task letters issued under
basic ordering agreements; letter contracts; orders, such as purchase
orders, under which the contract becomes effective by written
acceptance or performance; and bilateral contract modifications. The
proposed definition also specifies that the term contract includes
contracts covered by the SCA, contracts covered by the DBA, concessions
contracts not subject to the SCA, and contracts in connection with
Federal property or lands and related to offering services for Federal
employees, their dependents, or the general public. As explained in the
Minimum Wage Executive Order rulemaking, this proposed definition of
contract was derived from the definition of the term contract set forth
in Black's Law Dictionary (9th ed. 2009) and Sec. 2.101 of the FAR (48
CFR 2.101), as well as the descriptions of the term contract that
appear in the SCA's regulations at 29 CFR 4.110-.111 and 4.130. See 79
FR 60638-41.
The Department notes that it is deliberately adopting a broad
definition of this term, but the mere fact that a legal instrument
constitutes a contract does not mean that such contract is subject to
the Executive Order. In order for a contract to be covered by the
Executive Order and part 13, the contract must (1) qualify as a
contract or contract-like instrument; (2) fall within one of the
specifically enumerated types of contracts set forth in section 6(d)(i)
of the Order and proposed Sec. 13.3; and (3) be a ``new contract''
pursuant to the definition described below. Therefore, for example,
although a cooperative agreement is considered a contract pursuant to
the Department's proposed definition, a cooperative agreement will not
be covered by the Executive Order and part 13 unless it is a ``new
contract'' and is subject to the SCA or DBA, is a concessions contract,
or is entered into in connection with Federal property or lands and
related to offering services for Federal employees, their dependents,
or the general public.
The Department proposes to define contracting officer using a
definition based on that used in the Final Rule issued pursuant to the
Minimum Wage Executive Order, which in turn was adopted from the
definition in section 2.101 of the FAR. See 79 FR 60641 (citing 48 CFR
2.101). As proposed, the
[[Page 9597]]
term means a representative of an executive department or agency with
the authority to enter into, administer, and/or terminate contracts and
make related determinations and findings. Furthermore, the term
includes certain authorized representatives of the contracting officer
acting within the limits of their authority as delegated by the
contracting officer.
The Department proposes to define contractor to mean any individual
or other legal entity that is awarded a Federal Government contract or
a subcontract under a Federal Government contract. The term contractor
refers to both a prime contractor and all of its first or lower-tier
subcontractors on a contract with the Federal Government. This
definition includes lessors and lessees. The Department notes that the
term employer is used interchangeably with the terms contractor and
subcontractor in part 13. The proposed definition also explains that
the U.S. Government, its agencies, and its instrumentalities are not
considered contractors, subcontractors, employers, or joint employers
for purposes of compliance with the provisions of Executive Order
13706. This proposed definition, which is derived from the definition
adopted in the Minimum Wage Executive Order rulemaking, see 79 FR 60722
(codified at 29 CFR 10.2), incorporates relevant aspects of the
definitions of the term contractor in section 9.403 of the FAR, see 48
CFR 9.403; the SCA's regulations at 29 CFR 4.1a(f); and the
Department's regulations implementing the Nondisplacement Executive
Order at 29 CFR 9.2. The definition differs from the Minimum Wage
Executive Order only in that it does not refer to employers of
employees performing on covered Federal contracts whose wages are
computed pursuant to special certificates issued under 29 U.S.C.
214(c). Although such employers would be contractors for purposes of
Executive Order 13706, such a reference is not called for in this
definition because, unlike the Minimum Wage Executive Order, this Order
does not contain any explicit reference to employees whose wages are
computed pursuant to section 14(c) certificates.
The Department proposes to define the term Davis-Bacon Act (DBA) to
mean the Davis-Bacon Act of 1931, as amended, 40 U.S.C. 3141 et seq.,
and its implementing regulations.
The Department proposes to define the term domestic partner to mean
an adult in a committed relationship with another adult. This
definition includes both same-sex and opposite-sex relationships. The
Department proposes to further explain that a committed relationship is
one in which the employee and the domestic partner of the employee are
each other's sole domestic partner (and are not married to or domestic
partners with anyone else) and share responsibility for a significant
measure of each other's common welfare and financial obligations. This
includes, but is not limited to, any relationship between two
individuals of the same or opposite sex that is granted legal
recognition by a State or by the District of Columbia as a marriage or
analogous relationship (including, but not limited to, a civil union).
This definition is adopted from the definitions of ``domestic partner''
and ``committed relationship'' in the OPM regulations regarding the use
of sick leave by Federal employees. 5 CFR 630.201(b).
The Department proposes to define domestic violence as (1) felony
or misdemeanor crimes of violence (including threats or attempts)
committed: (i) By a current or former spouse, domestic partner, or
intimate partner of the victim; (ii) by a person with whom the victim
shares a child in common; (iii) by a person who is cohabitating with or
has cohabitated with the victim as a spouse, domestic partner, or
intimate partner; (iv) by a person similarly situated to a spouse of
the victim under domestic or family violence laws of the jurisdiction
in which the victim resides or the events occurred; or (v) by any other
adult person against a victim who is protected from that person's acts
under the domestic or family violence laws of the jurisdiction in which
the victim resides or the events occurred. Under the proposed
definition, domestic violence also includes any crime of violence
considered to be an act of domestic violence according to State law.
This definition is derived from the VAWA, 42 U.S.C. 13925(a)(8), and
its implementing regulations, 28 CFR 90.2(a).
The Department proposes to define employee similarly to the way the
term worker was used in the Minimum Wage Executive Order rulemaking,
see 79 FR 60723, but with some differences reflecting the differences
in the text of that Executive Order and Executive Order 13706. As
proposed, the term would mean any person engaged in performing work on
or in connection with a contract covered by the Executive Order, and
whose wages under such contract are governed by the SCA, DBA, or FLSA,
including employees who qualify for an exemption from the FLSA's
minimum wage and overtime provisions, regardless of the contractual
relationship alleged to exist between the individual and the employer.
Furthermore, the term employee includes any person performing work on
or in connection with a covered contract and individually registered in
a bona fide apprenticeship or training program registered with the U.S.
Department of Labor's Employment and Training Administration, Office of
Apprenticeship, or with a State Apprenticeship Agency recognized by the
Office of Apprenticeship.
Much of this definition comes directly from section 6(d)(ii) of the
Executive Order, and as noted, much of it is identical to the
definition of worker in the Minimum Wage Executive Order regulations.
Most importantly, the term refers to employees whose wages are governed
by the DBA, SCA, or FLSA, including employees who qualify for an
exemption from the FLSA's minimum wage and overtime provisions, as
directed in the Executive Order. 80 FR 54699. Furthermore, the
definition emphasizes, as explained in the Minimum Wage Executive Order
rulemaking, the well-established principle under the DBA, SCA, and FLSA
that employee coverage does not depend upon the existence or form of
any contractual relationship that may be alleged to exist between the
contractor or subcontractor and such persons. See 79 FR 60644 (citing
29 U.S.C. 203(d), (e)(1), (g) (FLSA); 41 U.S.C. 6701(3)(B), 29 CFR
4.155 (SCA); 29 CFR 5.5(a)(1)(i) (DBA)). As reflected in the proposed
definition, the Executive Order is intended to apply to a wide range of
employment relationships. Neither an individual's subjective belief
about his or her employment status nor the existence of a contractual
relationship is determinative of whether an employee is covered by the
Executive Order. In particular, whether a worker is an ``employee'' or
an ``independent contractor'' as those terms are often used in other
contexts is not material to whether that worker is an employee under
this proposed definition; even workers who are independent contractors
are covered by the SCA and DBA, and that coverage is adopted for
purposes of this Order and part 13. See, e.g., 29 CFR 4.155 (SCA); 29
CFR 5.5(a)(1)(i) (DBA); In re Igwe, ARB Case No. 07-120, 2009 WL
4324725, at *3-4 (Nov. 25, 2009) (rejecting an argument that ``the
individuals working on the four contracts were not entitled to SCA
prevailing wages and fringe benefits because they were independent
contractors, not employees'' because ``the relevant inquiry is whether
the persons working on the contract come
[[Page 9598]]
within the SCA definition of `service employee' '' and explaining ``the
irrelevance of `contractual relationship' to that definition''). The
definition's inclusion of any person performing work on or in
connection with a covered contract and individually registered in a
bona fide apprenticeship or training program registered with the
Department's Employment and Training Administration, Office of
Apprenticeship, or with a State Apprenticeship Agency recognized by the
Office of Apprenticeship, is similarly in keeping with the Minimum Wage
Executive Order's adoption of those provisions from the SCA and DBA
regulations. See 79 FR 60644 (citing 29 CFR 4.6(p) (SCA); 29 CFR 5.2(n)
(DBA)).
The most significant difference between this definition of employee
and the Minimum Wage Executive Order rulemaking's definition of worker
is the inclusion of employees who qualify for an exemption from the
FLSA's minimum wage and overtime provisions. Executive Order 13706
explicitly provides that it applies to such employees. 80 FR 54699. The
Executive Order's paid sick leave requirements therefore apply, for
example, to employees employed in a bona fide executive,
administrative, or professional capacity, as those terms are defined in
29 CFR part 541.
Finally, the Department notes that because unlike the Minimum Wage
Executive Order, Executive Order 13706 makes no reference to
individuals performing work on or in connection with a covered contract
whose wages are calculated pursuant to special certificates issued
under 29 U.S.C. 214(c), that category of employees is not explicitly
mentioned in this proposed definition. However, such individuals would
plainly fall within the definition of employee for purposes of this
rulemaking because their wages are, as described below, governed by the
FLSA.
The Department proposes to define executive departments and
agencies for purposes of this rulemaking by adopting the definition of
that term used in the Minimum Wage Executive Order rulemaking, which
was derived from the definition of executive agency provided in section
2.101 of the FAR, 48 CFR 2.101. 79 FR 60642, 60722 (codified at 29 CFR
10.2). The Department therefore interprets the Executive Order to apply
to executive departments within the meaning of 5 U.S.C. 101, military
departments within the meaning of 5 U.S.C. 102, independent
establishments within the meaning of 5 U.S.C. 104(1), and wholly owned
Government corporations within the meaning of 31 U.S.C. 9101. The
Department does not interpret this definition as including the District
of Columbia or any Territory or possession of the United States.
The Department proposes to define Executive Order 13495 or
Nondisplacement Executive Order to mean Executive Order 13495 of
January 30, 2009, Nondisplacement of Qualified Workers Under Service
Contracts, 74 FR 6103 (Feb. 4, 2009), and its implementing regulations
at 29 CFR part 9.
The Department proposes to define Executive Order 13658 or Minimum
Wage Executive Order to mean Executive Order 13658 of February 12,
2014, Establishing a Minimum Wage for Contractors, 79 FR 9851 (Feb. 20,
2014), and its implementing regulations at 29 CFR part 10.
The Department proposes to define Fair Labor Standards Act (FLSA)
as the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. 201 et
seq., and its implementing regulations.
The Department proposes to define Family and Medical Leave Act
(FMLA) as the Family and Medical Leave Act of 1993, as amended, 29
U.S.C. 2601 et seq., and its implementing regulations.
The Department proposes to define family violence, a term used in
the definition of domestic violence, to mean any act or threatened act
of violence, including any forceful detention of an individual that
results or threatens to result in physical injury and is committed by a
person against another individual (including an elderly individual) to
or with whom such person is related by blood, is or was related by
marriage or is or was otherwise legally related, or is or was lawfully
residing. Because VAWA does not provide a definition of the term, this
definition is adopted from the definition of ``family violence'' in the
Family Violence Prevention and Services Act, 42 U.S.C. 10401. See 42
U.S.C. 10402(4).
Proposed Sec. 13.2 defines Federal Government as an agency or
instrumentality of the United States that enters into a contract
pursuant to authority derived from the Constitution or the laws of the
United States. This proposed definition is identical to that used in
the regulations implementing the Minimum Wage Executive Order. 79 FR
60722 (codified at 29 CFR 10.2). That definition was based on the
definition of Federal Government set forth in 29 CFR 9.2, but
eliminated the term ``procurement'' from that definition because
Executive Order 13658 applies--as does Executive Order 13706--to both
procurement and non-procurement contracts. 79 FR 60642. Consistent with
the SCA, the term Federal Government includes nonappropriated fund
instrumentalities under the jurisdiction of the Armed Forces or of
other Federal agencies. See 29 CFR 4.107(a). For purposes of Executive
Order 13706 and part 13, the Department's proposed definition does not
include the District of Columbia or any Territory or possession of the
United States. As used in the Order and part 13, the term also does not
include any independent regulatory agency within the meaning of 44
U.S.C. 3502(5) because such agencies are not required to comply with
the Order or part 13.
The Department proposes to define health care provider as any
practitioner who is licensed or certified under Federal or State law to
provide the health-related service in question or any practitioner
recognized by an employer or the employer's group health plan. The term
includes, but is not limited to, doctors of medicine or osteopathy,
podiatrists, dentists, psychologists, optometrists, chiropractors,
nurse practitioners, nurse-midwives, clinical social workers, physician
assistants, physical therapists, and Christian Science Practitioners
listed with the First Church of Christ, Scientist in Boston,
Massachusetts. This definition is intended to be broad and inclusive.
It is derived from the definitions of health care provider in the FMLA
regulations, 29 CFR 825.125, and OPM regulations, 5 CFR 630.201 and 5
CFR 630.1202.
The Department proposes to define the term independent agencies as
any independent regulatory agency within the meaning of 44 U.S.C.
3502(5). Section 6(g) of the Executive Order states that
``[i]ndependent agencies are strongly encouraged to comply with the
requirements of this order.'' The Department interprets this provision,
as it did an identical provision in the Minimum Wage Executive Order,
to mean that independent agencies are not required to comply with this
Executive Order. See 79 FR 9853; 79 FR 60643. This proposed definition
is therefore based on other Executive Orders that similarly exempt
independent regulatory agencies within the meaning of 44 U.S.C. 3502(5)
from the definition of agency or include language requesting that they
comply. See, e.g., Executive Order 13636, 78 FR 11739 (Feb. 12, 2013)
(defining agency as any executive department, military department,
Government corporation, Government-controlled operation, or other
establishment in the executive branch of the Government but excluding
independent regulatory agencies as defined in 44 U.S.C. 3502(5));
Executive Order 13610, 77 FR 28469 (May 10, 2012) (same); Executive
Order 12861, 58 FR 48255 (September 11, 1993) (``Sec. 4
[[Page 9599]]
Independent Agencies. All independent regulatory commissions and
agencies are requested to comply with the provisions of this order.'');
Executive Order 12837, 58 FR 8205 (Feb. 10, 1993) (``Sec. 4. All
independent regulatory commissions and agencies are requested to comply
with the provisions of this order.'').
The Department proposes to include in Sec. 13.2 a definition of
individual related by blood or affinity whose close association with
the employee is the equivalent of a family relationship. As proposed,
the term means any person with whom the employee has a significant
personal bond that is or is like a family relationship, regardless of
biological or legal relationship. Although this term is used in the OPM
regulations, see 5 CFR 630.201 (defining ``family member,'' for
purposes of Federal employees' use of leave, to include the term), OPM
has not created a regulatory definition of it; the Department's
definition is, however, derived from OPM's discussion of the term in
OPM's 2010 Final Rule, Absence and Leave; Definitions of Family Member,
Immediate Relative, and Related Terms, 75 FR 33491 (June 14, 2010). In
particular, OPM explained that creating an exhaustive list of the
relationships that meet the definition is not possible, but that OPM
has ``broadly interpreted the phrase to include such relationships as
grandparent and grandchild, brother- and sister-in-law, fianc[eacute]
and fianc[eacute]e, cousin, aunt and uncle, other relatives not
specified in [the list naming a spouse, child, parent, brother, or
sister], and close friend, to the extent that the connection between
the employee and the individual was significant enough to be regarded
as having the closeness of a family relationship even though the
individuals might not be related by blood or formally in law.'' 75 FR
33492.
The Department understands this term to be inclusive of non-nuclear
family structures. It could include, for example, an individual who was
a foster child in the same home in which the employee was a foster
child for several years and with whom the employee has maintained a
sibling-like relationship, a friend of the family in whose home the
employee lived while she was in high school and whom the employee
therefore considers to be like a mother or aunt to her, or an elderly
neighbor with whom the employee has regularly shared meals and to whom
the employee has provided unpaid caregiving assistance for the past 5
years and whom the employee therefore considers to be like a
grandfather to her. The Department seeks comments regarding its
proposed definition of this term, in particular regarding whether
additional specificity is necessary.
The Department proposes to define intimate partner, a term used in
the definition of domestic violence, to mean a person who is or has
been in a social relationship of a romantic or intimate nature with the
victim, where the existence of such a relationship shall be determined
based on a consideration of the length of the relationship; the type of
relationship; and the frequency of interaction between the persons
involved in the relationship. This definition is derived from the
definition of ``dating partner'' in the VAWA. See 42 U.S.C.
13925(a)(9).
The Department proposes that the term new contract have the same
meaning as in the Minimum Wage Executive Order Final Rule, but with
dates altered to reflect the timing contemplated in section 7 of
Executive Order 13706. See 79 FR 60722 (codified at 29 CFR 10.2); 80 FR
54700. Under the proposed definition, a new contract is a contract that
results from a solicitation issued on or after January 1, 2017, or a
contract that is awarded outside the solicitation process on or after
January 1, 2017. This term includes both new contracts and replacements
for expiring contracts. It does not apply to the unilateral exercise of
a pre-negotiated option to renew an existing contract by the Federal
Government. For purposes of the Executive Order, a contract that is
entered into prior to January 1, 2017 will constitute a new contract
if, through bilateral negotiation, on or after January 1, 2017: (1) The
contract is renewed; (2) the contract is extended, unless the extension
is made pursuant to a term in the contract as of December 31, 2016
providing for a short-term limited extension; or (3) the contract is
amended pursuant to a modification that is outside the scope of the
contract. The Minimum Wage Executive Order rulemaking explained that
this definition was derived from section 8 of that Executive Order, 79
FR 9853, is consistent with the convention set forth in section
1.108(d) of the FAR, 48 CFR 1.108(d), and was developed in part in
response to comments on the proposed definition of new contract that
appeared in the Minimum Wage Executive Order NPRM. 79 FR 60643, 60646-
49.
For purposes of the Executive Order and part 13, which use the
terms in reference to domestic violence, sexual assault, or stalking,
the Department proposes to define obtain additional counseling, seek
relocation, seek assistance from a victim services organization, or
take related legal action to mean to spend time arranging, preparing
for, or executing acts related to addressing physical injuries or
mental or emotional impacts resulting from being a victim of domestic
violence, sexual assault, or stalking. Such acts include finding and
using services of a counselor or victim services organization, as that
term is defined below, intended to assist a victim to respond to or
prevent future incidents of domestic violence, sexual assault, or
stalking; identifying and moving to a different residence to avoid
being a victim of domestic violence, sexual assault, or stalking; or a
victim's pursuing any related legal action, as that term is defined
below. Counseling can but need not be provided by a health care
provider.
The Department proposes to define obtaining diagnosis, care, or
preventive care from a health care provider to mean receiving services
from a health care provider, whether to identify, treat, or otherwise
address an existing condition or to prevent potential conditions from
arising. The Department interprets this term broadly; examples include,
but are not limited to, obtaining a prescription for antibiotics at a
health clinic, attending an appointment with a psychologist, having an
annual physical or gynecological exam, or receiving a teeth cleaning
from a dentist's assistant. The definition further provides that the
term includes time spent traveling to and from the location at which
such services are provided or recovering from receiving such services.
The Department proposes to define the term Office of Administrative
Law Judges to mean the Office of Administrative Law Judges, U.S.
Department of Labor.
Proposed Sec. 13.2 defines the term option by adopting the
definition of that term used in the Minimum Wage Executive Order
rulemaking, which adopted the definition set forth in section 2.101 of
the FAR, 48 CFR 2.101. 79 FR 60643, 60722 (codified at 29 CFR 10.2).
Specifically, the term option means a unilateral right in a contract by
which, for a specified time, the Federal Government may elect to
purchase additional supplies or services called for by the contract, or
may elect to extend the term of the contract.
The Department proposes to define paid sick leave to mean
compensated absence from employment that is required by Executive Order
13706 and part 13. Throughout the proposed regulatory text and this
discussion of that text, the Department uses ``paid sick leave'' to
refer to the leave required by the Order and part 13 and ``paid sick
time'' to refer more generally to any
[[Page 9600]]
compensated absence from work for time used for purposes similar
(although not necessarily identical) to the purposes described in the
Order, including as required by State and local laws or as provided
pursuant to contractors' existing policies or under collective
bargaining agreements.
Proposed Sec. 13.2 defines the term parent to mean (1) a
biological, adoptive, step, or foster parent of the employee, or a
person who was a foster parent of the employee when the employee was a
minor; (2) a person who is the legal guardian of the employee or was
the legal guardian of the employee when the employee was a minor or
required a legal guardian; (3) a person who stands in loco parentis to
the employee or stood in loco parentis to the employee when the
employee was a minor or required someone to stand in loco parentis; or
(4) a parent, as described in paragraphs (1) through (3) of the
definition, of an employee's spouse or domestic partner. This
definition is adopted from the OPM regulations regarding leave for
Federal employees. 5 CFR 630.102(b).
The Department proposes to define physical or mental illness,
injury, or medical condition as any disease, sickness, disorder, or
impairment of, or any trauma to, the body or mind. The Department
understands the Executive Order to intend for this term to be
understood broadly, to include any illness, injury, or medical
condition, regardless of whether it requires attention from a health
care provider or whether it would be a ``serious health condition''
that qualifies for use of leave under the Family and Medical Leave Act.
See 29 U.S.C. 2611(11); 29 CFR 825.113. Examples include, but are not
limited to, a common cold, ear infection, upset stomach, ulcer, flu,
headache, migraine, sprained ankle, broken arm, or depressive episode.
The Department proposes to define predecessor contract to mean a
contract that precedes a successor contract. The term successor
contract would be defined as explained below.
The proposed regulatory text defines procurement contract for
construction as that term was defined for purposes of the Minimum Wage
Executive Order Final Rule, that is, to mean a contract for the
construction, alteration, or repair (including painting and decorating)
of public buildings or public works and which requires or involves the
employment of mechanics or laborers, and any subcontract of any tier
thereunder. 79 FR 60723 (codified at 29 CFR 10.2). That definition,
which is derived from language found at 40 U.S.C. 3142(a) and 29 CFR
5.2(h), includes any contract subject to the DBA. See 79 FR 60643.
The Department proposes to define the term procurement contract for
services to mean a contract the principal purpose of which is to
furnish services in the United States through the use of service
employees, and any subcontract of any tier thereunder, and to state
that the term includes any contract subject to the SCA. This proposed
definition is derived, as explained in the Minimum Wage Executive
Order, from language set forth in 41 U.S.C. 6702(a), 29 CFR 4.1a(e),
and 29 CFR 9.2. 79 FR 60643.
For purposes of the Executive Order and part 13, which use the
terms in reference to domestic violence, sexual assault, or stalking,
the Department proposes to define related legal action or related civil
or criminal legal proceeding to mean any type of legal action, in any
forum, that relates to domestic violence, sexual assault, or stalking,
including, but not limited to, family, tribal, territorial,
immigration, employment, administrative agency, housing matters, campus
administrative or protection or stay-away order proceedings, and other
similar matters; and criminal justice investigations, prosecutions, and
post-trial matters (including sentencing, parole, and probation) that
impact the victim's safety and privacy. This definition, which the
Department intends to be broad and inclusive, is derived from the
definition of ``legal assistance'' that appears in the VAWA. See 42
U.S.C. 13925(a)(19). The Department understands this definition to
encompass actions in any civil or criminal court, including a juvenile
court. It also includes administrative proceedings run by institutions
of higher education (college, community college, university, or trade
school), such as those related to alleged violations of Title IX of the
Education Amendments of 1972, 20 U.S.C. 1681 et seq.
Under proposed Sec. 13.2, Secretary means the Secretary of Labor
and includes any official of the U.S. Department of Labor authorized to
perform any of the functions of the Secretary of Labor under part 13.
The Department proposes to define the term Service Contract Act
(SCA) to mean the McNamara-O'Hara Service Contract Act of 1965, as
amended, 41 U.S.C. 6701 et seq., and its implementing regulations. See
29 CFR 4.1a(a).
The proposed definition of sexual assault in Sec. 13.2 is any
nonconsensual sexual act proscribed by Federal, tribal, or State law,
including when the victim lacks capacity to consent. This definition is
adopted from the VAWA. See 42 U.S.C. 13925(a)(29).
In this NPRM, the term solicitation is defined to have the meaning
given to it in the Minimum Wage Executive Order Final Rule, i.e., any
request to submit offers, bids, or quotations to the Federal
Government. 79 FR 60673 (codified at 29 CFR 10.2). As explained in the
Minimum Wage Executive Order rulemaking, the definition is based on
language from 29 CFR 9.2, and requests for information issued by
Federal agencies and informal conversations with federal workers do not
fall within the definition. See 79 FR 60643-44.
The Department proposes to define the term spouse as the other
person with whom an individual entered into marriage as defined or
recognized under State law for purposes of marriage in the State in
which the marriage was entered into or, in the case of a marriage
entered into outside of any State, if the marriage is valid in the
place where entered into and could have been entered into in at least
one State. This definition includes an individual in a common law
marriage that was entered into in a State that recognizes such
marriages or, if entered into outside of any State, is valid in the
place where entered into and could have been entered into in at least
one State. This definition is derived from the FMLA regulations. See 29
CFR 825.122 (as updated by Definition of Spouse Under the Family and
Medical Leave Act, 80 FR 9989 (Feb. 25, 2015)). The Department's
references to marriage and common law marriage include both same-sex
and opposite-sex marriages or common law marriages.
Under proposed Sec. 13.2, stalking means engaging in a course of
conduct directed at a specific person that would cause a reasonable
person to fear for his or her safety or the safety of others or suffer
substantial emotional distress. This definition is adopted from the
VAWA. See 42 U.S.C. 13925(a)(30).
The Department proposes to define successor contract to mean a
contract for the same or similar services as were provided by a
different predecessor contractor at the same location.
In proposed Sec. 13.2, the Department defines the term United
States as it did in the Minimum Wage Executive Order rulemaking, which
uses the definitions of that term set forth in 29 CFR 9.2 and 48 CFR
2.101, though it does not adopt any of the exceptions to the definition
of the term set forth in the FAR. See 79 FR 60645. Based on those
regulations, United States means the United States and all executive
departments, independent establishments, administrative agencies, and
[[Page 9601]]
instrumentalities of the United States, including corporations of which
all or substantially all of the stock is owned by the United States, by
the foregoing departments, establishments, agencies, and
instrumentalities, including nonappropriated fund instrumentalities.
When the term is used in a geographic sense, the United States means
the 50 States and the District of Columbia.
The Department proposes to define victim services organization to
mean a nonprofit, nongovernmental, or tribal organization or rape
crisis center, including a State or tribal coalition, that assists or
advocates for victims of domestic violence, sexual assault, or
stalking, including domestic violence shelters, faith-based
organizations, and other organizations, with a documented history of
effective work concerning domestic violence, sexual assault, or
stalking. This definition is based on the definition of ``victim
service provider'' in the VAWA. See 42 U.S.C. 13925(a)(43). The
Department intends this definition to include organizations that
provide services to adult, teen, and/or child victims of domestic
violence, sexual assault, or stalking.
The Department proposes to define Violence Against Women Act (VAWA)
as the Violence Against Women Act of 1994, 42 U.S.C. 13925 et seq., and
its implementing regulations.
The Department proposes to define Wage and Hour Division to mean
the Wage and Hour Division within the U.S. Department of Labor.
Section 13.3 Coverage
Proposed Sec. 13.3 addresses and implements the coverage
provisions of section 6 of Executive Order 13706. 80 FR 54697-54700.
Proposed Sec. 13.3(a) would implement the provisions regarding the
categories of contracts and employees covered by the Order by stating
that part 13 applies to any new contract with the Federal Government,
unless excluded by Sec. 13.4, provided that: (1)(i) It is a
procurement contract for construction covered by the DBA; (ii) it is a
contract for services covered by the SCA; (iii) it is a contract for
concessions, including any concessions contract excluded from coverage
under the SCA by Department of Labor regulations at 29 CFR 4.133(b); or
(iv) it is a contract in connection with Federal property or lands and
related to offering services for Federal employees, their dependents,
or the general public; and (2) the wages of employees performing on or
in connection with such contract are governed by the DBA, SCA, or FLSA,
including employees who qualify for an exemption from the FLSA's
minimum wage and overtime provisions.
Proposed Sec. 13.3(b) incorporates the monetary value thresholds
referred to in section 6(e) of the Executive Order. Specifically, it
would provide that for contracts covered by the SCA or the DBA, part 13
applies to prime contracts only at the thresholds specified in those
statutes, and for procurement contracts where employees' wages are
governed by the FLSA (i.e., procurement contracts not covered by the
SCA or DBA), part 13 applies when the prime contract exceeds the micro-
purchase threshold, as defined in 41 U.S.C. 1902(a). As proposed, Sec.
13.3(b) further explains that for all other covered prime contracts and
for all subcontracts awarded under covered prime contracts, part 13
applies regardless of the value of the contract. In this context, ``all
other prime contracts'' covered by the Order and part 13 refers to non-
procurement concessions contracts not covered by the SCA and non-
procurement contracts with the Federal Government in connection with
Federal property or lands and related to offering services for Federal
employees, their dependents, or the general public not covered by the
SCA.
Proposed Sec. 13.3(c), which is identical to the analogous
provision in the Minimum Wage Executive Order Final Rule, 29 CFR
10.3(c), states that part 13 only applies to contracts with the Federal
Government requiring performance in whole or in part within the United
States; it further explains that if a contract with the Federal
Government is to be performed in part within and in part outside the
United States and is otherwise covered by the Executive Order and part
13, the requirements of the Order and part 13 would apply with respect
to that part of the contract that is performed within the United
States.
Proposed Sec. 13.3(d), adopted from the Minimum Wage Executive
Order regulations, 29 CFR 10.3(d), explains that part 13 does not apply
to contracts subject to the Walsh-Healey Public Contracts Act, 41
U.S.C. 6501 et seq.
The preamble to the Minimum Wage Executive Order Final Rule
addressed several issues related to the coverage provisions of that
Order in its discussion of the regulatory text that was codified at 29
CFR 10.3; because many of those issues are also relevant to Executive
Order 13706, the Department addresses them here. Where the language of
Sec. 13.3 is based on text of Executive Order 13706 that is identical
to the text of the Minimum Wage Executive Order, the Department
interprets the text identically, although the Department is posing one
question about a contracts coverage issue, as described below. The
Department's interpretations of language from Executive Order 13706
that differs from the text of the Minimum Wage Executive Order are
based on and consistent with the language of the Order being
implemented here.
Coverage of Executive Agencies and Departments
Executive Order 13706 applies to all ``[e]xecutive departments and
agencies.'' 80 FR 54697. The Department proposes to define executive
departments and agencies in Sec. 13.2 as explained above.
Executive Order 13706, like the Minimum Wage Executive Order,
strongly encourages but does not compel ``[i]ndependent agencies'' to
comply with its requirements. 80 FR 54700; see also 79 FR 9853. The
Department interprets this provision, in light of the Executive Order's
broad goal of providing paid sick leave to employees on contracts with
the Federal Government, as a narrow exemption from coverage. The
proposed rule would define independent agencies as explained in the
discussion of Sec. 13.2 above.
Coverage of New Contracts With the Federal Government
Proposed Sec. 13.3(a) provides that the requirements of the
Executive Order apply to a ``new contract with the Federal
Government.'' By applying only to ``new contracts,'' the Executive
Order ensures that contracting agencies and contractors will have
sufficient notice of any obligations under Executive Order 13706 and
can take into account any potential impact of the Order prior to
entering into ``new contracts'' on or after January 1, 2017. As
discussed above, the proposed definition of the term contract is
broadly inclusive, and the proposed definition of new contract is
modeled on the definition of that term in the Minimum Wage Executive
Order Final Rule, 29 CFR 10.2, and incorporates the provisions of
section 7 of Executive Order 13706. Therefore, part 13 applies to
contracts with the Federal Government, unless excluded by Sec. 13.4,
that result from solicitations issued on or after January 1, 2017, or
to contracts that are awarded outside the solicitation process on or
after January 1, 2017. For example, any covered contracts that are
added to the GSA Schedule in response to GSA Schedule solicitations
issued on or after January 1, 2017 qualify as ``new contracts'' subject
to the Order; any covered task orders issued pursuant to those
contracts also would be deemed to be ``new contracts.'' This would
include
[[Page 9602]]
contracts to add new covered services as well as contracts to replace
expiring contracts.
As explained in the discussion of proposed Sec. 13.2, the proposed
definition of new contract also provides that the term includes both
new contracts and replacements for expiring contracts. However,
consistent with the Minimum Wage Executive Order Final Rule, the
proposed definition does not include unilateral exercise of a pre-
negotiated option to renew an existing contract by the Federal
Government. As discussed above, the Department proposes to define the
term option to mean a unilateral right in a contract by which, for a
specified time, the Federal Government may elect to purchase additional
supplies or services called for by the contract, or may elect to extend
the term of the contract. See 48 CFR 2.101.
The proposed definition of new contract also provides that for
purposes of the Executive Order, a contract that is entered into prior
to January 1, 2017 will constitute a new contract if, through bilateral
negotiation, on or after January 1, 2017: (1) The contract is renewed;
(2) the contract is extended, unless the extension is made pursuant to
a term in the contract as of December 31, 2016 providing for a short-
term limited extension; or (3) the contract is amended pursuant to a
modification that is outside the scope of the contract. These
statements have the same meaning in part 13 as they did in the Minimum
Wage Executive Order rulemaking. See 79 FR 60646-49. As also noted in
the Minimum Wage Executive Order rulemaking, the Department understands
that contract extensions may be accomplished through options created by
an agency pursuant to FAR clause 52.217-8 (which allows for an
extension of time of up to 6 months for a contractor to perform
services that were acquired but not provided during the contract
period) or FAR clause 52.217-9 (which provides for an extension of the
contract term to provide additional services for a limited term
specified in the contract at previously agreed upon prices). The
contracting agency's exercise of extensions under these clauses would
not trigger application of the Order's paid sick leave requirements
because the clauses give the contracting agency a discretionary right
to unilaterally exercise the option to extend, and unilateral options
are excluded from the definition of ``new contract.''
Specifically, and particularly in light of these clauses, a
bilaterally negotiated extension of an existing contract on or after
January 1, 2017 will be viewed as a ``new contract'' unless the
extension is made pursuant to a term in the contract as of December 31,
2016 providing for a short-term limited extension, in which case the
extension will not constitute a ``new contract'' and will not be
covered. Therefore, a short-term, bilaterally negotiated extension of
contract terms (e.g., an extension of 6 months or less) that was
provided for by the pre-negotiated terms of the contract prior to
January 1, 2017, such as a bridge to prevent a gap in service, would
not constitute a new contract. See Interim Final Rule, Federal
Acquisition Regulation; Establishing a Minimum Wage for Contractors, 79
FR 74544, 74545 (Dec. 15, 2014) (providing that contacting officers
``shall include'' the FAR contract clause to implement the Minimum Wage
Executive Order when ``bilateral modifications extending the contract .
. . are individually or cumulatively longer than six months''). In
addition, when a contracting agency exercises its unilateral right to
extend the term of an existing service contract and simply makes
pricing adjustments based on increased labor costs that result from its
obligation to include a current SCA wage determination pursuant to 29
CFR 4.4 but no bilateral negotiations occur (other than any necessary
to determine and effectuate those pricing adjustments), the Department
would not view the exercise of that option as a ``new contract''
covered by the Executive Order.
An extension that was bilaterally negotiated and not previously
authorized by the terms of the existing contract, however, would be a
``new contract'' subject to the Order's paid sick leave requirements.
The Department also notes that a long-term extension of an existing
contract will qualify as a ``new contract'' subject to the Executive
Order even if such an extension was provided for by a pre-negotiated
term of the contract.
With respect to the coverage of other contract modifications, the
Department's approach in this proposal is identical to that in the
Minimum Wage Executive Order Final Rule. 79 FR 60646-49. It is meant to
reflect that modifications within the scope of the contract do not in
fact constitute new contracts. Long-standing contracting principles
recognize that an existing contract, especially a larger one, will
often require modifications, which may include very modest changes
(e.g., a small change to a delivery schedule). Therefore, regulations
such as the FAR do not require agencies to create new contracts to
support these actions. Accordingly, contract modifications that are
within the scope of the contract within the meaning of the FAR, see 48
CFR 6.001(c) and related case law, are not ``new contracts'' for
purposes of the Executive Order, even when undertaken after January 1,
2017.
However, if the parties bilaterally negotiate a modification that
is outside the scope of the contract, the agency will be required to
create a new contract, triggering solicitation and/or justification
requirements, and thus such a modification after January 1, 2017 will
constitute a ``new contract'' subject to the Executive Order's paid
sick leave requirements. For example, if an existing SCA-covered
contract for janitorial services at a Federal office building is
modified by bilateral negotiation after January 1, 2017 to also provide
for security services at that building, such a modification would
likely be regarded as outside the scope of the contract and thus
qualify as a ``new contract'' subject to the Executive Order.
Similarly, if an existing DBA-covered contract for construction work at
Site A was modified by bilateral negotiation after January 1, 2017 to
also cover construction work at Site B, such a modification would
generally be viewed as outside the scope of the contract and thus
trigger coverage of the Executive Order. The Department cautions,
however, that whether a modification qualifies as ``within the scope''
or ``outside the scope'' of the contract is necessarily a fact-specific
determination. See, e.g., AT&T Communications, Inc. v. Wiltel, Inc., 1
F.3d 1201 (Fed. Cir. 1993).
Although in-scope modifications do not create ``new contracts''
under part 13, the Department strongly encourages agencies to
bilaterally negotiate, as part of any such modification, application of
the Executive Order's paid sick leave requirements so that these
contracts can take advantage of the benefits of such leave. For
example, the FARC should encourage, if not require, contracting
officers to modify existing indefinite-delivery, indefinite-quantity
contracts in accordance with FAR section 1.108(d)(3) to include the
paid sick leave requirements of Executive Order 13706 and part 13,
particularly if the remaining ordering period extends at least 6 months
and the amount of remaining work or number of orders expected is
substantial. See 79 FR 74545 (providing that contracting officers ``are
strongly encouraged to include'' the FAR contract clause to implement
the Minimum Wage Executive Order in ``existing indefinite-delivery
indefinite-quantity contracts, if the remaining ordering period extends
at least six months and the amount of remaining
[[Page 9603]]
work or number of orders expected is substantial'').
Coverage of Types of Contractual Arrangements
Proposed Sec. 13.3(a)(1) sets forth the specific types of
contractual arrangements with the Federal Government that are covered
by the Executive Order. Executive Order 13706 and part 13 are intended
to apply to a wide range of contracts with the Federal Government for
services or construction, and proposed Sec. 13.3(a)(1) implements the
Executive Order by generally extending coverage to procurement
contracts for construction covered by the DBA; service contracts
covered by the SCA; concessions contracts, including any concessions
contract excluded by the Department's regulations at 29 CFR 4.133(b);
and contracts in connection with Federal property or lands and related
to offering services for Federal employees, their dependents, or the
general public. Each of these categories of contractual agreements,
which are treated in this proposed rulemaking as they were in the
Minimum Wage Executive Order rulemaking, is discussed in greater detail
below.
Procurement Contracts for Construction: Section 6(d)(i)(A) of the
Executive Order extends coverage to any ``procurement contract for . .
. construction.'' 80 FR 54699. As explained in the Minimum Wage
Executive Order rulemaking, 79 FR 60650, this language indicates that
the Executive Order and part 13 apply to contracts subject to the DBA
and that they do not apply to contracts subject only to the Davis-Bacon
Related Acts, including those set forth at 29 CFR 5.1(a)(2)-(60).
The DBA applies, in relevant part, to contracts to which the
Federal Government is a party, for the construction, alteration, or
repair, including painting and decorating, of public buildings and
public works of the Federal Government and which require or involve the
employment of mechanics or laborers. 40 U.S.C. 3142(a). The DBA's
regulatory definition of construction is expansive and includes all
types of work done on a particular building or work by laborers and
mechanics employed by a construction contractor or construction
subcontractor. See 29 CFR 5.2(j). For purposes of the DBA and therefore
the Executive Order, a contract is ``for construction'' if ``more than
an incidental amount of construction-type activity'' is involved in its
performance. See, e.g., In the Matter of Crown Point, Indiana
Outpatient Clinic, WAB Case No. 86-33, 1987 WL 247049, at * 2 (June 26,
1987) (citing In re: Military Housing, Fort Drum, New York, WAB Case
No. 85-16, 1985 WL 167239 (Aug. 23, 1985)), aff'd sub nom. Building &
Construction Trades Dep't, AFL-CIO v. Turnage, 705 F. Supp. 5 (D.D.C.
1988); Office of Legal Counsel, U.S. Department of Justice,
Reconsideration of Applicability of the Davis-Bacon Act to the Veterans
Administration's Lease of Medical Facilities (OLC Letter), 18 Op.
O.L.C. 109, 1994 WL 810699, at * 5 (May 23, 1994). The term ``contract
for construction'' is not limited to contracts entered into with a
construction contractor; rather, a contract for construction ``would
seem to require only that there be a contract, and that one of the
things required by that contract be construction of a public work.''
OLC Letter at * 3-4. The term ``public building or public work''
includes any building or work, the construction, prosecution,
completion, or repair of which is carried on directly by authority of
or with funds of a Federal agency to serve the interest of the general
public. See 29 CFR 5.2(k).
Proposed Sec. 13.3(b) implements section 6(e) of Executive Order
13706, 80 FR 52699-700, which provides that the Order applies only to
DBA-covered prime contracts that exceed the $2,000 value threshold
specified in the DBA. See 40 U.S.C. 3142(a). Consistent with the DBA,
there is no value threshold requirement for application of Executive
Order 13706 and part 13 to subcontracts awarded under such prime
contracts.
Procurement Contracts for Services: Proposed Sec. 13.3(a)(1)(ii)
provides, in language identical to that of 29 CFR 10.3(a)(1)(ii) as
promulgated by the Minimum Wage Executive Order Final Rule, 79 FR
60723, that coverage of the Executive Order and part 13 encompasses any
``contract for services covered by the Service Contract Act.''
This proposed provision implements section 6(d)(i)(B) of the
Executive Order, which states that the Order applies to ``a contract or
contract-like instrument for services covered by the Service Contract
Act.'' 80 FR 54699. The SCA applies (subject to the exceptions
discussed below) to any contract entered into by the United States that
``has as its principal purpose the furnishing of services in the United
States through the use of service employees.'' 41 U.S.C. 6702(a)(3);
see also 29 CFR 4.110. The SCA is intended to cover a wide variety of
service contracts with the Federal Government, so long as the principal
purpose of the contract is to provide services using service employees.
See, e.g., 29 CFR 4.130(a). SCA coverage exists regardless of the
direct beneficiary of the services or the source of the funds from
which the contractor is paid for the service and irrespective of
whether the contractor performs the work in its own establishment, on a
Government installation, or elsewhere. 29 CFR 4.133(a).
In addition to the provision in section 6(d)(i)(B) of the Executive
Order extending coverage to contracts covered by the SCA, section
6(d)(i)(A) provides that the Order applies to ``a procurement contract
for services.'' 80 FR 54699. In the Minimum Wage Executive Order
rulemaking, the Department interpreted these two phrases together to
mean that Executive Order 13658 applied to all procurement and non-
procurement contracts covered by the SCA. The phrase ``a procurement
contract for services'' could, however, be construed to encompass a
category or categories of procurement contracts for services beyond
those covered by the SCA.
The SCA does not apply to all procurement contracts with the
Federal Government for services. For example, the SCA contains a list
of exemptions from its coverage: It does not apply to ``a contract for
the carriage of freight or personnel by vessel, airplane, bus, truck,
express, railway line or oil or gas pipeline where published tariff
rates are in effect''; ``a contract for the furnishing of services by
radio, telephone, telegraph, or cable companies, subject to the
Communications Act of 1934''; ``a contract for public utility services,
including electric light and power, water, steam, and gas''; ``an
employment contract providing for direct services to a Federal agency
by an individual''; and ``a contract with the United States Postal
Service, the principal purpose of which is the operation of postal
contract stations.'' 41 U.S.C. 6702(b); see also 29 CFR 4.115-4.122.
Additionally, 29 CFR 4.123(d) and (e) identify certain categories of
contracts the Department has exempted, pursuant to authority granted by
the SCA, see 41 U.S.C. 6707(b), from SCA coverage to the extent
regulatory criteria for exclusion from coverage are satisfied. For
example, 29 CFR 4.123(e)(1)(i)(A) exempts from SCA coverage certain
contracts principally for the maintenance, calibration, or repair of
automated data processing equipment and office information/word
processing systems. Furthermore, the SCA does not apply to contracts
for services to be performed exclusively by persons who are not service
employees, i.e., persons who qualify as bona fide executive,
administrative, or professional employees as defined in the FLSA's
regulations at 29 CFR part 541. 29 CFR
[[Page 9604]]
4.113(a)(2); see also 41 U.S.C. 6701(a)(3)(C), 6702(a)(3); WHD Field
Operations Handbook (FOH) ] 14c07. Similarly, a contract for services
``performed essentially by bona fide executive, administrative, or
professional employees, with the use of service employees being only a
minor factor in contract performance,'' is not covered by the SCA. 29
CFR 4.113(a)(3); FOH ] 14c07.
The Department seeks comment as to whether it should include within
the coverage of Executive Order 13706 a wider set of procurement
contracts for services than those contracts for services covered by the
SCA. An interpretation treating as covered procurement contracts for
services performed exclusively or essentially by employees who qualify
as bona fide executive, administrative, or professional employees as
defined in the FLSA's regulations at 29 CFR part 541--a type of
employee covered by section 6(d)(ii) of the Order because such
employees qualify for an exemption from the FLSA's minimum wage and
overtime provisions, 80 FR 54700--would, for example, extend the
Order's paid sick leave requirements to some such employees who would
otherwise not be covered by the Order. An interpretation treating as
covered other types of service contracts explicitly exempted from SCA
coverage under 41 U.S.C. 6702(b) and 29 CFR 4.123(d) and (e) would also
extend the Order's paid sick leave requirements to at least some
employees on any such contracts; although those employees' wages would
by definition not be covered by the SCA, under such an interpretation,
employees performing on or in connection with such contracts whose
wages were governed by the FLSA, including employees who qualify for an
exemption from its minimum wage and overtime provisions, would be
entitled to paid sick leave under the Order and part 13. The Department
seeks comments discussing the potential scope and implications of such
coverage, including whether employees who work on or in connection with
certain categories of non-SCA-covered service contracts currently
typically do not have paid sick time or do not have any type of paid
time off such that the protections of Executive Order 13706 would be
particularly significant to them. (If in the Final Rule, the Department
changes the scope of coverage of service contracts, it will make a
corresponding change to proposed Sec. 13.4(d), which--as explained
below--sets forth an exclusion from the Order's coverage for service
contracts not covered by the SCA or proposed Sec. 13.3(a)(1)(iii) or
(iv).)
The Department notes that regardless of whether it adopts a broader
interpretation of the set of procurement contracts for services covered
by the Order and part 13, under proposed Sec. 13.3(a)(1)(iii) and (iv)
as well as Sec. 13.3(d), described in more detail below, the Order's
paid sick leave requirements will apply to service contracts that are
concessions contracts, including all concessions contracts excluded by
the SCA regulations at 29 CFR 4.133(b); will apply to service contracts
that are in connection with Federal property or lands and related to
offering services for Federal employees, their dependents, or the
general public; and will not apply to contracts for the manufacturing
or furnishing of materials, supplies, articles, or equipment to the
Federal Government that are subject to the Walsh-Healey Public
Contracts Act, 41 U.S.C. 6501 et seq.
Finally, proposed Sec. 13.3(b) implements section 6(e) of the
Executive Order, which provides that for SCA-covered contracts, the
Executive Order applies only to those prime contracts that exceed the
threshold for prevailing wage requirements specified in the SCA. 80 FR
54700. Although the SCA covers all non-exempted contracts with the
Federal Government that have the ``principal purpose'' of furnishing
services in the United States through the use of service employees
regardless of the value of the contract, the prevailing wage
requirements of the SCA only apply to covered contracts in excess of
$2,500. 41 U.S.C. 6702(a)(2). Consistent with the SCA, there is no
value threshold requirement for application of Executive Order 13706
and part 13 to subcontracts awarded under such prime contracts.
Contracts for Concessions: Proposed Sec. 13.3(a)(1)(iii)
implements the Executive Order's coverage of a ``contract or contract-
like instrument for concessions, including any concessions contract
excluded by the Department of Labor's regulations at 29 CFR 4.133(b),''
80 FR 54699, just as the Minimum Wage Executive Order Final Rule
implemented identical language in that Order, see 79 FR 60638, 60652.
The proposed definition of concessions contract is addressed in the
discussion of proposed Sec. 13.2.
The SCA generally covers contracts for concessionaire services. See
29 CFR 4.130(a)(11). Pursuant to the Secretary's authority under
section 4(b) of the SCA, however, the SCA's regulations specifically
exempt from coverage concession contracts ``principally for the
furnishing of food, lodging, automobile fuel, souvenirs, newspaper
stands, and recreational equipment to the general public.'' 29 CFR
4.133(b); 48 FR 49736, 49753 (Oct. 27, 1983).\1\ Proposed Sec.
13.3(a)(1)(iii) extends coverage of the Executive Order and part 13 to
all concession contracts with the Federal Government, including those
exempted from SCA coverage. For example, the Executive Order generally
covers souvenir shops at national monuments as well as boat rental
facilities and fast food restaurants at National Parks. In addition,
consistent with the SCA's implementing regulations at 29 CFR 4.107(a),
the Department notes that the Executive Order generally applies to
concessions contracts with nonappropriated fund instrumentalities under
the jurisdiction of the Armed Forces or other Federal agencies.
---------------------------------------------------------------------------
\1\ This exemption applies to certain concessions contracts that
provide services to the general public, but does not apply to
concessions contracts that provide services to the Federal
Government or its personnel or to concessions services provided
incidentally to the principal purpose of a covered SCA contract.
See, e.g., 29 CFR 4.130 (providing an illustrative list of SCA-
covered contracts); In the Matter of Alcatraz Cruises, LLC, ARB Case
No. 07-024, 2009 WL 250456 (ARB Jan. 23, 2009) (holding that the SCA
regulatory exemption at 29 CFR 4.133(b) does not apply to National
Park Service contracts for ferry transportation services to and from
Alcatraz Island).
---------------------------------------------------------------------------
Proposed Sec. 13.3(b) implements the value threshold requirements
of section 6(e) of Executive Order 13706. 80 FR 54699-700. Pursuant to
that section, the Executive Order applies to an SCA-covered concessions
contract only if it exceeds $2,500. Id.; 41 U.S.C. 6702(a)(2). Section
6(e) of the Executive Order further provides that, for procurement
contracts where employees' wages are governed by the FLSA, such as any
procurement contracts for concessionaire services that are excluded
from SCA coverage under 29 CFR 4.133(b), part 13 applies only to
contracts that exceed the $3,000 micro-purchase threshold, as defined
in 41 U.S.C. 1902(a). There is no value threshold for application of
Executive Order 13706 and part 13 to subcontracts awarded under covered
prime contracts or for non-procurement concessions contracts that are
not covered by the SCA.
Contracts in Connection with Federal Property or Lands and Related
to Offering Services: Proposed Sec. 13.3(a)(1)(iv) implements section
6(d)(i)(D) of the Executive Order, which extends coverage to contracts
entered into with the Federal Government in connection with Federal
property or lands and related to offering services for
[[Page 9605]]
Federal employees, their dependents, or the general public. See 80 FR
54699; see also 79 FR 60655 (Minimum Wage Executive Order Final Rule
preamble discussion of identical provisions in the Minimum Wage
Executive Order and 29 CFR part 10). To the extent that such agreements
are not otherwise covered by Sec. 13.3(a)(1), the Department
interprets this provision as generally including leases of Federal
property, including space and facilities, and licenses to use such
property entered into by the Federal Government for the purpose of
offering services to the Federal Government, its personnel, or the
general public. In other words, a private entity that leases space in a
Federal building to provide services to Federal employees or the
general public would be covered by the Executive Order and part 13
regardless of whether the lease is subject to the SCA. Although
evidence that an agency has retained some measure of control over the
terms and conditions of the lease or license to provide services is not
necessary for purposes of determining applicability of this section,
such a circumstance strongly indicates that the agreement involved is
covered by section 6(d)(i)(D) of the Executive Order and proposed Sec.
13.3(a)(1)(iv). Pursuant to this interpretation, a private fast food or
casual dining restaurant that rents space in a Federal building and
serves food to the general public would be subject to the Executive
Order's paid sick leave requirements even if the contract does not
constitute a concessions contract for purposes of the Order and part
13. Additional examples of agreements that would generally be covered
by the Executive Order and part 13 under this approach, even if they
are not subject to the SCA, include delegated leases of space in a
Federal building from an agency to a contractor whereby the contractor
operates a child care center, credit union, gift shop, barber shop,
health clinic, or fitness center in the space to serve Federal
employees and/or the general public.
Despite this broad definition, the Department notes some limits to
it. Coverage under this section only extends to contracts that are in
connection with Federal property or lands. The Department does not
interpret section 6(d)(i)(D)'s reference to ``Federal property'' to
encompass money; as a result, purely financial transactions with the
Federal Government, i.e., contracts that are not in connection with
physical property or lands, would not be covered by the Executive Order
or part 13. For example, if a Federal agency contracts with an outside
catering company to provide and deliver coffee for a conference, such a
contract will not be considered a covered contract under section
6(d)(i)(D), although it would be a covered contract under section
6(d)(i)(B) if it is covered by the SCA. In addition, section 6(d)(i)(D)
coverage only extends to contracts ``related to offering services for
Federal employees, their dependents, or the general public.''
Therefore, if a Federal agency contracts with a company to solely
supply materials in connection with Federal property or lands, the
Department will not consider the contract to be covered by section
6(d)(i)(D) because it is not a contract related to offering services.
Likewise, because a license or permit to conduct a wedding on Federal
property or lands generally would not relate to offering services for
Federal employees, their dependents, or the general public, but rather
would only relate to offering services to the specific individual
applicant(s), the Department would not consider such a contract covered
by section 6(d)(i)(D).
Pursuant to proposed Sec. 13.3(b) and section 6(e) of Executive
Order 13706, 80 FR 54700, the Order and part 13 apply only to SCA-
covered prime contracts in connection with Federal property and related
to offering services if such contracts exceed $2,500. Id.; 41 U.S.C.
6702(a)(2). For procurement contracts in connection with Federal
property and related to offering services where employees' wages are
governed by the FLSA (rather than the SCA), part 13 applies only to
such contracts that exceed the $3,000 micro-purchase threshold, as
defined in 41 U.S.C. 1902(a). As to subcontracts awarded under prime
contracts in this category and non-procurement contracts in connection
with Federal property or lands and related to offering services for
Federal employees, their dependents, or the general public that are not
SCA-covered, there is no value threshold for coverage under Executive
Order 13706 and part 13.
Contracts Subject to the Walsh-Healey Public Contracts Act:
Finally, the Department proposes to include as Sec. 13.3(d) a
statement that contracts for the manufacturing or furnishing of
materials, supplies, articles, or equipment to the Federal Government,
i.e., those subject to the Walsh-Healey Public Contracts Act (PCA), 41
U.S.C. 6501 et seq., are not covered by Executive Order 13706 or part
13. As in the Minimum Wage Executive Order rulemaking, the Department
proposes to exercise its authority under the Order to ``provid[e]
exclusions from the requirements set forth in this order where
appropriate,'' 80 FR 64698, and to follow the regulations set forth in
the FAR at 48 CFR 22.402(b) in addressing whether the DBA (and thus the
Executive Order) applies to construction work on a PCA contract. Under
this approach, where a PCA-covered contract involves a substantial and
segregable amount of construction work that is subject to the DBA,
employees whose wages are governed by the DBA or FLSA, including those
who qualify for an exemption from the FLSA's minimum wage and overtime
provisions, are covered by the Executive Order for the hours that they
spend performing on or in connection with such DBA-covered construction
work.
Coverage of Subcontracts
As explained in the Minimum Wage Executive Order rulemaking, 79 FR
60657-58, the same test for determining application of the Executive
Order to prime contracts applies to the determination of whether a
subcontract is covered by the Order, with the distinction that the
value threshold requirements set forth in section 6(e) of the Order do
not apply to subcontracts. In other words, the requirements of the
Order apply to a subcontract if the subcontract qualifies as a contract
or contract-like instrument under the definition set forth in part 13
and it falls within one of the four specifically enumerated types of
contracts set forth in section 6(d)(i) of the Order and proposed Sec.
13.3(a)(1).
Pursuant to this approach, only covered subcontracts of covered
prime contracts are subject to the requirements of the Executive Order.
Therefore, just as the Executive Order does not apply to prime
contracts that are subject to the PCA, it likewise does not apply to
subcontracts for the manufacturing or furnishing of materials,
supplies, articles, or equipment. In other words, the Executive Order
does not apply to subcontracts for the manufacturing or furnishing of
materials, supplies, articles, or equipment between a manufacturer or
other supplier and a covered contractor for use on a covered Federal
contract. For example, a subcontract to supply napkins and utensils to
a covered prime contractor operating a fast food restaurant on a
military base is not a covered subcontract for purposes of this Order.
The Executive Order likewise does not apply to contracts under which a
contractor orders materials from a construction materials supplier.
Coverage of Employees
Proposed Sec. 13.3(a)(2) implements section 6(d)(ii) of Executive
Order
[[Page 9606]]
13706, which provides that the paid sick leave requirements of the
Order only apply if the wages of employees under a covered contract are
governed by the DBA, SCA, or FLSA, including employees who qualify for
an exemption from the FLSA's minimum wage and overtime provisions. 80
FR 54699. This coverage provision is distinct from that in Executive
Order 13658 in that the Minimum Wage Executive Order did not cover
employees who qualify for an exemption from the FLSA's minimum wage and
overtime provisions, see 79 FR 9853; the discussion below reflects this
distinction.
An employee's wages are governed by the FLSA for purposes of
section 6(d)(ii) of the Executive Order and part 13 if the employee is
entitled to minimum wage and/or overtime compensation under sections 6
and/or 7 of the FLSA or the employee's wages are calculated pursuant to
special certificates issued under section 14 of the FLSA. See 29 U.S.C.
206, 207, 214. The Department interprets the Order's explicit coverage
of employees who qualify for an exemption from the FLSA's minimum wage
and overtime provisions to mean that the Order and part 13 apply to an
employee who would be entitled to minimum wage and/or overtime
compensation under the FLSA but for the application of an exemption
from the FLSA's minimum wage and overtime requirements pursuant to
section 13 of the Act. See 29 U.S.C. 213. Such employees include those
employed in a bona fide executive, administrative, or professional
capacity as defined in section 13(a)(1) of the FLSA, 29 U.S.C.
213(a)(1), and 29 CFR part 541.
The Department interprets the Order's reference to employees whose
wages are governed by the DBA to include laborers and mechanics who are
covered by the DBA, including any individual who is employed on a DBA-
covered contract and individually registered in a bona fide
apprenticeship program registered with the Department's Employment and
Training Administration, Office of Apprenticeship, or with a State
Apprenticeship Agency recognized by the Office of Apprenticeship. The
Department also interprets the language in section 6(d)(ii) of
Executive Order 13706 and proposed Sec. 13.3(a)(2) to extend coverage
to employees performing on or in connection with DBA-covered contracts
for construction who are not laborers or mechanics but whose wages are
governed by the FLSA as provided above, including those who qualify for
an exemption from the FLSA's minimum wage and overtime provisions.
Although such employees are not covered by the DBA itself because they
are not ``laborers and mechanics,'' 40 U.S.C. 3142(b), such individuals
are employees performing on or in connection with a contract subject to
the Executive Order whose wages are governed by the FLSA, including
those who qualify for an exemption from the FLSA's minimum wage and
overtime provisions, and thus are covered by section 6(d) of the Order.
80 FR 54699. This coverage extends to employees whose wages are
governed by the FLSA, including those who qualify for an exemption from
the FLSA's minimum wage and overtime provisions, who are working on or
in connection with DBA-covered contracts regardless of whether such
employees are physically present on the DBA-covered construction
worksite.
The Order also refers to employees whose wages are governed by the
SCA. The SCA provides that ``service employees'' directly engaged in
providing specific services called for by the SCA-covered contract are
entitled to SCA prevailing wage rates. 41 U.S.C. 6701(3), 6703; 29 CFR
4.152. These employees are covered by the plain language of section
6(d) of Executive Order 13706. This category includes individuals who
are employed on an SCA contract and individually registered in a bona
fide apprenticeship program registered with the Department's Employment
and Training Administration, Office of Apprenticeship, or with a State
Apprenticeship Agency recognized by the Office of Apprenticeship.
Under the SCA, ``service employees'' who do not perform the
services required by an SCA-covered contract but whose duties are
``necessary to performance of the contract'' must be paid at least the
FLSA minimum wage. 29 CFR 4.153; see also 41 U.S.C. 6704(a). The
Department interprets the language in section 6(d)(ii) of Executive
Order 13706 and proposed Sec. 13.3(a)(2) to extend coverage to this
category of employee. For example, an accounting clerk who is paid
hourly to process invoices and work orders on an SCA-covered contract
for janitorial services would likely not qualify as performing services
required by the contract (and therefore would not be entitled to SCA
prevailing wages), but the clerk would be entitled to at least the FLSA
minimum wage. Therefore, the clerk would be covered by the Executive
Order.
Furthermore, some employees perform work on or in connection with
SCA-covered contracts but are not ``service employees'' for purposes of
the Act because that term does not include an individual employed in a
bona fide executive, administrative, or professional capacity, as those
terms are defined in the FLSA regulations at 29 CFR part 541. 41 U.S.C.
6701(3)(C). As explained above, these employees are covered pursuant to
section 6(d)(ii) of the Executive Order. For example, a contractor
could employ a manager who meets the test for the executive employee
exemption under 29 U.S.C. 213(a)(1) and 29 CFR 541.100 to supervise
janitors on an SCA-covered contract for cleaning services at a Federal
building. Because that manager performs work on a covered contract and
qualifies for an exemption from the FLSA's minimum wage and overtime
provisions, she would be entitled to the paid sick leave required by
Executive Order 13706 and part 13.
The Department notes that where State or local government employees
are performing on or in connection with covered contracts and their
wages are governed by the SCA or the FLSA, including employees who
qualify for an exemption from the FLSA's minimum wage and overtime
provisions, such employees are entitled to the protections of the
Executive Order and part 13. The DBA does not apply to construction
performed by State or local government employees.
On or In Connection With
The paid sick leave requirements of Executive Order 13706 and part
13 apply to employees performing work ``on or in connection with''
covered contracts. As it did in the Minimum Wage Executive Order
rulemaking, see 79 FR 60671-72, the Department interprets these terms
in a manner consistent with SCA regulations, see, e.g., 29 CFR
4.150-.155. Specifically, the Department views employees performing
``on'' a covered contract as those employees directly performing the
specific services called for by the contract. Whether an employee is
performing ``on'' a covered contract will be determined, as explained
in the Minimum Wage Executive Order Final Rule, 79 FR 60660, in part by
the scope of work or a similar statement set forth in the covered
contract that identifies the work (e.g., the services or construction)
to be performed under the contract. Accordingly, all laborers and
mechanics engaged in the construction of a public building or public
work on the site of the work will be regarded as performing ``on'' a
DBA-covered contract, and all service employees performing the specific
services called for by an SCA-covered contract will also be regarded as
performing ``on'' a
[[Page 9607]]
contract covered by the Executive Order. In other words, any employee
who is entitled to be paid DBA or SCA prevailing wages is necessarily
performing ``on'' a covered contract. For purposes of concessions
contracts and contracts in connection with Federal property or lands
and related to offering services for Federal employees, their
dependents, or the general public that are not covered by the SCA, the
Department will regard any employee performing the specific services
called for by the contract as performing ``on'' the covered contract in
the manner described above.
The Department regards an employee performing ``in connection
with'' a covered contract to be any employee who is performing work
activities that are necessary to the performance of a covered contract
but who is not directly engaged in performing the specific services
called for by the contract itself. This standard, also articulated in
the Minimum Wage Executive Order rulemaking, is derived from SCA
regulations. See 79 FR 60659 (citing 29 CFR 4.150-.155).
The Department notes that the Order does not extend to employees
who are not engaged in working on or in connection with a covered
contract. For example, a technician who is hired to repair a DBA
contractor's electronic time system or a janitor who is hired to clean
the bathrooms at the DBA contractor's company headquarters are not
covered by the Order because they are not performing the specific
duties called for by the contract or other services or work necessary
to the performance of the contract. Similarly, the Executive Order
would not apply to a landscaper at the home office of an SCA contractor
because that employee is not performing the specific duties called for
by the SCA contract or other services or work necessary to the
performance of the contract. And the Executive Order would not apply to
an employee hired by a covered concessionaire to redesign the
storefront sign for a snack shop in a National Park unless the redesign
of the sign was called for by the concessions contract itself or
otherwise necessary to the performance of the contract. The Department
notes for clarity that because the Order and part 13 do not apply to
employees of Federal contractors who do no work on or in connection
with a covered contract, a contractor could be required to provide paid
sick leave to some of its employees but not others; in other words, it
is not the case that because a contractor has one or more Federal
contracts, all of its projects becomes covered.
Geographic Scope
Proposed Sec. 13.3(c), which is identical to 29 CFR 10.3(c) as
promulgated in the Minimum Wage Executive Order Final Rule, see 79 FR
60723, provides that Executive Order 13706 and part 13 only apply to
contracts with the Federal Government requiring performance in whole or
in part within the United States. This interpretation is reflected in
the Department's proposed definition of the term United States, which
provides that when used in a geographic sense, the United States means
the 50 States and the District of Columbia. Under this approach, the
requirements of the Order and part 13 would not apply to contracts with
the Federal Government to be performed in their entirety outside the
geographical limits of the United States as thus defined. If a contract
with the Federal Government is to be performed in part within and in
part outside these geographical limits and is otherwise covered by the
Executive Order and part 13, however, the requirements of the Order and
part 13 would apply with respect to that part of the contract that is
performed within the United States, i.e., employees would accrue paid
sick leave based on their hours worked on or in connection with covered
contracts within the United States, and could likewise use accrued paid
sick leave while performing on or in connection with a covered contract
within the United States. As with other instances described below in
which employees perform some work covered by the Executive Order and
part 13 and other work that is not, or if some employees working on or
in connection with a covered contract do so in the United States and
others do so outside the United States, a contractor wishing to comply
with the Order's paid sick leave requirements as to only some employees
on a contract or only some of an employee's hours worked must keep
records adequately segregating non-covered work from covered work. If a
contractor does not make and maintain such records, in the absence of
other proof regarding the location of the work, all of the employees'
hours worked on or in connection with the covered contract and/or all
of the employees working on or in connection with the covered contract
will be presumed to be covered by the Order and part 13.
Section 13.4 Exclusions
Proposed Sec. 13.4 sets forth exclusions from the Executive
Order's requirements, including by implementing the exclusions set
forth in section 6(f) of the Order and creating other limited
exclusions from coverage as authorized by section 3(a) of the Executive
Order. See 80 FR 54698, 54700. Specifically, proposed Sec. 13.4(a)
through (d) describes the limited categories of contractual
arrangements with the Federal Government for services or construction
that are excluded from the paid sick leave requirements of the
Executive Order and part 13, and proposed Sec. 13.4(e) establishes a
narrow category of employees that are excluded from coverage of the
Order and part 13.
Proposed Sec. 13.4(a) implements the statement in section 6(f) of
Executive Order 13706 that the Order does not apply to ``grants.'' 80
FR 54700. As it did in the Minimum Wage Executive Order rulemaking, see
79 FR 60665-66, the Department interprets this provision to mean that
the paid sick leave requirements of the Executive Order and part 13 do
not apply to grants as that term is used in the Federal Grant and
Cooperative Agreement Act, 31 U.S.C. 6301 et seq. That statute defines
a ``grant agreement'' as ``the legal instrument reflecting a
relationship between the United States Government and a State, a local
government, or other recipient when--(1) the principal purpose of the
relationship is to transfer a thing of value to the State or local
government or other recipient to carry out a public purpose of support
or stimulation authorized by a law of the United States instead of
acquiring (by purchase, lease, or barter) property or services for the
direct benefit or use of the United States Government; and (2)
substantial involvement is not expected between the executive agency
and the State, local government, or other recipient when carrying out
the activity contemplated in the agreement.'' 31 U.S.C. 6304. Section
2.101 of the FAR similarly excludes ``grants,'' as defined in the
Federal Grant and Cooperative Agreement Act, from its coverage of
contracts. 48 CFR 2.101. Several appellate courts have also adopted
this construction of ``grants'' in defining the term for purposes of
other Federal statutory schemes. See, e.g., Chem. Service, Inc. v.
Environmental Monitoring Systems Laboratory, 12 F.3d 1256, 1258 (3rd
Cir. 1993) (applying same definition of ``grants'' for purposes of 15
U.S.C. 3710a); East Arkansas Legal Services v. Legal Services Corp.,
742 F.2d 1472, 1478 (D.C. Cir. 1984) (applying same definition of
``grants'' in interpreting 42 U.S.C. 2996a). If a contract qualifies as
a grant within the meaning of the Federal Grant and Cooperative
Agreement Act, it would be excluded from coverage of Executive Order
13706 and part 13.
[[Page 9608]]
Proposed Sec. 13.4(b) implements the other exclusion set forth in
section 6(f) of Executive Order 13706, which states that the Order does
not apply to ``contracts and agreements with and grants to Indian
Tribes under the Indian Self-Determination and Education Assistance Act
(Pub. L. 93-638), as amended.'' 80 FR 54700. This proposed provision is
identical to 29 CFR 10.4(b) as promulgated by the Minimum Wage
Executive Order. See 79 FR 60723.
Proposed Sec. 13.4(c) provides that any procurement contracts for
construction that are not subject to the DBA are excluded from coverage
of the Executive Order and part 13. This proposed provision is
identical to 29 CFR 10.4(c) as promulgated by the Minimum Wage
Executive Order Final Rule. See 79 FR 60723. The Department proposes to
make coverage of construction contracts under the Executive Order and
part 13 consistent with coverage under the DBA in order to assist all
interested parties in understanding their rights and obligations under
Executive Order 13706.
Similarly, proposed Sec. 13.4(d) incorporates the SCA's exemption
of certain service contracts into the exclusionary provisions of the
Executive Order. This proposed provision excludes from coverage of the
Executive Order and part 13 any contracts for services, except for
those expressly covered by proposed Sec. 13.3(a)(1)(iii) or (iv), that
are exempted from coverage under the SCA, pursuant to its statutory
language at 41 U.S.C. 6702(b) or its implementing regulations,
including those at 29 CFR 4.115 through 4.122 and 29 CFR 4.123(d) and
(e). The Department notes that this exemption would not apply if the
relevant service contract is expressly included within the Executive
Order's coverage by proposed Sec. 13.3(a)(1)(iii) or (iv). For
example, certain types of concessions contracts are excluded from SCA
coverage pursuant to 29 CFR 4.133(b) but are explicitly covered by
section 6(d)(i)(C) of the Executive Order and part 13 under proposed
Sec. 13.3(a)(1)(iii). The Department notes that any comments
addressing whether the Department should change proposed Sec.
13.3(a)(1)(ii) to extend coverage to any categories of ``procurement
contracts for services'' beyond those covered by the SCA would be
relevant to this proposed provision as well.
Proposed Sec. 13.4(e) provides that the accrual requirements of
part 13 do not apply to employees performing in connection with covered
contracts, i.e., those employees who perform work duties necessary to
the performance of the contract but who are not directly engaged in
performing the specific work called for by the contract, who spend less
than 20 percent of their hours worked in a particular workweek
performing in connection with such contracts. It further provides that
this exclusion is inapplicable to employees performing on covered
contracts, i.e., those employees directly engaged in performing the
specific work called for by the contract, at any point during the
workweek. Finally, it explains that this exclusion is also inapplicable
to employees performing in connection with covered contracts with
respect to any workweek in which the employees spend 20 percent or more
of their hours worked performing in connection with a covered contract.
This provision adopts language included in the Minimum Wage Executive
Order Final Rule in response to comments expressing concern about new
burdens on contractors associated with employees who spend an
insubstantial amount of time performing work in connection with covered
contracts (in particular, DBA-covered contractors that did not
previously segregate hours worked by FLSA-covered employees, including
those who were not present on the site of the construction work). 79 FR
60659, 60724 (codified at 29 CFR 10.4(f)). The Department explained in
that rulemaking that it expected the exclusion to significantly
mitigate the recordkeeping concerns identified by commenters without
substantially affecting the Executive Order's economy and efficiency
interests, and noted that it has used a 20 percent threshold for other
purposes in the SCA and DBA contexts. 79 FR 60660 (citing 29 CFR
4.123(e)(2); WHD FOH ]] 15e06, 15e10(b), 15e16(c), and 15e19).
As explained in the Minimum Wage Executive Order rulemaking, 79 FR
60659-62, this exclusion does not apply to any employee performing
``on,'' rather than ``in connection with,'' a covered contract at any
point during the workweek. (The meaning of these terms is addressed
above, in the discussion of the coverage provisions of proposed Sec.
13.3.) If an employee spends any time performing on a covered contract
and that employee's wages are governed by the DBA, SCA, or FLSA,
including employees who qualify for an exemption from the FLSA's
minimum wage and overtime provisions, the employee will be entitled to
accrue and use paid sick leave pursuant to the Executive Order as to
all time performing on or in connection with covered contracts in that
workweek. For an employee solely performing ``in connection with'' a
covered contract, however, the Executive Order's paid sick leave
requirements will only apply if that employee spends 20 percent or more
of her hours worked in a given workweek performing in connection with
covered contracts. Therefore, in order to apply this exclusion
correctly, contractors must accurately distinguish between employees
performing ``on'' a covered contract and those employees performing
``in connection with'' a covered contract. As explained in the
discussion of these concepts above, employees directly performing the
specific services called for by the contract are performing ``on'' a
covered contract. This category includes any employee who is entitled
to be paid DBA or SCA prevailing wages; such an employee is therefore
entitled to accrue and use paid sick leave as required by the Executive
Order and part 13 regardless of whether such covered work constitutes
less than 20 percent of the employee's overall hours worked in a
particular workweek.
This exclusion could apply, however, to any employees who are not
directly engaged in performing the specific construction identified in
a DBA contract (i.e., they are not DBA-covered laborers or mechanics)
but whose services are necessary to the performance of the DBA
contract, such as employees who do not perform the construction
identified in the DBA contract either due to the nature of their non-
physical duties and/or because they are not present on the site of the
work, but whose duties would be regarded as essential for the
performance of the contract. For example, proposed Sec. 13.4(e) could
apply to a security guard patrolling or monitoring a construction
worksite where DBA-covered work is being performed or a clerk who
processes the payroll for DBA contracts (either on or off the site of
the work). If the security guard or clerk also performed the duties of
a DBA-covered laborer or mechanic (for example, by painting or moving
construction materials), however, the exclusion would not apply to any
hours worked on or in connection with the contract in that workweek
because that employee performed ``on'' the covered contract at some
point in the workweek.
Similarly, any employees performing work in connection with an SCA
contract who are not entitled to SCA prevailing wages but are, because
they perform work ``in connection with'' an SCA-covered contract,
entitled to at least the FLSA minimum wage could fall within the scope
of this exclusion provided their work falls below the 20 percent
threshold. For example, the exclusion could apply to an accounting
[[Page 9609]]
clerk who processes a few invoices for SCA contracts out of hundreds of
other invoices for non-covered contracts during the workweek or a human
resources employee who assists for short periods of time in the hiring
of the employees performing on the SCA-covered contract in addition to
the hiring of employees on other non-covered projects.
With respect to concessions contracts and contracts in connection
with Federal property or lands and related to offering services, the
proposed Sec. 13.4(e) exclusion could apply to any employees
performing in connection with such contracts who are not at any time
directly engaged in performing the specific services identified in the
contract but whose services or work duties are necessary to the
performance of the covered contract. One example of an employee who
could qualify for this exclusion is a clerk who handles the payroll for
a child care center that leases space in a Federal building as well as
the center's other locations that are not covered by the Executive
Order and thus does not spend 20 percent or more of his time handling
payroll for the child care center in the Federal building.
Importantly, as in the Minimum Wage Executive Order rulemaking, 79
FR 60661-62, the Department notes that a contractor seeking to rely on
this exclusion must correctly determine the hours worked, make and
maintain records (or other affirmative proof) that the employee did not
work ``on'' a covered contract, and appropriately segregate the hours
worked by the employee in connection with the covered contract from
other work not subject to the Executive Order. This requirement is
consistent with other instances, described elsewhere in this preamble,
in which employees perform some work covered by the Executive Order and
part 13 and some work that is not. In the absence of records or other
proof demonstrating that an employee did not work ``on'' a covered
contract and adequately segregating non-covered work from the work
performed in connection with a covered contract, the exclusion will not
apply, and employees who work in connection with a covered contract
will be presumed to have spent all paid time performing such work
throughout the workweek.
The quantum of affirmative proof necessary to support reliance on
the exclusion will vary with the circumstances. For example, it may
require considerably less affirmative proof to satisfy the proposed
Sec. 13.4(e) exclusion with respect to an accounting clerk who only
occasionally processes an SCA-contract-related invoice than would be
necessary to establish the exclusion with respect to a security guard
who works on a DBA-covered site for at least several hours each week.
Additionally, the Department notes that in calculating hours worked
by a particular employee in connection with covered contracts for
purposes of determining whether this exclusion may apply, contractors
must determine the aggregate amount of hours worked on or in connection
with covered contracts in a given workweek by that employee. For
example, if an administrative assistant works for a single employer 40
hours per week and spends 2 hours each week handling payroll for each
of four separate SCA contracts, the 8 hours that the employee spends
performing in connection with the four covered contracts must be
aggregated for each workweek in order to determine whether the
exclusion applies. In this case, the exclusion would not apply because
the employee's hours worked in connection with the SCA contracts
constitute 20 percent of her total hours worked for that workweek. As a
result, the 8 hours that the employee spends performing in connection
with the four covered contracts each workweek would count toward the
accrual of paid sick leave.
Finally, the Department acknowledges that the Minimum Wage
Executive Order rulemaking contained additional exclusions for certain
categories of employees that are not replicated in this proposed rule.
Specifically, under the Minimum Wage Executive Order regulations,
employees whose wages are not governed by section 206(a)(1) of the FLSA
because of the applicability of exemptions under section 213(a) are not
entitled to the protections of Executive Order 13658. 29 CFR
10.4(e)(3). Executive Order 13706 expressly covers employees to whom an
exemption from the FLSA's minimum wage and overtime provisions applies,
see 80 FR 54699, so no similar exclusion would be appropriate in this
rulemaking. Additionally, the Minimum Wage Executive Order does not
apply to employees whose wages are calculated pursuant to special
certificates issued under 29 U.S.C. 214(a) or (b). 29 CFR 10.4(e)(1),
(2). Because the Department interprets Executive Order 13706 to be
intended to apply to a broad range of employees, the Order explicitly
applies to employees whose wages are governed by the FLSA, and the
Order (unlike the Minimum Wage Executive Order) contains no reference
to any category of employees whose wages are calculated pursuant to
special certificates, the Department proposes to interpret Executive
Order 13706 to apply to employees whose wages are calculated pursuant
to special certificates under section 14 of the FLSA. It therefore does
not propose to incorporate an exclusion for any such employees in this
proposed rule.
Section 13.5 Paid Sick Leave for Federal Contractors and Subcontractors
Proposed Sec. 13.5 implements section 2 of Executive Order 13706
by setting forth rules and restrictions regarding the accrual and use
of paid sick leave.
Proposed Sec. 13.5(a) addresses the accrual of paid sick leave.
Proposed Sec. 13.5(a)(1) provides that a contractor shall permit an
employee to accrue not less than 1 hour of paid sick leave for every 30
hours worked on or in connection with a covered contract. This
requirement implements section 2(a) of Executive Order 13706. 80 FR
54697. Proposed Sec. 13.5(a) further provides that a contractor shall
aggregate an employee's hours worked on or in connection with all
covered contracts for that contractor for purposes of paid sick leave
accrual. For example, if a subcontractor who installs windows in
building construction projects sends a single employee to three
separate DBA-covered projects, all the time the employee spends on all
worksites--whether during the same or different workweeks--for the
subcontractor must be added together to determine how much paid sick
leave the employee has accrued. If in one workweek the employee spent
20 hours at Site A and 10 hours at Site B, she would have accrued 1
hour of paid sick leave at the end of that workweek; if in the next
workweek the employee spent 30 hours at Site C, she would then have a
total accrual of 2 hours of paid sick leave. As for an employee who
falls within the 20 percent of hours worked exclusion created by
proposed Sec. 13.4(e) for some workweeks but not others, only the
employee's hours worked on or in connection with covered contracts
during workweeks in which the exclusion does not apply would count
toward accrual of paid sick leave.
Proposed Sec. 13.5(a)(1)(i) explains that for purposes of
Executive Order 13706 and part 13, ``hours worked'' includes all time
for which an employee is or should be paid, meaning time an employee
spends working or in paid time off status, including time when the
employee is using paid sick leave or any other paid time off provided
by the contractor. This definition is different from the use of the
term ``hours worked'' in other contexts and applies only for purposes
of the Executive Order. It includes (but is broader than)
[[Page 9610]]
all time considered ``hours worked'' for purposes of the SCA and the
FLSA, i.e., all time an employee is suffered or permitted to work. 29
CFR 4.178 (explaining that ``[i]n general, the hours worked by an
employee include all periods in which the employee is suffered or
permitted to work whether or not required to do so, and all time during
which the employee is required to be on duty or to be on the employer's
premises or to be at a prescribed workplace''); 29 CFR 785.11 (``Work
not requested but suffered or permitted is work time.''); see also 29
CFR part 785 (FLSA regulations regarding hours worked principles).
The Department's interpretation of ``hours worked'' under Executive
Order 13706 to additionally include paid time off, although distinct
from the FLSA and SCA definitions of the term, is analogous to the
accrual of vacation leave under the SCA, where absences from work (with
or without pay) generally count toward satisfaction of length of
service requirements for vacation benefits. 29 CFR 4.173(b)(1). And it
is consistent with the OPM regulation regarding leave accrual by
federal employees, which provides that an employee accrues leave each
pay period based on time she is ``in a pay status.'' 5 CFR 630.202(a).
The Department's interpretation also reflects its view that basing paid
sick leave accrual on all time an employee is in pay status, rather
than merely on when the employee is suffered or permitted to work, will
be administratively easier (or no more difficult) for contractors to
implement. The Department further notes that this interpretation
generally will have minimal impact on the rate of an employee's accrual
of paid sick leave and, with respect to many employees who work at
least full time (or potentially even less) each week on or in
connection with covered contracts, will have no impact on the total
amount of paid sick leave accrued per year because such employees will
reach the maximum 56 hours within each accrual year regardless of
whether paid time off is included. The Department reiterates that this
broad definition of hours worked is only for purposes of the Executive
Order and part 13 and has no bearing on the definition of hours worked
in other contexts, such as the definition for purposes of the FLSA and
SCA, which is set forth in longstanding regulations under those
statutes. See 29 CFR part 785 (FLSA hours worked principles); 29 CFR
4.178 (adopting FLSA hours worked principles for purposes of the SCA).
The Department reiterates that only hours worked (as that term is
defined for purposes of the Order and part 13) on or in connection with
a covered contract, rather than hours worked on or in connection with a
non-covered contract, count toward paid sick leave accrual. For
example, if an employee works on an SCA-covered contract for security
services for 30 hours each workweek and works for the same contractor
on a private contract for security services an additional 30 hours each
workweek, the contractor would only be required to allow that employee
to accrue 1, rather than 2, hours of paid sick leave each workweek.
Similarly, if an employee works for one contractor on a DBA-covered
contract for construction for 2 months and then on a private contract
for construction for 2 months, the contractor would only be required to
allow the employee to accrue paid sick leave during the first 2 months.
But the Department proposes to require contractors who wish to
distinguish covered and non-covered hours worked for purposes of paid
sick leave accrual to keep records that clearly reflect that
distinction. Specifically, proposed Sec. 13.5(a)(1)(i) explains that
to properly exclude time spent on non-covered work from an employee's
hours worked that count toward the accrual of paid sick leave, a
contractor must accurately identify in its records the employee's
covered and non-covered hours worked. In the absence of records or
other proof adequately segregating the time--whether because of a
contractor's inadequate recordkeeping, because the contractor preferred
permitting the employee to more rapidly accrue paid sick leave rather
than keeping such records, or for another reason--the employee would be
presumed to have spent all paid time performing work on or in
connection with a covered contract. This policy is consistent with the
treatment of hours worked on SCA- and non-SCA-covered contracts, see 29
CFR 4.178, 4.179, as well as the treatment of covered versus non-
covered time under the Minimum Wage Executive Order rulemaking, see 79
FR 60660-61, 60672.
Proposed Sec. 13.5(a)(1)(ii) provides that a contractor shall
calculate an employee's accrual of paid sick leave no less frequently
than at the conclusion of each workweek, but it is not required to
allow employees to accrue paid sick leave in increments smaller than 1
hour for completion of any fraction of 30 hours worked. In other words,
a contractor must treat each employee's paid sick leave as accruing no
less frequently than at the end of each workweek, but an employee need
only be permitted to accrue a full hour of paid sick leave after
working a full 30 hours, rather than accruing any fraction of an hour
for any fraction of 30 hours worked during the workweek. The Department
considers ``workweek'' to have the meaning explained in the FLSA
regulations, i.e., a fixed and regularly recurring period of 168
hours--seven consecutive 24-hour periods--that need not coincide with
the calendar week but must generally remain fixed for each employee.
See 29 CFR 778.105.
Proposed Sec. 13.5(a)(1)(ii) further explains that any remaining
fraction of 30 hours worked shall be added to hours worked for the same
contractor in subsequent workweeks to reach the next 30 hours worked
provided that the next workweek in which the employee performs on or in
connection with a covered contract occurs within the same accrual year.
(The term accrual year is defined in proposed Sec. 13.2 and further
explained below.) For example, assume an employee works on a covered
concessions contract for 45 hours in workweek 1 and 20 hours in
workweek 2. At the conclusion of workweek 1, the employee will have
accrued 1 hour of paid sick leave based on her first 30 hours worked
and, unless the employer chooses to allow accrual in increments smaller
than 1 hour, will not have accrued additional paid sick leave based on
the additional 15 hours she worked in that workweek. At the conclusion
of workweek 2, the employee will have accrued an additional hour of
paid sick leave based on the additional 15 hours in workweek 1 plus her
first 15 hours worked in workweek 2. The employee need not have earned
any paid sick leave based on the remaining 5 hours worked during
workweek 2. If the employee spends several subsequent weeks working for
the contractor on a private contract and then returns to working on the
covered concessions contract, under this provision as proposed, those
remaining 5 hours would be added to her subsequent hours worked on the
concessions contract for purposes of reaching her next accrued hour of
paid sick leave (provided her return to the covered concessions
contract occurred within the same accrual year as workweek 2, and, as
explained below, provided that the same, rather than a successor,
contractor holds the concessions contract). An employer may elect to
permit employees to accrue paid sick leave in fractions of an hour--
because it finds the related recordkeeping less burdensome than keeping
track of hours worked from previous workweeks, it allows for use of
[[Page 9611]]
paid sick leave in increments smaller than 1 hour, or for any other
reason--provided all hours worked for the contractor on or in
connection with covered contracts within the accrual year are counted
toward an employee's paid sick leave accrual.
Proposed Sec. 13.5(a)(1)(iii) addresses the accrual of paid sick
leave for employees as to whom contractors are not obligated by another
statute to keep records of hours worked. For most employees on covered
contracts, such as service employees on SCA-covered contracts, laborers
and mechanics on DBA-covered contracts, and all employees performing
work on or in connection with any covered contract whose wages are
governed by the FLSA, contractors are already obligated by the SCA,
DBA, or FLSA to keep records of employees' hours worked as that term is
defined under those statutes. 29 CFR 4.6(g)(1)(iii), 4.185 (SCA); 29
CFR 5.5(a)(3)(i) (DBA); 29 CFR 516.2(a)(7), 516.30(a) (FLSA). As to
those employees, therefore, contractors are already collecting
information central to calculating the accrual of paid sick leave. But
for those employees who are employed in a bona fide executive,
administrative, or professional capacity, as those terms are defined in
29 CFR part 541, contractors are not currently required by the SCA,
DBA, or FLSA to keep such records. See 29 CFR 4.6(g)(1)(iii), 4.156,
4.185 (requiring that records be kept for ``service employees'' to whom
the SCA applies and excluding from that category ``persons employed in
an executive, administrative, or professional capacity as those terms
are defined in 29 CFR part 541); 29 CFR 5.5(a)(3)(i), 5.2(m) (requiring
that records be kept for ``laborers and mechanics'' to whom the DBA
applies and excluding from those terms ``[p]ersons employed in a bona
fide executive, administrative, or professional capacity as defined in
part 541 of this title''); 29 CFR 516.3 (excusing employers of ``each
employee in a bona fide executive, administrative, or professional
capacity . . . as defined in part 541 of this chapter'' from the FLSA
requirement to maintain and preserve records of hours worked). In order
not to impose a new recordkeeping burden on employers of such
employees, proposed Sec. 13.5(a)(1)(iii) would allow contractors to
choose to continue not to keep records of such employees' hours worked,
but instead to allow the employees to accrue paid sick leave as though
the employees were working on or in connection with a covered contract
for 40 hours per week. Contractors may, under the proposed provision,
choose to calculate paid sick leave accrual by tracking the employee's
actual hours worked. Contractors who do so, however, must permit the
relevant employees to accrue paid sick leave based on their actual
hours worked consistently across workweeks rather than, for example,
using the 40 hours assumption in workweeks during which an employee
works more than 40 hours but not those in which the employee works
fewer. The Department would apply these principles to any employees
exempt from the FLSA's minimum wage and overtime provisions and not
covered by the SCA or DBA. This approach is consistent with FMLA
recordkeeping regulations, under which there is a general requirement
that FMLA-covered employers keep records of hours worked by employees
eligible for FMLA leave but an exception with respect to employees who
are not covered by or are exempt from the FLSA; employers of those
employees need not keep such records so long as the employer presumes
that the employees have met the hours requirement for FMLA eligibility.
See 29 CFR 825.500(c)(1), (f). Proposed Sec. 13.5(a)(1)(iii) further
provides that if such an employee regularly works fewer than 40 hours
per week on or in connection with covered contracts, whether because
the employee splits time between covered and non-covered contracts or
because the employee is part-time, the contractor may allow the
employee to accrue paid sick leave based on the employee's typical
number of hours worked on covered contracts per workweek. Although the
contractor need not keep records of the employee's hours worked each
week, to use a number less than 40 for this purpose, the contractor
must have probative evidence of the employee's typical number of
covered hours worked, such as payroll records showing that an employee
who performs on a covered contract was paid for only 20 hours per week
by the contractor.
Proposed Sec. 13.5(a)(2) would require a contractor to inform an
employee, in writing, of the amount of paid sick leave that the
employee has accrued but not used (i) no less than monthly, (ii) at any
time when the employee makes a request to use paid sick leave, (iii)
upon the employee's request for such information, but no more often
than once a week, (iv) upon a separation from employment, and (v) upon
reinstatement of paid sick leave pursuant to Sec. 13.5(b)(3). Some of
these requirements are based on FMLA regulations regarding notification
to an employee of how much leave will be or has been counted against
her FMLA entitlement, see 29 CFR 825.300(d)(6), but they are modified
to account for the differences between FMLA leave and paid sick leave,
including in the method of accrual. The fourth and fifth requirements
are meant to ensure that employees who may be and ultimately are
rehired by a contractor or a successor contractor know how much paid
sick leave they should and do have available upon such rehiring. The
Department believes it is important that employees be able to determine
whether absences will be paid (so they can, for example, schedule their
own or their family members' doctors' appointments to occur after they
have accrued sufficient paid sick leave), and does not believe these
notification requirements will create a significant burden for
contractors. The Department notes that a contractor's existing
procedure for informing employees of their available paid time off,
such as notification accompanying each paycheck or an online system an
employee can check at any time, can be used to satisfy or partially
satisfy these requirements provided it is written (including
electronically) and clearly indicates the amount of paid sick leave an
employee has accrued separately from indicating amounts of other types
of paid time off available (except where the employer's paid time off
policy satisfies the requirements of proposed Sec. 13.5(f)(5),
described below).
Proposed Sec. 13.5(a)(3) permits a contractor to choose to provide
an employee with at least 56 hours of paid sick leave at the beginning
of each accrual year rather than allowing the employee to accrue such
leave based on hours worked over time. As proposed, it further provides
that in such circumstances, the contractor need not comply with the
accrual requirements described in proposed Sec. 13.5(a)(1). The
contractor must, however, allow carryover of paid sick leave as
required by proposed Sec. 13.5(b)(2), and although the contractor may
limit the amount of paid sick leave an employee may carry over to no
less than 56 hours, the contractor may not limit the amount of paid
sick leave an employee has available for use at any point as is
otherwise permitted by proposed Sec. 13.5(b)(3). For example, if a
contractor exercises this option and an employee carries over 16 hours
of paid sick leave from one accrual year to the next (as described in
the discussion of proposed Sec. 13.5(b)(2) below), the contractor must
permit the employee to have 72 hours (16 hours plus 56 hours) of paid
sick
[[Page 9612]]
leave available for use as of the beginning of the second accrual year
(because the contractor is not permitted to limit an employee's paid
sick leave at any point in time as described in the discussion of
proposed Sec. 13.5(b)(3) below). Under proposed Sec. 13.5(c)(4),
described below, the contractor may not limit the employee's use of
that paid sick leave in the second (or any) accrual year, but the
employee's use can effectively be limited if the contractor sets, as
permitted by this proposed provision, a limit on the amount of paid
sick leave an employee can carry over from year to year; in the
example, if the employee who had 72 hours of paid sick leave at the
beginning of accrual year 2 did not use any leave in that year, she
could be permitted to carry over only 56 hours into accrual year 3. The
Department believes this option will be beneficial to contractors that
find the tracking of hours worked and/or calculations of paid sick
leave accrual to be burdensome, and it provides employees with the full
amount of paid sick leave contemplated by the Executive Order at the
beginning of each accrual year.
Proposed Sec. 13.5(b) implements the Executive Order's provisions,
in sections 2(b), (d), and (j), regarding maximum accrual, carryover,
and reinstatement of paid sick leave as well as non-payment for unused
paid sick leave. Proposed Sec. 13.5(b)(1) provides that a contractor
may limit the amount of paid sick leave an employee is permitted to
accrue at not less than 56 hours in each accrual year. Proposed Sec.
13.5(b)(1) would also provide detail regarding an accrual year, a term
defined in proposed Sec. 13.2. The Department proposes to explain that
an accrual year is a 12-month period beginning on the date an
employee's work on or in connection with a covered contract began or
any other fixed date chosen by the contractor, such as the date a
covered contract began, the date the contractor's fiscal year begins, a
date relevant under State law, or the date a contractor uses for
determining employees' leave entitlements under the FMLA pursuant to 29
CFR 825.200. Under this proposal, a contractor may choose its accrual
year but must use a consistent option for all employees and may not
select or change its accrual year in order to avoid the paid sick leave
requirements of Executive Order 13706 and part 13. As under the FMLA,
if a contractor does not select an accrual year, the option that
provides the most beneficial outcome to the employee will be used. See
29 CFR 825.200(e).
Proposed Sec. 13.5(b)(2) provides that paid sick leave shall carry
over from one accrual year to the next. This proposed language would
mean that upon the date a contractor has selected as the beginning of
the accrual year, an employee would continue to have available for use
as much paid sick leave as the employee had accrued but not used as of
the end of the previous accrual year. Proposed Sec. 13.5(b)(2) further
provides that paid sick leave carried over from the previous accrual
year shall not count toward any limit the contractor sets on the annual
accrual of paid sick leave. For example, if an employee carries over 30
unused hours of paid sick leave from accrual year 1 to accrual year 2,
she must still be permitted to accrue up to 56 additional hours of paid
sick leave in accrual year 2 rather than only 26 (because 30 plus 26 is
56), subject to the limitations described below.
Proposed Sec. 13.5(b)(3) provides that a contractor may limit the
amount of paid sick leave an employee is permitted to have available
for use at any point to not less than 56 hours and further explains
that even if an employee has accrued fewer than 56 hours of paid sick
leave since the beginning of the accrual year, the employee need only
be permitted to accrue additional paid sick leave if the employee has
fewer than 56 hours available for use. For example, if an employee
carries over 56 hours of paid sick leave into a new accrual year, a
contractor may prohibit that employee from accruing any additional paid
sick leave until she has used some portion of that leave. If and when
she does use paid sick leave, she must be permitted to accrue
additional paid sick leave, up to a limit of no less than 56 hours for
the accrual year, beginning with hours worked in the workweek after she
has used paid sick leave such that her amount of available paid sick
leave is less than 56 hours. Similarly, if an employee carries over 16
hours of paid sick leave into a new accrual year, she must be permitted
to accrue 40 additional hours of paid sick leave even if she does not
use any paid sick leave while that accrual occurs. Once she has 56
hours of paid sick leave accrued, the contractor may prohibit her from
accruing any additional leave unless, and until the workweek after, she
uses some portion of the 56 hours. If she uses, for example, 24 hours
of paid sick leave in the same accrual year (such that she has 32 hours
remaining available for use), she must be permitted to accrue up to at
least 16 more hours (in addition to the 40 hours she has already
accrued during the accrual year) for a total of 56 hours accrued in
that accrual year. If she did so, she would then have 48 hours of paid
sick leave (32 previously available hours plus 16 newly accrued hours)
available for use and could be limited to that amount until the next
accrual year.
Proposed Sec. 13.5(b)(4) implements the second clause of section
2(d) of the Executive Order by providing that paid sick leave shall be
reinstated for employees rehired by the same contractor or a successor
contractor within 12 months after a job separation. The proposed text
specifies that this reinstatement requirement applies whether the
employee leaves and returns to a job on or in connection with a single
covered contract or works for a single contractor on or in connection
with more than one covered contract, regardless of whether the employee
remains employed by the contractor to work on non-covered contracts in
between periods of working on covered contracts. For example, if a
service employee on an SCA-covered contract accrued but did not use 12
hours of paid sick leave, moved to a different work site to perform
work unrelated to a contract with the Federal Government (either with
or not with the same employer), and after 6 months, returned to the
original SCA-covered contract, that employee would begin back on the
original job with 12 hours of paid sick leave available for use.
Pursuant to proposed Sec. Sec. 13.5(a)(2) and 13.5(b)(1), if her first
week back on the job is within the same accrual year during which she
accrued those 12 hours, the contractor would be required to count any
fraction of 30 hours worked in her previous time on the contract toward
the accrual of her next hour of paid sick leave, but the contractor may
limit her additional accrual in that accrual year to 44 hours such that
she can only accrue 56 hours total in the accrual year.
Proposed Sec. 13.5(b)(4) further explains that the reinstatement
requirement also applies if an employee takes a job on or in connection
with a covered successor contract after working for a different
contractor on or in connection with the predecessor contract, including
when an employee is entitled to a right of first refusal of employment
from a successor contractor under Executive Order 13495. (The terms
``successor contract'' and ``predecessor contract'' are defined in
proposed Sec. 13.2, and the requirements that a predecessor contractor
submit to a contracting agency, and a contracting agency provide to a
successor contractor, a certified list of relevant employees' accrued,
unused paid sick leave appear in proposed Sec. Sec. 13.26 and
13.11(f), respectively.) For example, if an employee performing work on
a contract
[[Page 9613]]
to sell food to the public in a National Park has accrued 16 hours of
paid sick leave, the contract ends, a different contractor takes over
the food stand, and that employee is rehired by the successor
contractor, he would begin the new job with 16 hours of paid sick
leave. Because the successor contractor is not the same contractor for
which the employee previously worked, proposed Sec. 13.5(a)(2) does
not require that the successor contractor count any fraction of 30
hours worked for the predecessor contractor toward the accrual of the
employee's next hour of paid sick leave. (This means that predecessor
and successor contractors will not have to submit and receive,
respectively, information about any such fraction of 30 hours worked
for each employee.) The successor contractor must, however, treat any
of the previously accrued paid sick leave as carried over from a prior
accrual year, i.e., under proposed Sec. 13.5(b)(2), the previously
accrued paid sick leave does not count toward any annual accrual limit
in the accrual year designated by the successor contractor.
The Department invites comments on its interpretation of section
2(d) of the Executive Order to mean that the reinstatement requirement
applies if an employee is rehired by a different contractor on or in
connection with a covered successor contract after working on or in
connection with the predecessor contract. The Department believes that
the Executive Order's requirement to carry over previously accrued paid
sick leave for employees ``rehired by a covered contractor'' should be
interpreted to include different successor contractors who rehire
employees from the predecessor contract. SCA-covered successor
contractors generally are required by the Nondisplacement Executive
Order to provide a right of first refusal of employment to employees on
the predecessor contract in positions for which they are qualified. As
a result, many covered successor contractors effectively ``rehire''
these employees, and thus, it is reasonable to interpret Executive
Order 13706, particularly given its purpose of ensuring that employees
have access to paid sick leave, to provide that such employees' accrued
paid sick leave balances would carry over as well. Such an
interpretation also ensures that the carryover of accrued, unused leave
does not depend on whether the successor contract is awarded to the
same contractor that performed on the predecessor contract (in which
case the Executive Order clearly mandates carryover of unused paid sick
leave).
The Department recognizes that the government must ensure that it
spends money wisely, and it is imperative that contract actions result
in the best value for the taxpayer. The Government understands
contractors may include the costs of benefits in overhead and may not
(except in cost-type contracts) pay contractors based on their actual
costs. The Department therefore invites comments regarding the extent
to which its interpretation of the reinstatement requirement may affect
pricing and cost accounting, if at all, for covered contractors and
contracting agencies, including any potential for paying twice for the
same benefit--once to a predecessor contractor charging the Government
for predicted use of paid sick leave during its contract term, and a
second time to a successor contractor who would be obligated to pay for
unused sick leave later used by its employees during the successor's
contract, with the Government potentially bearing the added costs
through higher contract prices. In one potential scenario, a contractor
on a covered contract may have included in its bid the full cost of
providing 56 hours of paid sick leave to every employee performing on
or in connection with the contract, and the contracting agency may
treat the full amount of such leave as an allowable cost. At the end of
the contract term, some employees will likely have balances of accrued
but unused paid sick which could be carried over to a successor
contractor. The Department seeks comment on how the current contractor
and any different contractors bidding for the successor contract would
account for this situation in their bid pricing. The Department also
invites comment as to the extent to which any potential impacts on
pricing or cost accounting may be mitigated, including ways to mitigate
any potential impact on subcontractors, small businesses, and prime
contractors with covered supply chains. In providing comments on the
feasibility of mitigation steps, commenters should consider that the
requirement for paid sick leave flows down to all subcontract tiers and
that in other than cost type contracts, the Government may not have
insight into and does not pay contractors based on their actual costs.
Proposed Sec. 13.5(b)(5) implements section 2(j) of the Executive
Order by providing that nothing in the Order or part 13 shall require a
contractor to make a financial payment to an employee for accrued paid
sick leave that has not been used upon a separation from employment.
Although the Executive Order does not prohibit a contractor from making
such payments should the contractor so choose, under the regulatory
text as proposed, doing so (whether voluntarily or pursuant to a
collective bargaining agreement) does not affect that contractor's, or
a successor contractor's, obligation to reinstate any accrued paid sick
leave upon rehiring the employee within 12 months of the separation
pursuant to proposed Sec. 13.5(b)(4). In other words, under proposed
Sec. 13.5(b)(5), a contractor cannot avoid the requirement to
reinstate paid sick leave when it rehires an employee by cashing out
the leave at the time of the original separation from employment. This
interpretation is consistent with the Department's understanding that
the Executive Order is meant to ensure that employees of Federal
contractors have access to paid sick leave rather than its cash
equivalent. The Department requests comments, however, regarding the
impact of this proposed provision on contractors and employees, as well
as the incidence of cash-out for paid time off or paid sick time under
contractors' current policies or relevant collective bargaining
agreements.
Proposed Sec. 13.5(c) describes the purposes for which an employee
may use paid sick leave, thereby implementing section 2(c) of the
Executive Order, and addresses the calculation of the use of paid sick
leave.
Proposed Sec. 13.5(c)(1) provides that subject to the conditions
described in proposed Sec. 13.5(d) and (e) and the amount of paid sick
leave the employee has available for use, a contractor must permit an
employee to use paid sick leave to be absent from work for that
contractor on or in connection with a covered contract for four
reasons.
First, under proposed Sec. 13.5(c)(1)(i), an employee may use paid
sick leave if she is absent because of her own physical or mental
illness, injury, or medical condition. These terms are defined in
proposed Sec. 13.2 and, as explained above, are meant to be understood
broadly.
Second, under proposed Sec. 13.5(c)(1)(ii), an employee may use
paid sick leave if she is absent because she is obtaining diagnosis,
care, or preventive care from a health care provider. Obtaining
diagnosis, care, or preventive care from a health care provider and
health care provider are also defined in proposed Sec. 13.2, and the
Department also interprets those terms broadly.
Third, under proposed Sec. 13.5(c)(1)(iii), an employee may use
paid sick leave if she is absent because
[[Page 9614]]
she is caring for her child, parent, spouse, domestic partner, or any
other individual related by blood or affinity whose close association
with the employee is the equivalent of a family relationship who has
any of the conditions or needs for diagnosis, care, or preventive care
described in proposed Sec. 13.5(c)(1)(i) or (ii) or is otherwise in
need of care. The terms child, parent, spouse, domestic partner, and
individual related by blood or affinity whose close association with
the employee is the equivalent of a family relationship are defined in
proposed Sec. 13.2. As explained, the Department understands the use
of these terms in the Executive Order to be an indication that the
category of individuals for whom an employee can use paid sick leave to
care is expansive. Furthermore, the individual for whom the employee is
caring may have any of the broadly understood conditions or needs
referred to in proposed Sec. 13.5(c)(1)(i) or (ii). For example, an
employee may use paid sick leave to be with a child home from school
with a cold or to accompany his spouse to an appointment at a fertility
clinic. Proposed Sec. 13.5(c)(1)(iii) also refers to an individual who
is ``otherwise in need of care,'' language that appears in section 2(c)
of the Executive Order. The Department interprets this phrase to refer
to non-medical caregiving for an individual who has a general need for
assistance related to the individual's underlying health condition. For
example, an employee may use paid sick leave to provide his
grandfather, who has dementia, unpaid assistance with bathing,
dressing, and eating if the grandfather's usual paid personal care
attendant is unable to keep her regular schedule.
Fourth, under proposed Sec. 13.5(c)(1)(iv), an employee may use
paid sick leave if the absence is because of domestic violence, sexual
assault, or stalking, if the time absent from work is for the purposes
otherwise described in proposed Sec. 13.5(c)(1)(i) or (ii) or to
obtain additional counseling, seek relocation, seek assistance from a
victim services organization, take related legal action, including
preparation for or participation in any related civil or criminal legal
proceeding, or assist an individual related to the employee as
described in proposed Sec. 13.5(c)(1)(iii) in engaging in any of these
activities. The terms used in proposed Sec. 13.5(c)(1)(iv) (domestic
violence, which includes the terms spouse, domestic partner, intimate
partner, and family violence; sexual assault; stalking; obtain
additional counseling, seek relocation, seek assistance from a victim
services organization, or take related legal action; victim services
organization; and related legal action or related civil or criminal
legal proceeding) are defined in proposed Sec. 13.2. The Department
reiterates that it interprets these terms broadly in keeping with the
purpose of ensuring that victims of domestic violence, sexual assault,
or stalking are able to obtain the care, safety, and legal protections
they need without losing wages or their jobs and that employees can
assist such victims who are family members or like family in doing so.
For example, an employee who is a victim of domestic violence could use
a day of paid sick leave to prepare for a meeting with an attorney,
travel to the attorney's office, have the meeting to discuss her legal
options, and travel home; a victim could use a day of paid sick leave
to go to a courthouse to determine the process for filing a petition
for a civil protection order, complete any necessary paperwork, and
file that paperwork with the court, and another full day to attend
proceedings at the court in support of that application, including
mandatory mediation. For this purpose, assisting another individual who
is a victim of domestic violence, sexual assault, or stalking includes,
but is not limited to, accompanying the victim to see a health care
provider, attorney, social worker, victim advocate, or other individual
who provides services the victim needs as a result of the domestic
violence, sexual assault, or stalking. If the individual the employee
is assisting is a minor victim of domestic violence or child sexual
abuse, the employee could use paid sick leave to, for example, seek
legal protections for the victim (including filing a police report and/
or seeking a civil protection order), medical treatment for the victim,
or emergency relocation services.
Just as with the accrual of paid sick leave, use of paid sick leave
is contractor, rather than contract, specific, meaning that an employee
who has accrued paid sick leave working on or in connection with one
covered contract may use the paid sick leave for time she would
otherwise have been working on or in connection with another covered
contract for the same contractor. For example, if an employee had
accrued 2 hours of paid sick leave over the course of several workweeks
during which she worked for a single contractor in connection with one
covered contract for 30 hours and another two covered contracts for 15
hours each, she could use her accrued paid sick leave during time she
was scheduled to perform work in connection with any of the three
contracts, or any other covered contract, on behalf of the same
contractor.
Additionally, the Department notes that under proposed Sec.
13.5(c)(1), an employee need only be permitted to use paid sick leave
during time the employee would otherwise have spent working on or in
connection with a covered contract rather than time spent performing
other work (such as on a private contract), even if that work is for
the same contractor. As explained elsewhere in this preamble, it is the
contractor's responsibility to keep adequate records distinguishing
between an employee's covered and non-covered work, and any denial of a
request to use paid sick leave because the leave would occur while an
employee is performing work that is not covered by Executive Order
13706 or part 13 must be supported by records or other proof
demonstrating that fact. As for an employee who falls within the 20
percent of hours worked exclusion created by proposed Sec. 13.4(e) for
some workweeks but not others, the employee must be permitted to use
paid sick leave at any time the employee would be working on or in
connection with covered contracts, regardless of whether they fall
during workweeks in which the exclusion applies. This approach is
designed to avoid complications that would otherwise arise in
responding to requests to use paid sick leave accrued by such
employees. Specifically, an employee could request to use paid sick
leave during a week in which it was not clear at the time of the
request (because it would not be known until the end of the week)
whether the employee met the 20 percent threshold; under this approach,
in such circumstances, the contractor must permit the use of paid sick
leave (assuming all relevant requirements for use are met) rather than
deny the request or provide an uncertain response to the employee.
Proposed Sec. 13.5(c)(2) provides that a contractor shall account
for an employee's use of paid sick leave in increments of no greater
than 1 hour. In other words, although a contractor may choose to allow
employees to use paid sick leave in increments of smaller than 1 hour
(such as half an hour or 15 minutes), it may not require employees to
use paid sick leave in increments of any more than 1 hour. For example,
if an employee needs to be an hour late for work because she
accompanied her sister to a chemotherapy appointment that morning, her
employer must permit her to use 1 hour of paid sick leave (rather than,
for instance, requiring her to take a full day off or use a full day's
leave).
[[Page 9615]]
The Department requests comments regarding whether it should add to
this proposed provision a physical impossibility exception to the 1-
hour requirement as exists under the FMLA regulations at 29 CFR
825.205(a)(2). Under such a provision, in situations in which an
employee is physically unable to access the worksite after the start of
the shift or to depart from the workplace prior to the end of the
shift, a contractor would be permitted to require the employee to
continue to use paid sick leave for as long as the physical
impossibility remains. Examples that arise in the FMLA context are
flight attendants whose scheduled flight departs, train conductors
whose scheduled train departs, and laboratory technicians who work in
``clean rooms'' that must remain sealed. The Department seeks comment
regarding the categories of covered contracts and employees entitled to
paid sick leave under Executive Order 13706 and part 13 with respect to
which similar circumstances could arise and the implications of such a
provision for contractors and employees who perform on or in connection
with those contracts.
Proposed Sec. 13.5(c)(2)(i) further explains that a contractor may
not reduce an employee's accrued paid sick leave by more than the
amount of leave the employee actually takes, and a contractor may not
require an employee to take more leave than is necessary to address the
circumstances that precipitated the need for the leave, provided that
the leave is counted using an increment of no greater than 1 hour. This
language is based on FMLA regulations regarding the use of FMLA leave.
See 29 CFR 825.205(a). It means that if an employer chooses to waive
its increment of leave policy in order to return an employee to work--
for example, if an employee arrives a half hour late to work because
she was at an appointment with a psychologist and the employer waives
its normal one-hour increment of leave and puts the employee to work
immediately--the contractor must treat the employee as having used no
more than the amount of leave the employee actually used, half an hour.
See The Family and Medical Leave Act; Final Rule, 78 FR 8867 (Feb. 6,
2013) (discussing relevant language codified in 20 CFR 825.205(a)).
Under no circumstances may a contractor treat an employee as having
used paid sick leave for any time that employee was working.
Proposed Sec. 13.5(c)(2)(ii) explains that the amount of paid sick
leave used may not exceed the hours an employee would have worked if
the need for leave had not arisen. If, for example, an employee is
scheduled to work from 9am to 3pm, and she is absent from work from
10:30am to 12:30pm to take her father to a doctor's appointment, a
contractor may deduct no more than 2 hours of paid sick leave from her
accrued paid sick leave. If the employee is scheduled to work from 9am
to 3pm and she is absent from work for the entire day to care for her
sick child, a contractor may deduct no more than 6 hours of paid sick
leave from her accrued paid sick leave. If an employee is out on paid
sick leave at a time when she could have worked beyond her scheduled
hours but would not have been required to do so, the contractor may not
treat the employee as having used paid sick leave for those optional
hours. For example, if an employee scheduled to work from 9am to 3pm
could have chosen to stay until 7pm that night to earn overtime, but
she was absent for the entire day, a contractor may not deduct more
than 6 hours of paid sick leave from her accrued paid sick leave. This
provision is consistent with the FMLA regulation at 29 CFR 925.205(e)
(``Voluntary overtime hours that an employee does not work due to an
FMLA-qualifying reason may not be counted against the employee's FMLA
leave entitlement.'').
Proposed Sec. 13.5(c)(3) provides that a contractor shall provide
to an employee using paid sick leave the same pay and benefits the
employee would have received had the employee not used paid sick leave.
In other words, while on paid sick leave, employees paid on a salary
basis may not face any deduction in pay, and employees paid hourly must
receive the same hourly rate of pay they would have earned had they
been present at work. Furthermore, for time employees are using paid
sick leave, contractors must continue to make contributions to any
fringe benefit plan (for example, a health insurance or pension plan)
and count time toward the earning of other benefits (for example, the
accrual of vacation time) as they would were the employees working. In
particular, employees whose wages are governed by the SCA or DBA must
receive the same wages required under those statutes, including health
and welfare and other fringe benefits or the cash equivalent thereof,
as they would have earned had they been present at work instead of
using paid sick leave. As discussed above, contractors must count
employees' time using paid sick leave toward the accrual of paid sick
leave. Under this proposal, employees who receive different pay and
benefits for different portions of their work (for example, an employee
who works as a carpenter on one DBA-covered contract and a skilled
laborer on another DBA-covered contract on which she works for the same
contractor), the pay and benefits due while the employee uses paid sick
leave is to be determined based on which work she would have been doing
at the time she uses the leave.
The Department proposes to include as Sec. 13.5(c)(4) a
restriction on limits to an employee's use of paid sick leave.
Specifically, as proposed, Sec. 13.5(c)(4) would provide that a
contractor may not limit the amount of paid sick leave an employee may
use per year or at once. In other words, although a contractor may
limit an employee's accrual of paid sick leave to 56 hours per year, a
contractor may not prohibit the employee from, for example, using 16
hours carried over from the previous accrual year, accruing 56
additional hours, and then using all 56 accrued hours even though her
total use in the current accrual year would exceed 56 hours. Under the
proposed text, an employer also cannot limit the amount of paid sick
leave an employee may use at one time. For example, an employer cannot
establish a policy prohibiting employees from using any particular
number of hours of paid sick leave in a single workweek. Similarly, an
employer may not deny an employee's request to use paid sick leave for
2 full days in a row based on the length of time requested (as long as
the employee has accrued sufficient paid sick leave to cover the time).
Proposed Sec. 13.5(c)(5) provides that a contractor may not make
an employee's use of paid sick leave contingent on the employee's
finding a replacement worker to cover any work time to be missed or the
fulfillment of the contractor's operational needs. This language
implements section 2(e) of the Executive Order and makes explicit the
important point that the intent of the Executive Order can only be
fulfilled if employees are entitled to use paid sick leave even if the
need for such leave arises at a time that is inconvenient for a
contractor.
Proposed Sec. 13.5(d) implements section 2(h) of Executive Order
13706. Proposed Sec. 13.5(d)(1) provides that a contractor shall
permit an employee to use any or all of the employee's available paid
sick leave upon the oral or written request of an employee that
includes information sufficient to inform the contractor that the
employee is seeking to be absent from work for a purpose described in
proposed Sec. 13.5(c)(1) and, to the extent reasonably feasible, the
anticipated duration of the
[[Page 9616]]
leave. Proposed Sec. 13.5(d)(1) further provides that the request
shall be directed to the appropriate personnel pursuant to a
contractor's policy or, in the absence of a formal policy, any
personnel who typically receive requests for other types of leave or
otherwise address scheduling issues on behalf of the contractor.
Under this proposed text, employees may request paid sick leave by
any oral or written method, including in person, by phone, via email,
or with a note reasonably calculated to provide timely notice of the
employee's intent to take leave. Additionally, although the request
must contain sufficient information for a contractor to determine
whether it is a proper use of paid sick leave, and the contractor may
ask questions tailored to making that determination, the request need
not contain extensive or detailed information about the reason for the
leave and a contractor may not require such information. Because the
employee only needs to provide information sufficient to inform the
contractor that she wishes to miss work for a reason that is a
permissible use of paid sick leave, the employee need not specify all
symptoms or details of the need for leave, nor need she specifically
request to use paid sick leave required by the Executive Order or part
13 or even use the words ``sick leave'' or ``paid sick leave.'' The
employee could simply state, for example, that the employee has a cold,
a dentist appointment, or an appointment with an attorney regarding a
domestic violence matter. In such cases, a contractor could not ask,
for purposes of approving or rejecting the request to use paid sick
leave, when the cold began or how severe it is, what type of doctor the
employee is seeing or for what purpose, or for any detail regarding the
circumstances of the domestic violence.
The request similarly need not provide extensive details regarding
the employee's relationship with an individual for whom the employee is
caring or will care; it need only inform the contractor that the
employee has a family or family-like relationship with the individual.
Simply stating, for example, that the employee's son has a stomach bug,
the employee's wife was injured in a car accident, or the employee's
father needs assistance going to a doctor's appointment is sufficient.
If the employee's request for paid sick leave involves providing care
for an individual related by blood or affinity whose close association
with the employee is the equivalent of a family relationship, the
employee need only assert that a family or family-like relationship
exists, such as by stating that the employee needs to care for her ill
grandmother or needs to accompany a man who is like a brother to him to
a doctor's appointment. Although a contractor may ask questions to
determine if the use of paid sick leave is justified, such as inquiring
of an employee who asks to take leave to care for a close friend who
was in a car accident whether that friend is someone whom the employee
considers to be like family, the contractor may not demand intimate
details upon receiving a positive response to such an inquiry. Although
the Department recognizes that paid sick leave is available for only
particular uses, it interprets Executive Order 13706 as intending to
provide paid sick leave in a manner that is not burdensome for
employees and does not allow significant intrusion into their personal
lives by their employers.
To the extent reasonably feasible, the request should provide an
estimate of the timing and amount of such leave needed; this
requirement is satisfied by stating that the sick employee hopes only
to be out for 1 day, that the child's dentist appointment is on a
particular date at 10:00 a.m. and is not anticipated to take more than
an hour, or that the appointment with the attorney is on a particular
date at 2:00 p.m. and will likely continue for the remainder of the
work day. The contractor may not hold an employee to the estimate
provided in the request; for example, the sick employee could return to
work in the afternoon if she recovers more quickly than she expected,
and an employee can use more than an hour of paid sick leave (provided
she has more than 1 hour available for use) if the dentist appointment
runs longer than anticipated.
A request to use paid sick leave is acceptable if the employee
directs it to the appropriate personnel pursuant to a contractor's
policy or, in the absence of a formal policy, any personnel who
typically receive requests for other types of leave on behalf of the
contractor, such as a supervisor or human resources department staff.
The Department notes that as explained elsewhere and required by
Sec. Sec. 13.5(e)(1)(ii) and 13.25(d), when an employee requests leave
for the purposes described in proposed Sec. 13.5(c)(1)(iv), i.e., for
absences related to being a victim of domestic violence, sexual
assault, or stalking, the contractor shall maintain confidentiality
about the domestic abuse, sexual assault, or stalking, unless the
employee consents or when disclosure is required by law.
Proposed Sec. 13.5(d)(2) provides that if the need to use paid
sick leave is foreseeable, the employee's request shall be made at
least 7 calendar days in advance, whereas if the employee is unable to
request leave at least 7 calendar days in advance, the request shall be
made as soon as is practicable. The term as soon as is practicable is
defined in proposed Sec. 13.2. Proposed Sec. 13.5(d)(2) further
provides that when an employee becomes aware of a need to take paid
sick leave less than 7 calendar days in advance, it should typically be
practicable for the employee to make a request for leave either the day
the employee becomes aware of the need to take paid sick leave or the
next business day, but notes that in all cases, the determination of
when an employee could practicably make a request must take into
account the individual facts and circumstances. The Department would
consider any request made on the day the employee becomes aware of the
need to take paid sick leave or the following business day to have been
made as soon as was practicable. Although the Department will not
presume that requests made beyond that time frame were made as soon as
practicable, the facts and circumstances of the specific situation
could be such that despite the longer delay, the employee did in fact
notify the employer as soon as was possible and practical. For example,
if an employee makes an appointment for his daughter to have an annual
exam with her doctor 2 weeks in the future, the employee should ask to
use paid sick leave to take the daughter to the appointment at least 7
calendar days before the date of the appointment. If instead the nurse
at the employee's daughter's school called one afternoon to say the
daughter had a high fever and he needed to take her out of school right
away, he could plainly not have requested leave 7 days in advance, and
he should instead request leave as soon as is practicable. Depending on
the circumstances, such as how much attention the daughter needed,
whether the employee had access to a phone or computer, and/or whether
the person to whom the request would be directed was available, in this
situation, as soon as practicable could be as the employee was
preparing to leave work to get his daughter, when he got home with his
daughter, later that evening (perhaps after she was asleep), or the
next morning (assuming the next day was a business day). If, on the
other hand, the employee himself was in a serious car accident, was
taken to the hospital, and had surgery the next day, he could not
practicably request leave the day of the accident or of the surgery
(i.e., the day
[[Page 9617]]
he became aware of the need for leave or the next day).
If an employee has not complied with the requirements of proposed
Sec. 13.5(d)(2), a contractor may properly deny the employee's request
to use paid sick leave. For example, if an employee arranges a doctor's
appointment for his son 3 weeks in advance but does not submit a
request to use paid sick leave until 2 days before the appointment, the
contractor may properly deny that request. Denial of the request would
not be proper, however, if the need for leave was not foreseeable and
the employee made the request as soon as was practicable, such as if
upon making the request 2 days in advance, the employee explained that
his husband had planned to take their son to the appointment, but the
husband learned on the morning the employee submitted the request that
the husband would be unavailable at the time of the appointment, and
the couple decided that the employee would have to take the son
instead.
Proposed Sec. 13.5(d)(3) addresses a contractor's response to an
employee's request to use paid sick leave. Proposed Sec. 13.5(d)(3)(i)
provides that a contractor may communicate its grant of a request to
use paid sick leave either orally or in writing provided that the
contractor also complies with the requirement in Sec. 13.5(a)(2) to
inform the employee in writing of the amount of paid sick leave the
employee has available for use.
Proposed Sec. 13.5(d)(3)(ii) provides that a contractor shall
communicate any denial of a request to use paid sick leave in writing,
with an explanation for the denial. It further provides that denial is
appropriate if, for example, the employee did not provide sufficient
information about the need for paid sick leave; the reason given is not
consistent with the uses of paid sick leave described in proposed Sec.
13.5(c)(1); the employee did not indicate when the need would arise;
the employee has not accrued, and will not have accrued by the date of
leave anticipated in the request, a sufficient amount of paid sick
leave to cover the request (in which case, if the employee will have
any paid sick leave available for use, only a partial denial is
appropriate); or the request is to use paid sick leave during time the
employee is scheduled to be performing non-covered work. The proposed
text also explains that if the denial is based on insufficient
information provided in the request, such as if the employee did not
state the time of an appointment with a health care provider, the
contractor must permit the employee to submit a new, corrected request.
It further notes that if the denial is based on an employee's request
to use paid sick leave during time she is scheduled to be performing
non-covered work, the denial must be supported by records adequately
segregating the employee's time spent on covered and non-covered
contracts.
Proposed Sec. 13.5(d)(3)(iii) provides that a contractor shall
respond to any request to use paid sick leave as soon as is practicable
after the request is made. As proposed, it further explains that
although the determination of when it is practicable for a contractor
to provide a response will take into account the individual facts and
circumstances, it should in many circumstances be practicable for the
contractor to respond to a request immediately or within a few hours.
The proposed provision further explains that in some instances, such as
if it is unclear at the time of the request whether the employee will
be working on or in connection with a covered or non-covered contract
at the time for which paid sick leave is requested, as soon as
practicable could mean within a day or no longer than within a few
days.
Proposed Sec. 13.5(e) implements section 2(i) of the Executive
Order, which addresses certification and documentation for leave of 3
or more consecutive workdays. Under proposed Sec. 13.5(e)(1)(i), a
contractor may require certification issued by a health care provider
to verify the need for paid sick leave used for the purposes listed in
proposed Sec. 13.5(c)(1)(i), (ii), or (iii) only if the employee is
absent for 3 or more consecutive full workdays. Under this provision, a
contractor may not require certification to justify the use of paid
sick leave for any amount of time shorter than 3 consecutive full
workdays. For instance, if an employee is scheduled to work from 9am to
5pm on Monday, Tuesday, and Wednesday, and he is unable to come to work
at all during those times because he is hospitalized due to a severe
infection, his employer may require that he provide certification to
show that he was in the hospital. If the employee instead uses 4 hours
of paid sick leave on Monday because his daughter's school nurse calls
in the early afternoon to say his daughter has a fever and must be
taken home, all 8 hours on Tuesday because he stays home with his ill
daughter, and another 2 hours on Wednesday because his daughter isn't
well enough to go to school on time, his employer may not require
certification because he has not used paid sick leave for all of his
scheduled time on 3 consecutive full workdays. A proposed definition of
certification issued by a health care provider appears in proposed
Sec. 13.2. Proposed Sec. 13.5(e)(1)(i) further notes that the
contractor must protect the confidentiality of any certification as
required by proposed Sec. 13.25(d).
Proposed Sec. 13.5(e)(1)(ii) addresses documentation to verify the
use of paid sick leave for the purposes listed in proposed Sec.
13.5(c)(1)(iv), i.e., for absences related to domestic violence, sexual
assault, or stalking. Specifically, only if an employee uses paid sick
leave on 3 or more consecutive full workdays for such purposes may a
contractor require documentation from an appropriate individual or
organization to verify the need for such leave. Such documentation may
come from any person involved in providing or assisting with the care,
counseling, relocation, assistance of a victim services organization,
or related legal action, such as, but not limited to, a health care
provider, counselor, employee of the victim services organization, or
attorney.
Proposed Sec. 13.5(e)(1)(ii) also provides that the contractor may
only require that such documentation contain the minimum necessary
information establishing the need for the employee to be absent from
work. For example, the documentation could consist of a note from a
social worker at a victim services organization stating that the
employee received services from the organization related to being a
victim of domestic violence and moved to a new home for reasons related
to the domestic violence, as well as a receipt from a moving company or
a note from a landlord that indicates the date(s) of the move; it need
not name the perpetrator of the domestic violence, the nature of the
acts that constitute domestic violence, the addresses of the old or new
homes, or any other details beyond those sufficient to make clear that
the time was used for a purpose that justifies the use of paid sick
leave. As another example, documentation could consist of a letter from
a legal services attorney or sexual assault victim advocate who is
assisting an employee who is a victim of sexual assault in completing
the paperwork and filing for a civil protection order or restraining
order, explaining that the employee spent time (consisting of most
business hours over 3 consecutive days) with the attorney or advocate
preparing for the hearing, including completing the petition for the
court's order and obtaining a time for the hearing, and attending the
hearing, including waiting at the court house and attending the
proceedings; the letter would not need to explain the circumstances of
the sexual assault, name the person(s) accused of the sexual assault,
or
[[Page 9618]]
otherwise provide any details beyond those sufficient to justify the
need to use paid sick leave. Similarly, if the employee used 3 or more
consecutive full workdays of paid sick leave to fly across the country
to be with her daughter who is a victim of sexual assault to provide
support related to an administrative hearing at the university the
daughter attends, documentation could consist of the boarding passes
from the employee's plane flights and emails from a university official
to the daughter setting the date of the hearing, without providing
details about the specific subject matter of the hearing.
Proposed Sec. 13.5(e)(1)(ii) further provides that the contractor
shall not disclose any verification information and shall maintain
confidentiality about the domestic abuse, sexual assault, or stalking
as required by Sec. 13.25(d).
Proposed Sec. 13.5(e)(2), which is derived from the FMLA
regulations at 29 CFR 825.122(k), provides that if certification or
documentation is to verify the illness, injury, or condition, need for
diagnosis, care, or preventive care, or activity related to domestic
violence, sexual assault, or stalking of an individual related to the
employee as described in proposed Sec. 13.5(c)(1)(iii), a contractor
may also require the employee to provide reasonable documentation or a
statement of the family or family-like relationship. Proposed Sec.
13.5(e)(2) further explains that this documentation may take the form
of a simple written statement from the employee or could be a legal or
other document proving the relationship, such as a birth certificate or
court order. As under the FMLA, a written statement from the employee
need not be notarized. Additionally, the contractor is entitled to
examine any legal or other documentation provided, but the employee is
entitled to the return of any official document submitted for this
purpose, such as a birth certificate. The Department also notes that if
an employee has already submitted proof of a family or family-like
relationship to the contractor for some other purpose, such as
providing a marriage certificate in order to obtain health care
benefits for the employee's spouse, such proof is sufficient to confirm
the family relationship for purposes of paid sick leave, and the
contractor may not require additional documentation.
Proposed Sec. 13.5(e)(3) address timing with respect to
certification and documentation. Proposed Sec. 13.5(e)(3)(i) provides
that a contractor may only require certification or documentation if
the contractor informs an employee before the employee returns to work
that certification or documentation will be required to verify the use
of paid sick leave if the employee is absent for 3 or more consecutive
full workdays. This time limit is necessary because without notice at
the time the employee or individual cared for by the employee has the
condition or need justifying the use of paid sick leave, it could
become difficult or even impossible for the employee to obtain
certification. For example, if an employee has the flu for 4 days,
without knowing that the contractor wishes her to provide certification
from a health care provider verifying that she was sick, she might well
recover fully without contacting a doctor. A contractor's general
policy, if made clear to employees (such as in an employee handbook),
requiring certification of the use of paid sick leave for absences of 3
or more consecutive full workdays suffices to meet this requirement.
Proposed Sec. 13.5(e)(3)(ii) further provides that a contractor
may require the employee to provide certification or documentation
within 30 days of the first day of the 3 or more consecutive full
workdays of paid sick leave but may not set a shorter deadline for its
submission. This requirement is set forth in section 2(i) of the
Executive Order. 80 FR 54698.
The Department proposes to provide in Sec. 13.5(e)(3)(iii) that
while a contractor is waiting for or reviewing certification or
documentation, it must treat the employee's otherwise proper request
for 3 or more consecutive full workdays of paid sick leave as valid.
Additionally, the proposed provision explains that if the contractor
ultimately does not receive certification or documentation, or if the
certification or documentation the employee provides is insufficient to
verify the employee's need for paid sick leave, the contractor may,
within 10 calendar days of the deadline for receiving the certification
or documentation or within 10 calendar days of the receipt of the
insufficient certification or documentation, whichever occurs first,
retroactively deny the employee's request to use paid sick leave.
Certification or documentation could be insufficient, for example,
because it does not describe a need for leave consistent with the
permitted reasons for using paid sick leave or because, if the reason
for leave was for a purpose other than that described in proposed Sec.
13.5(c)(1)(iv), it was not created or signed by a health care provider
or a health care provider's representative. Proposed Sec.
13.5(e)(3)(iii) further provides that if the contractor retroactively
rejects the employee's request, the contractor may recover the value of
the pay and benefits the employee received but to which the employee
was not entitled, including through deduction from any sums due to the
employee (e.g., unpaid wages, vacation pay, profit sharing, etc.),
provided such deductions do not otherwise violate applicable Federal or
State wage payment or other laws. This language is derived from the
FMLA regulations regarding the consequences of an employee's failure to
return to work after an employer paid for health or non-health benefit
premiums while an employee was on FMLA leave. See 29 CFR 825.213(f). If
a contractor retroactively denies an employee's request to use paid
sick leave as contemplated here, the amount of paid sick leave the
employee was treated as having used must be reinstated to the employee.
Proposed Sec. 13.5(e)(4) provides that a contractor may contact
the health care provider or other individual who created or signed the
certification or documentation only for purposes of authenticating the
document or clarifying its contents and further explains that the
contractor may not request additional details about the medical or
other condition referenced, seek a second opinion, or otherwise
question the substance of the certification. Authentication means
verifying that the health care provider or other individual did in fact
create or sign the certification. Clarifying means asking what
illegible handwriting or other unreadable text says or asking for an
explanation of the meaning of words used or information contained in
the certification. Under this proposal, which is consistent with
requirements regarding certification under the FMLA, see 29 CFR
825.307, a contractor may not ask the health care provider or other
individual who created or signed the certification or other
documentation for more information than is necessary to verify that the
employee was justified in using paid sick leave. The specific
information required will vary depending upon the reason for the leave.
For example, although if an employee was home sick or injured for 3
days, any certification would need to contain some information about
the medical condition (such as that it was the flu or a broken leg) to
verify that the condition existed and lasted 3 or more days, if an
employee was a patient in a hospital for 3 days, the certification
would not need to specify the condition for which the employee was
being treated, because she was clearly receiving care from a health
care provider while using paid sick leave.
[[Page 9619]]
Proposed Sec. 13.5(e)(4) further provides that to make contact
with the health care provider or other individual who created or signed
the certification or documentation, the contractor must use a human
resources professional, a leave administrator, or a management
official. This requirement is derived from a regulatory provision under
the FMLA. See 29 CFR 825.307(a). The proposed text goes on to note that
the employee's direct supervisor may not contact the employee's health
care provider unless there is no other appropriate individual who can
do so. This requirement is also based on a similar provision in the
FMLA regulations, 29 CFR 825.307(a), but unlike that provision, it does
not contain a complete prohibition on an employee's direct supervisor
contacting the health care provider. Although the Department seeks to
protect the privacy of employees who may not wish to share personal
medical or other information with a supervisor to the extent possible,
it recognizes that the Executive Order applies to contractors that are
not covered by the FMLA because their businesses are not of the
requisite size, so it believes the limited proposed exception is
necessary.
Proposed Sec. 13.5(e)(4) also addresses the Health Insurance
Portability and Accountability Act (HIPAA) Privacy Rule, Pub. L. 104-
191, 110 Stat. 1936 (1996), which governs the privacy of individually
identifiable health information created or held by HIPAA-covered
entities and the requirements of which are set forth at 45 CFR parts
160 and 164. Specifically, it provides that the HIPAA Privacy Rule
requirements must be satisfied when individually identifiable health
information of an employee is shared with a contractor by a HIPAA-
covered health care provider. As is true for purposes of the FMLA, if
an employee's certification is unclear and the employee chooses not to
provide the contractor with authorization allowing the contractor to
clarify the certification with the health care provider (and does not
otherwise clarify the certification), the contractor may deny an
employee's request to use paid sick leave. See 29 CFR 825.307(a).
Proposed Sec. 13.5(f) addresses the interaction between the paid
sick leave required by Executive Order 13706 and part 13 with other
laws as well as other paid time off policies. Proposed Sec. 13.5(f)(1)
implements section 2(l) of the Executive Order by providing that
nothing in the Order or part 13 shall excuse noncompliance with or
supersede any applicable Federal or State law, any applicable law or
municipal ordinance, or a collective bargaining agreement requiring
greater paid sick leave or leave rights than those established under
the Executive Order and part 13.
Proposed Sec. 13.5(f)(2) addresses the interaction between paid
sick leave and the requirements of the SCA and DBA, thereby
implementing section 2(f) of the Executive Order. Proposed Sec.
13.5(f)(2)(i) explains that paid sick leave required by Executive Order
13706 and part 13 is in addition to a contractor's obligations under
the SCA and DBA, and a contractor may not receive credit toward its
prevailing wage or fringe benefit obligations under those Acts for any
paid sick leave provided in satisfaction of the requirements of
Executive Order 13706 and part 13. The SCA and DBA both provide that
fringe benefits furnished to employees in compliance with their
requirements do not include any benefits ``required by Federal, State,
or local law.'' 41 U.S.C. 6703(2) (SCA); 40 U.S.C. 3141(2)(B) (DBA);
see also 29 CFR 4.171(c) (``No benefit required by any other Federal
law or by any State or local law, such as unemployment compensation,
workers' compensation, or social security, is a fringe benefit for
purposes of the [SCA].''); 29 CFR 5.29 (``The [DBA] excludes fringe
benefits which a contractor or subcontractor is obligated to provide
under other Federal, State, or local law. No credit may be taken under
the [DBA] for the payments made for such benefits. For example,
payment[s] for workmen's compensation insurance under either a
compulsory or elective State statute are not considered payments for
fringe benefits under the [DBA].''). Because paid sick leave provided
in accordance with the Executive Order and part 13 is required by law,
such paid sick leave cannot count toward the fulfillment of SCA or DBA
obligations.
Proposed Sec. 13.5(f)(2)(ii) provides that a contractor may count
the value of any paid sick time provided in excess of the requirements
of Executive Order 13706 and part 13 (and any other law) toward its
obligations under the SCA or DBA in keeping with the requirements of
those Acts. In particular, a contractor may take credit for such paid
sick time provided in compliance with the SCA requirements regarding
fringe benefits as described in 29 CFR 4.170 through 4.177 or with the
DBA requirements regarding fringe benefits as described in 29 CFR 5.20
through 5.32.
Proposed Sec. 13.5(f)(3) addresses the interaction of paid sick
leave required by Executive Order 13706 and part 13 with the FMLA. It
provides that a contractor's obligations under the Executive Order and
part 13 have no effect on its obligations to comply with, or ability to
act pursuant to, the FMLA. It further provides that paid sick leave may
be substituted for (that is, may run concurrently with) unpaid FMLA
leave under the same conditions as other paid time off pursuant to 29
CFR 825.207. It also explains that as to time off that is designated as
FMLA leave and for which an employee uses paid sick leave, all notices
and certifications that satisfy the FMLA requirements set forth at 29
CFR 825.300 through 825.308 will satisfy the request for leave and
certification requirements of proposed Sec. Sec. 13.5(d) and (e). For
example, although under the Executive Order and part 13 an employee's
request to use paid sick leave need only be made at least 7 days in
advance if the need for leave is foreseeable, under the FMLA, such
notice must be made at least 30 days in advance pursuant to 29 CFR
825.302(a). If an employee seeks to use paid sick leave for an FMLA-
qualifying reason (and thus both types of leave will run concurrently),
such as if she needs surgery, the contractor may require that she
comply with the FMLA's notice requirements, which will satisfy the
requirements of the Executive Order and part 13; specifically, when she
notifies the contractor of the date of her surgery (that is 30 days in
the future) and likely recovery period, she will have complied with the
requirements of Sec. 13.5(d) to provide oral or written notice of a
need for leave that justifies the use of paid sick leave, and the
expected duration of the leave, at least 7 days in advance. Similarly,
although under the Executive Order and part 13, a contractor may not
require certification of the need to use paid sick leave unless the
employee uses more than 3 consecutive full workdays of paid sick leave,
a contractor is permitted to require certification from an employee for
a shorter period of FMLA-designated leave as provided in 29 CFR
825.305. If an employee is concurrently using paid sick leave and FMLA
leave, a contractor may require certification as permitted under the
FMLA even if certification for paid sick leave would not be permitted
under Executive Order 13706 and part 13 (such as, for example, if the
employee only needed to use 1 day of leave). If that certification
supported the use of FMLA leave for an employee's serious health
condition, it would be more than sufficient to serve as the
certification issued by a health care provider for use of 3 consecutive
full workdays of paid sick leave should such certification become
necessary. Even if the certification was insufficient to demonstrate
that an employee was entitled to use FMLA leave (such as because
although the employee is ill,
[[Page 9620]]
the illness did not meet the definition of a serious health condition),
it could nevertheless be sufficient to meet the requirements of the
Executive Order and part 13.
Proposed Sec. 13.5(f)(4) addresses the interaction of paid sick
leave required by Executive Order 13706 and part 13 with paid sick time
required by State or local law. As proposed, it explains that a
contractor's compliance with a State or local law requiring that
employees be provided with paid sick time does not excuse the
contractor from compliance with its obligations under the Executive
Order 13706 or part 13. It further provides that a contractor may,
however, satisfy its obligations under the Order and part 13 by
providing paid sick time that fulfills the requirements of a State or
local law provided that the paid sick time is accrued and may be used
in a manner that meets or exceeds the requirements of the Order and
part 13. In other words, a contractor whose employees perform work on
or in connection with covered contracts in States, counties, or
municipalities that have statutes or ordinances requiring that
employees be provided with paid sick time must comply with both those
laws and the Executive Order. But that contractor is permitted, at
least for purposes of the Executive Order and part 13, to fulfill both
obligations simultaneously. If, for example, a State law requires that
employees receive up to 40 hours of paid sick time, a contractor is not
necessarily required to provide employees performing on or in
connection with covered contracts in that State an additional 56 hours
of paid sick leave; if the contractor provides paid sick time in
compliance with both the State law and the Executive Order and part 13,
the contractor need only provide up to 56 hours total of paid sick
leave. Because the requirements of State and local laws and the Order
and part 13 will rarely be identical, to satisfy both, a contractor
will likely need to comply with the requirements that are more generous
to employees. For example, a contractor could satisfy both a county law
that requires employees to earn at least 1 hour of paid sick time for
every 40 hours worked and the Executive Order by allowing employees to
earn 1 hour of paid sick leave for every 30 hours worked. Or a
contractor could satisfy both a State statute that allows employers to
limit employees' use of paid sick time to 40 hours per year and the
Executive Order by not limiting use per year (although accrual and
carryover limits, which would effectively limit use, might still
apply). Similarly, a contractor could satisfy both a municipal
ordinance that does not permit an employer to require certification of
the reason for using paid sick time under any circumstances and the
Executive Order and part 13 by choosing not to require certification
for the use of paid sick time even if an employee uses such leave for
more than 3 consecutive days.
Proposed Sec. 13.5(f)(5) addresses the interaction between the
paid sick leave requirements of Executive Order 13706 and part 13 and
an employer's paid time off policies, explaining that the Order and
part 13 need not have any effect on a contractor's voluntary paid time
off policy, whether provided pursuant to a collective bargaining
agreement or otherwise. Whether as a practical matter the requirement
to provide paid sick leave under the Order and part 13 affects the
amount or types of other leave a contractor provides or a union
negotiates is not an issue within the Department's rulemaking
authority.
Proposed Sec. 13.5(f)(5) also provides that a contractor's
existing paid time off policy (if provided in addition to the
fulfillment of SCA or DBA obligations, if applicable) will satisfy the
requirements of the Executive Order and part 13 if various conditions
are met. First, the paid time off must be made available to all
employees described in proposed Sec. 13.3(a)(2) (other than those
excluded by proposed Sec. 13.4(e)). Second, employees must be
permitted to use the paid time off for at least all of the purposes
described in proposed Sec. 13.5(c)(1). Third, the paid time off must
be provided in a manner and an amount sufficient to comply with the
rules and restrictions regarding the accrual of paid sick leave set
forth in proposed Sec. 13.5(a) and regarding maximum accrual,
carryover, reinstatement, and payment for unused leave set forth in
proposed Sec. 13.5(b). Fourth, the paid time off must be provided
pursuant to policies sufficient to comply with the rules and
restrictions regarding use of paid sick leave set forth in proposed
Sec. 13.5(c), requests for leave set forth in proposed Sec. 13.5(d),
and certification and documentation set forth in proposed Sec.
13.5(e), at least with respect to any paid time off used for the
purposes described in proposed Sec. 13.5(c)(1). Finally, the paid time
off must be protected by the prohibitions against interference,
discrimination, and recordkeeping violations described in proposed
Sec. 13.6 and the prohibition against waiver of rights described in
proposed Sec. 13.7, at least with respect to any paid time off used
for the purposes described in proposed Sec. 13.5(c)(1).
In other words, a contractor may use its paid time off policy to
satisfy its obligations under the Order and part 13, but only if the
policy complies with all of the accrual-related requirements of the
Executive Order and part 13--including, but not limited to, allowing
employees to accrue at least 1 hour of leave for every 30 hours worked
as that term is defined for purposes of part 13, not limiting annual
accrual at any less than 56 hours, allowing carryover of leave from the
previous accrual year that does not count toward any limit on annual
accrual in the new accrual year, and reinstating leave for an employee
rehired by the same or a successor contractor within 12 months of a job
separation. And a contractor may only use its paid time off policy to
satisfy its obligations under the Order and part 13 if when an employee
seeks to use or does use leave for the purposes described in proposed
Sec. 13.5(c)(1), all of which must be permissible uses of the paid
leave, the request, any required certification, and use of the leave
comply with all of the specifications of this proposed part. This
requirement includes, but is not limited to, allowing employees to take
leave in increments of no greater than 1 hour, not setting limits on
the amount of leave that may be used per year or at once, not making
the use of leave contingent on finding a replacement worker or
fulfilling operational needs, requiring employees to make requests for
leave no longer than 7 days in advance of the need or as soon as is
practicable if the need for leave is not foreseeable, denying requests
for leave in writing with an explanation for the denial that is in
accordance with the permissible reasons for denial under this proposed
rule, and requiring certification or documentation of the leave only if
the employee uses leave for more than 3 or more consecutive full
workdays and only requiring the minimum information necessary to verify
the leave. Furthermore, a contractor may only use its paid time off
policy to satisfy its obligations under the Order and part 13 if when
an employee seeks to use or does use leave for the purposes described
in proposed Sec. 13.5(c)(1), that leave is treated as protected by the
prohibitions on interference and discrimination in this proposed part
(described below), meaning that, for example, the request for or use of
leave cannot be used as a negative factor in any hiring or promotion
decision and cannot be the basis for discipline, including by being
counted in a no fault attendance policy.
[[Page 9621]]
The Department notes that if, for example, a contractor does not
permit an employee to use the paid time off for the purposes described
in proposed Sec. 13.5(c)(1)(iv) related to domestic violence, sexual
assault, or stalking, its paid time off policy would not satisfy its
obligations under the Executive Order and part 13. Accordingly, the
contractor could choose to amend its paid time off policy to address
the omission or could provide paid sick leave in addition to paid time
off. Similarly, if a contractor's policy allowed the contractor to deny
an employee's request for leave to be used for one of the purposes
described in proposed Sec. 13.5(c)(1) based on operational needs, that
policy would not satisfy the contractor's obligations under the
Executive Order and part 13.
Although under this proposed provision, a contractor need not treat
vacation or other uses of leave under its paid time off policy
identically to the way it treats paid sick leave, the Department will
consider any aspects of a paid time off policy that create significant
barriers to an employee's using the time as paid sick leave as
interference with the employee's accrual or use under the Order or part
13 in violation of proposed Sec. 13.6(a) or, if appropriate, as
discrimination in violation of proposed Sec. 13.6(b). For example,
although a contractor need not allow vacation time to be taken in no
greater than 1-hour increments, it would constitute a violation of
proposed Sec. 13.6(a) if a contractor were to require employees to use
all of the time provided in its paid time off policy at once should the
employee ask to take vacation, such that any employee who took any
vacation in an accrual year would automatically have no paid time off
remaining for the purposes described in proposed Sec. 13.5(c)(1).
Similarly, it would constitute a violation of proposed Sec. 13.6(a) if
a contractor required employees to request leave for vacation 1 month
in advance and would not allow an employee who had scheduled such leave
and who became, or had a family member who became, unexpectedly ill to
instead use paid time off for that purpose (and cancel the other
upcoming leave, or take it as unpaid leave).
Section 13.6 Prohibited Acts
Proposed Sec. 13.6 describes and prohibits acts that constitute
violations of the requirements of Executive Order 13706 and part 13.
Proposed Sec. 13.6(a)(1) provides that a contractor may not in any
manner interfere with an employee's accrual or use of paid sick leave
as required by Executive Order 13706 or part 13. Proposed Sec.
13.6(a)(2) includes a non-exclusive list of examples of interference.
Interference includes miscalculating the amount of paid sick leave an
employee has accrued, such as if a contractor does not include all of
an employee's hours worked in calculating accrual. Interference also
includes denying or unreasonably delaying a response to a proper
request to use paid sick leave, such as if a contractor denies a
request to use paid sick leave for a dentist's appointment because the
contractor does not believe a dentist is a health care provider, a
contractor denies a request to use paid sick leave to accompany the
employee's sister to a court proceeding regarding stalking because the
contractor does not believe an employee can use paid sick leave for a
family member's legal proceeding related to stalking, or if a
contractor does not respond to an employee's timely request for paid
sick leave until after the need for leave has passed (provided the
request was made sufficiently in advance of the need). In addition,
interference includes discouraging an employee from using paid sick
leave or reducing an employee's accrued paid sick leave by more than
the amount of such leave used. Transferring the employee to work on
non-covered contracts to prevent the accrual or use of paid sick leave,
including scheduling an employee's non-covered work to fall at the time
for which the employee has requested to use paid sick leave for the
purpose of avoiding approving the request (rather than for a lawful
reason, such as for a legitimate business purpose), also constitutes
interference. Interference also includes disclosing confidential
information provided in certification or other documentation provided
to verify the need to use paid sick leave or making the use of paid
sick leave contingent on the employee's finding a replacement worker or
the fulfillment of the contractor's operational needs.
Proposed Sec. 13.6(b) is an anti-discrimination provision
implementing section 2(k) of Executive Order 13706. Proposed Sec.
13.6(b)(1) provides that a contractor may not discharge or in any other
manner discriminate against an employee for: (i) Using, or attempting
to use, paid sick leave as provided for under Executive Order 13706 and
part 13; (ii) filing any complaint, initiating any proceeding, or
otherwise asserting any right or claim under Executive Order 13706 and
part 13; (iii) cooperating in any investigation or testifying in any
proceeding under Executive Order 13706 and part 13; or (iv) informing
any other person about his or her rights under Executive Order 13706
and part 13. Proposed Sec. 13.6(b)(2) addresses what constitutes
discrimination, a term the Department intends to be understood broadly,
by noting that discrimination includes, but is not limited to, a
contractor's considering any of the actions described in proposed Sec.
13.6(b)(1) as a negative factor in employment actions, such as hiring,
promotions, or disciplinary actions, or a contractor's counting paid
sick leave under a no fault attendance policy. See 29 CFR 825.220(c)
(analogous provision under FMLA regulations). Under this provision, a
contractor may not, for example, reassign an employee to fewer or less
preferable shifts, to a less well paid position, or to a non-covered
contract because she used paid sick leave. This proposed provision
would also prohibit a contractor, in deciding whether or not to hire an
employee to work on or in connection with a covered contract, to
consider as a factor that the contractor would be required to reinstate
the employee's unused paid sick leave from prior covered work pursuant
to proposed Sec. 13.5(b)(3).
This provision will serve the important purpose of ensuring
effective enforcement of the Executive Order, which will depend on
complaints from employees. The Department wishes to note several
interpretations of the provision, all of which it also noted in the
Minimum Wage Executive Order rulemaking in connection with a comparable
antidiscrimination provision. 79 FR 60666-67. First, consistent with
the Supreme Court's interpretation of the FLSA's antiretaliation
provision, proposed Sec. 13.6(b) would protect employees who file oral
as well as written complaints. See Kasten v. Saint-Gobain Performance
Plastics Corp., 131 S. Ct. 1325, 1336 (2011). Furthermore, as under the
FLSA, the proposed anti-discrimination provision under part 13 would
protect employees who complain to the Department as well as those who
complain internally to their employers about alleged violations of the
Order or part 13. See, e.g., Minor v. Bostwick Laboratories, 669 F.3d
428, 438 (4th Cir. 2012); Hagan v. Echostar Satellite, LLC, 529 F.3d
617, 626 (5th Cir. 2008); Lambert v. Ackerley, 180 F.3d 997, 1008 (9th
Cir. 1999) (en banc); Valerio v. Putnam Associates, 173 F.3d 35, 43
(1st Cir. 1999); EEOC v. Romeo Community Sch., 976 F.2d 985, 989 (6th
Cir. 1992).
In addition, the anti-discrimination provision would apply in
situations where there is no current employment relationship between
the parties; for example, it would protect from
[[Page 9622]]
retaliation by a prospective or former employer that is a covered
contractor. This position is consistent with the Department's
interpretation of the FLSA's antiretaliation provision, which it
considers to extend to job applicants. As explained in the Minimum Wage
Executive Order, however, the Department recognizes that the U.S. Court
of Appeals for the Fourth Circuit has disagreed with its interpretation
with respect to the coverage of job applicants, see Dellinger v.
Science Applications Int'l Corp., 649 F.3d 226 (4th Cir. 2011), and the
Department therefore would not enforce its interpretation on this issue
in that circuit. See 79 FR 60667. To the extent that application of the
FLSA's antiretaliation provision to job applicants or internal
complaints is definitively resolved through the judicial process by the
Supreme Court or otherwise, the Department would interpret the
antiretaliation provision under the Executive Order in accordance with
such precedent. Id.
Proposed Sec. 13.6(c) provides that a contractor's failure to make
and maintain or to make available to WHD records for inspection,
copying, and transcription as required by proposed Sec. 13.25, or any
other failure to comply with the requirements of that proposed
provision, constitutes a violation of Executive Order 13706, part 13,
and the underlying contract. This proposed provision is derived from
paragraph (g)(3) of the contract clause included in the Minimum Wage
Executive Order Final Rule as well as analogous provisions in the SCA
and DBA. 29 CFR 4.6(g)(3) (SCA); 29 CFR 5.5(a)(3)(iii) (DBA).
Section 13.7 Waiver of Rights
Proposed Sec. 13.7 provides that employees cannot waive, nor may
contractors induce employees to waive, their rights under Executive
Order 13706 or part 13. The Department included a provision prohibiting
the waiver of rights in the regulations implementing the Minimum Wage
Executive Order and believes it is appropriate to adopt the same policy
here.
In the Minimum Wage Executive Order rulemaking, the Department
noted that an employee's rights and remedies under the FLSA, including
payment of minimum wage and back wages, cannot be waived or abridged by
contract. 79 FR 60667 (citing Tony & Susan Alamo Found. v. Sec'y of
Labor, 471 U.S. 290, 302 (1985); Barrentine v. Arkansas-Best Freight
Sys., Inc., 450 U.S. 728, 740 (1981); D.A. Schulte, Inc. v. Gangi, 328
U.S. 108, 112-16 (1946); Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697,
706-07 (1945)). The Supreme Court has explained that ``FLSA rights
cannot be abridged by contract or otherwise waived because this would
`nullify the purposes' of the statute and thwart the legislative
policies it was designed to effectuate,'' Barrentine, 450 U.S. at 740
(quoting Brooklyn Sav. Bank, 324 U.S. at 707), and that FLSA rights are
not subject to waiver because they serve an important public interest
by protecting employers against unfair methods of competition in the
national economy, see Tony & Susan Alamo Found., 471 U.S. at 302.
Similarly, under the SCA regulations, releases and waivers executed by
employees for unpaid SCA wages (and fringe benefits) are without legal
effect. 29 CFR 4.187(d). Because the public policy interests underlying
the issuance of Executive Order 13706 would be similarly thwarted by
permitting employees to waive, or contractors to induce employees to
waive, their rights under the Executive Order or part 13, proposed
Sec. 13.7 makes clear that such waiver of rights is impermissible.
Subpart B-Federal Government Requirements
Proposed subpart B of part 13, which is largely modeled on subpart
B of the Minimum Wage Executive Order implementing regulations, 29 CFR
10.11-10.12, establishes the requirements for the Federal Government to
implement and comply with Executive Order 13706. Proposed Sec. 13.11
addresses contracting agency requirements, and proposed Sec. 13.12
explains the requirements placed upon the Department of Labor.
Section 13.11 Contracting Agency Requirements
Proposed Sec. 13.11(a) implements section 2(a) of Executive Order
13706 by directing that the contracting agency shall include the
Executive Order paid sick leave contract clause set forth in appendix A
of part 13 in all covered contracts and solicitations for such
contracts, as described in proposed Sec. 13.3, except for procurement
contracts subject to the FAR. Proposed Sec. 13.11(a) further provides
that the required contract clause directs, as a condition of payment,
that all employees performing work on or in connection with covered
contracts must be permitted to accrue and use paid sick leave as
required by Executive Order 13706 and part 13. It also provides that
for procurement contracts subject to the FAR, contracting agencies
shall use the clause that will be set forth in the FAR to implement
part 13, and that the FAR clause will accomplish the same purposes as
the clause set forth in appendix A and be consistent with the
requirements set forth in part 13.
Proposed Sec. 13.11(a) is effectively identical to 29 CFR
10.11(a), the analogous provision in the Minimum Wage Executive Order
Final Rule. As explained in that rulemaking, see 79 FR 60668, inserting
the full contract clause in a covered contract is an effective and
practical means of ensuring that contractors receive notice of their
obligations under the Executive Order and part 13, and the Department
therefore prefers that covered contracts include the contract clause in
full. The Department is aware, however, that there will be instances in
which a contracting agency or contractor does not include the entire
contract clause in a covered contract; in such cases, the facts and
circumstances may establish that the contracting agency or contractor
sufficiently apprised the prime or lower-tier contractor that the
Executive Order applies to the contract. See Nat'l Electro-Coatings,
Inc. v. Brock, No. C86-2188, 1988 WL 125784 (N.D. Ohio July 13, 1988);
In the Matter of Progressive Design & Build, Inc., WAB Case No. 87-31,
1990 WL 484308 (WAB Feb. 21, 1990). For example, the full contract
clause will be deemed incorporated by reference in a covered contract
if the contract provides that ``Executive Order 13706--Establishing
Paid Sick Leave for Federal Contractors, and its implementing
regulations, including the applicable contract clause, are incorporated
by reference into this contract as if fully set forth in this
contract'' and includes a citation to a Web page that contains the
contract clause in full, to the provision of the Code of Federal
Regulations containing the contract clause set forth at appendix A of
part 13, or to the provision of the FAR containing the contract clause
promulgated by the FARC to implement part 13.
Proposed Sec. 13.11(b) explains a contracting agency's obligations
in the event that it fails to include the contract clause in a covered
contract. Proposed Sec. 13.11(b) first provides that where the
Department of Labor or the contracting agency discovers or determines,
whether before or subsequent to a contract award, that a contracting
agency made an erroneous determination that Executive Order 13706 and
part 13 did not apply to a particular contract and/or failed to include
the applicable contract clause in a contract to which the Executive
Order and part 13 apply, the contracting agency, on its own initiative
or within 15 calendar days of notification by an
[[Page 9623]]
authorized representative of the Department of Labor, shall incorporate
the clause in the contract retroactive to commencement of performance
under the contract through the exercise of any and all authority that
may be needed (including, where necessary, its authority to negotiate
or amend, its authority to pay any necessary additional costs, and its
authority under any contract provision authorizing changes,
cancellation, and termination). The Administrator possesses analogous
authority under the DBA, see 29 CFR 1.6(f), and Executive Order 13658,
see 29 CFR 10.11(b), and it believes a similar mechanism for addressing
an agency's failure to include the contract clause in a contract
subject to Executive Order 13706 would enhance its ability to obtain
compliance with the Order.
Proposed Sec. 13.11(c) provides that a contracting officer shall,
upon his or her own action or upon written request of the
Administrator, withhold or cause to be withheld from the prime
contractor under the contract or any other Federal contract with the
same prime contractor, so much of the accrued payments or advances as
may be necessary to pay employees the full amount owed to compensate
for any violation of Executive Order 13706 or part 13. It further
provides that in the event of any such violation, the agency may, after
authorization or by direction of the Administrator and written
notification to the contractor, take action to cause suspension of any
further payment or advance of funds until such violations have ceased.
Such amounts would be based on the estimated monetary relief, including
any pay and/or benefits denied or lost by reason of the violation or
other monetary losses sustained as a direct result of the violation,
described in proposed Sec. 13.44. The SCA, DBA, and the Minimum Wage
Executive Order's implementing regulations provide for withholding to
ensure the availability of monies for payment to covered workers when a
contractor or subcontractor has failed to comply with its obligations
to pay required wages (including fringe benefits) under those
authorities. 29 CFR 4.6(i); 29 CFR 5.5(a)(2); 29 CFR 10.11(c).
Withholding likewise is an appropriate remedy under this Executive
Order for all covered contracts because the Order directs the
Department to adopt SCA, DBA, and Minimum Wage Executive Order
enforcement processes to the extent practicable and to exercise
authority to obtain compliance with the Order. 80 FR 54699. Consistent
with withholding procedures under the SCA and DBA, which were also
adopted in the Minimum Wage Executive Order rulemaking, proposed Sec.
13.11(c) allows the contracting agency and the Department to withhold
or cause to be withheld funds from the prime contractor not only under
the contract on which violations of the paid sick leave requirements of
Executive Order 13706 and part 13 occurred, but also under any other
contract that the prime contractor has entered into with the Federal
Government. 29 CFR 4.6(i); 29 CFR 5.5(a)(2); 29 CFR 10.11(c). Finally,
a withholding remedy is consistent with the requirement in section 2(a)
of the Executive Order that compliance with the specified obligations
is an express ``condition of payment'' to a contractor or
subcontractor. 80 FR 54699.
Proposed Sec. 13.11(c) also provides that any failure to comply
with the requirements of Executive Order 13706 or part 13 may be
grounds for termination of the right to proceed with the contract work.
In such event, the contracting agency may enter into other contracts or
arrangements for completion of the work, charging the contractor in
default with any additional cost. This language is essentially
identical to language included in the analogous provision in the
Minimum Wage Executive Order rulemaking. See 79 FR 60724 (codified at
29 CFR 10.11(c)).
Proposed Sec. 13.11(d) describes a contracting agency's
responsibility to suspend further payment or advance of funds to a
contractor that fails to make available for inspection, copying, and
transcription any of the records identified in proposed Sec. 13.25.
The proposal requires contracting agencies to take action to suspend
payment or advance of funds under these circumstances upon their own
action, or upon the direction of the Administrator and notification of
the contractor. Proposed Sec. 13.11(d) is derived from paragraph
(g)(3) of the Minimum Wage Executive Order contract clause, 79 FR
60731, and is consistent with the analogous provisions of the SCA and
DBA regulations, 29 CFR 4.6(g)(3); 29 CFR 5.5(a)(3)(iii).
Proposed Sec. 13.11(e) describes a contracting agency's
responsibility to forward to the WHD any complaint alleging a
contractor's non-compliance with Executive Order 13706 or part 13, as
well as any information related to the complaint. Although the
Department proposes in Sec. 13.41 that complaints be filed with the
WHD rather than with contracting agencies, the Department recognizes
that some employees or other interested parties nonetheless may file
formal or informal complaints concerning alleged violations of the
Executive Order or part 13 with contracting agencies. Proposed Sec.
13.11(e)(1) therefore specifically requires the contracting agency to
transmit the complaint-related information identified in proposed Sec.
13.11(e)(2) to the WHD's Office of Government Contracts Enforcement
within 14 calendar days of receipt of a complaint alleging a violation
of the Executive Order or part 13, or within 14 calendar days of being
contacted by the WHD regarding any such complaint.
Proposed Sec. 13.11(e)(2) describes the contents of any
transmission under proposed Sec. 13.11(e)(1). Specifically, it
provides that the contracting agency shall forward to the Office of
Government Contracts Enforcement any: (i) Complaint of contractor
noncompliance with Executive Order 13706 or part 13; (ii) available
statements by the worker, contractor, or any other person regarding the
alleged violation; (iii) evidence that the Executive Order paid sick
leave contract clause was included in the contract; (iv) information
concerning known settlement negotiations between the parties, if
applicable; and (v) any other relevant facts known to the contracting
agency or other information requested by the Wage and Hour Division.
Proposed Sec. 13.11(e) is nearly identical to 29 CFR 10.11(d) as
promulgated by the Minimum Wage Executive Order Final Rule, which was
derived from analogous provisions in the Department's regulations
implementing the Nondisplacement Executive Order. 79 FR 60669 (citing
29 CFR 9.11(d)). As in the Minimum Wage Executive Order rulemaking, the
Department believes proposed Sec. 13.11(e), which includes an
obligation to send such complaint-related information to WHD even
absent a specific request (e.g., when a complaint is filed with a
contracting agency rather than with the WHD), is appropriate because
prompt receipt of such information from the relevant contracting agency
will allow the Department to fulfill its charge under the Order to
implement enforcement mechanisms for obtaining compliance with the
Order. 80 FR 54699.
Proposed Sec. 13.11(f) would provide that a contracting officer
shall provide to a successor contractor any predecessor contractor's
certified list, provided to the contracting officer pursuant to
proposed Sec. 13.26, of the amounts of unused paid sick leave that
employees have accrued. This requirement would facilitate compliance by
successor contractors with proposed Sec. 13.5(b)(3), which requires
that paid sick leave be reinstated for employees rehired by a
[[Page 9624]]
successor contractor within 12 months of the job separation from the
predecessor contractor. The terms predecessor contract and successor
contract are defined in proposed Sec. 13.2.
Section 13.12 Department of Labor Requirements
Proposed Sec. 13.12 addresses the Department's obligations under
the Executive Order. Specifically, proposed Sec. 13.12(a)(1) states
that the Administrator will publish and maintain on Wage Determinations
OnLine (WDOL), http://www.wdol.gov, or any successor Web site, a notice
that Executive Order 13706 creates a requirement to allow employees
performing work on or in connection with contracts covered by Executive
Order 13706 and part 13 to accrue and use paid sick leave, as well as
an indication of where to find more complete information about that
requirement.
Proposed Sec. 13.12(a)(2) provides that the Administrator will
also publish a notice on all wage determinations issued under the DBA
and SCA that Executive Order 13706 creates a requirement to allow
employees performing work on or in connection with contracts covered by
Executive Order 13706 and part 13 to accrue and use paid sick leave, as
well as an indication of where to find more complete information about
that requirement.
Proposed Sec. 13.12(b), which is modeled on 29 CFR 10.12(d),
addresses the Department's obligation to notify a contractor of a
request to the contracting agency for the withholding of funds or a
request for the suspension of payment or advance of funds. Under
proposed Sec. 13.11(c), the Administrator may direct that payments due
on the covered contract or any other contract between the contractor
and the Federal Government be withheld as may be considered necessary
to provide for monetary relief for violations of Executive Order 13706
or part 13. Under proposed Sec. 13.11(d), the Administrator may direct
that the contracting agency suspend payment or advance of funds. If the
Administrator makes the requests contemplated by proposed Sec.
13.11(c) or (d), proposed Sec. 13.12(b) would require the
Administrator and/or the contracting agency to notify the affected
prime contractor of the Administrator's withholding request to the
contracting agency. Although it is only necessary that one party--
either the Administrator or the contracting agency--provide the notice,
the other may choose in its discretion to provide notice as well.
Subpart C--Contractor Requirements
Proposed subpart C describes the requirements with which
contractors must comply under Executive Order 13706 and part 13. It
sets forth the obligation to include the applicable Executive Order
paid sick leave contract clause in subcontracts and lower-tier
contracts to comply with the contract clause. Proposed subpart C also
sets forth contractor requirements pertaining to deductions, kickbacks,
recordkeeping, a list of employees' accrued paid sick leave at the time
a contract concludes, notice, and timing of pay.
Section 13.21 Contract Clause
Proposed Sec. 13.21(a), which is adopted from 29 CFR 10.21 as
promulgated by the Minimum Wage Executive Order Final Rule, requires
the contractor, as a condition of payment, to abide by the terms of the
applicable Executive Order paid sick leave contract clause referred to
in proposed Sec. 13.11(a). The applicable contract clause will contain
the obligations with which the contractor must comply on the covered
contract and will reflect the contractor's obligations as described in
part 13.
Proposed Sec. 13.21(b) states that contractors must include the
applicable contract clause in any covered subcontracts and shall
require, as a condition of payment, that subcontractors include the
clause in all lower-tier subcontracts. Under the proposal, the prime
contractor and upper-tier contractors will be responsible for
compliance by any subcontractor or lower-tier subcontractor with
Executive Order 13706 and part 13, regardless of whether the contract
clause was included in the subcontract. This responsibility on the part
of prime and upper-tier contractors for subcontractor compliance
parallels that of the SCA and DBA. See 29 CFR 4.114(b) (SCA); 29 CFR
5.5(a)(6) (DBA).
Section 13.22 Paid Sick Leave
Proposed Sec. 13.22 requires contractors to allow all employees
performing work on or in connection with a covered contract to accrue
and use paid sick leave as required by the Executive Order and part 13.
Although contractors must comply with the Order and part 13 in its
entirety, the Department notes that contractors' paid sick leave
obligations are described in detail in proposed subpart A (particularly
proposed Sec. 13.5, which addresses the accrual and use of paid sick
leave, and proposed Sec. 13.6, which describes prohibited acts).
Section 13.23 Deductions
Proposed Sec. 13.23 states that contractors may only make
deductions from the pay and benefits of an employee who is using paid
sick leave under the limited circumstances set forth in the proposed
provision. The reference to ``pay and benefits'' in proposed Sec.
13.23 has the same meaning as the reference to pay and benefits in
proposed Sec. 13.5(c)(3), discussed above.
Proposed Sec. 13.23 permits deductions required by Federal, State,
or local law, including Federal or State withholding of income taxes.
See 29 CFR 531.38 (FLSA); 29 CFR 4.168(a) (SCA); 29 CFR 5.5(a)(1)
(DBA); 29 CFR 10.23(a) (Executive Order 13658). This proposed provision
would also permit deductions for payments made to third parties
pursuant to court orders. See 29 CFR 531.39 (FLSA); 29 CFR 4.168(a)
(SCA); 29 CFR 5.5(a)(1) (DBA); 29 CFR 10.23(b) (Executive Order 13658).
Permissible deductions made pursuant to a court order may include such
deductions as those made for child support. The proposed section also
permits deductions directed by a voluntary assignment of the employee
or his or her authorized representative. See 29 CFR 531.40 (FLSA); 29
CFR 4.168(a) (SCA); 29 CFR 5.5(a)(1) (DBA); 29 CFR 10.23(c) (Executive
Order 13658). Deductions directed by a voluntary assignment include,
but are not limited to, deductions for the purchase of U.S. savings
bonds, donations to charitable organizations, and the payment of union
dues. Deductions made for voluntary assignments must be made for the
employee's account and benefit pursuant to the request of the employee
or his or her authorized representative. See 29 CFR 531.40 (FLSA); 29
CFR 4.168(a) (SCA); 29 CFR 5.5(a)(1) (DBA). Finally, the Department
proposes to permit deductions made for the reasonable cost or fair
value of board, lodging, and other facilities. See 29 CFR part 531
(FLSA); 29 CFR 4.168(a) (SCA); 29 CFR 5.5(a)(1) (DBA); 29 CFR 10.23(d)
(Executive Order 13658). Deductions made for the reasonable cost or
fair value of board, lodging and other facilities must be in compliance
with the regulations in 29 CFR part 531. The Department notes that a
contractor may take credit for the reasonable cost or fair value of
board, lodging, or other facilities against an employee's wages, rather
than taking a deduction for the reasonable cost or fair value of these
items. See 29 CFR part 531.
Section 13.24 Anti-Kickback
Proposed Sec. 13.24 requires that all paid sick leave used by
employees
[[Page 9625]]
performing on or in connection with covered contracts must be paid free
and clear and without subsequent deduction (unless as set forth in
proposed Sec. 13.23), rebate, or kickback on any account. It further
provides that kickbacks directly or indirectly to the contractor or to
another person for the benefit of the contractor for the whole or part
of the paid sick leave are also prohibited. This anti-kickback
proposal, which the Department derived from the Executive Order 13658
implementing regulations at 29 CFR 10.27, aims to ensure that employees
actually receive the full pay and benefits to which they are entitled
under the Executive Order and part 13 when they use paid sick leave.
Section 13.25 Records To Be Kept by Contractors
Proposed Sec. 13.25 explains the recordkeeping and related
requirements for contractors. The obligations set forth in proposed
Sec. 13.25 are derived from the FLSA, SCA, DBA, FMLA and Executive
Order 13658. See 29 CFR part 516 (FLSA); 29 CFR 4.6(g) (SCA); 29 CFR
5.5(a)(3) (DBA); 29 CFR 825.500(c) (FMLA); 29 CFR 10.26 (Executive
Order 13658). Proposed Sec. 13.25(a) states that contractors and
subcontractors shall make and maintain during the course of the covered
contract, and preserve for no less than 3 years thereafter, records
containing the information enumerated in proposed Sec. 13.25(a)(1)-
(15) for each employee. It also requires contractors to make such
records available to the WHD for inspection, copying and transcription.
Proposed Sec. 13.25(a)(1)-(6) require contractors to make and
maintain for each employee: Name, address, and Social Security number;
the employee's occupation(s) or classification(s); the rate or rates of
wages paid to the employee; the number of daily and weekly hours worked
by the employee; any deductions made; and the total wages paid each pay
period. Contractor obligations to maintain the categories of records
set forth in Sec. 13.25(a)(1)-(6) derive from and are consistent
across the FLSA, SCA, and DBA (with the exception of the requirement to
preserve records for no less than 3 years after the contact expires,
which applies under the DBA and SCA but not the FLSA). An exception to
the requirement in proposed Sec. 13.25(a)(4) to keep records of an
employee's hours worked is provided in proposed Sec. 13.25(c), as
described below. Therefore, in conjunction with proposed Sec.
13.25(c), these recordkeeping requirements impose almost no new burdens
on contractors. Moreover, with respect to both the categories of
records set forth in proposed Sec. 13.25(a)(1)-(6) and those set forth
in proposed Sec. 13.25(a)(7)-(15) below, the recordkeeping
requirements set forth in this section are necessary and appropriate
for the enforcement of Executive Order 13706 and part 13 because they
require the maintenance and preservation of records necessary to
investigate potential violations of and obtain compliance with the
Order, consistent with sections 3(a) and 4(a) of the Order.
Proposed Sec. 13.25(a)(7) requires contractors to make and
maintain copies of notifications to employees of the amount of paid
sick leave the employees have accrued as required under proposed Sec.
13.5(a)(2). Proposed Sec. 13.25(a)(8) requires contractors to maintain
copies of employees' requests to use paid sick leave, if in writing,
or, if not in writing, any other records of employees' requests.
Proposed Sec. 13.25(a)(9) requires contractors to make and
maintain records of the dates and amounts of paid sick leave used by
employees and further specifies that unless a contractor's paid time
off policy satisfies the requirements of Executive Order 13706 and part
13 as described in proposed Sec. 13.5(f)(5), contractors must
designate the leave in their records as paid sick leave pursuant to
Executive Order 13706. Proposed Sec. 13.25(a)(10) requires contractors
to make and maintain copies of any written denials of employees'
requests to use paid sick leave, including explanations for such
denials, as required under proposed Sec. 13.5(d)(3). Proposed Sec.
13.25(a)(11) requires contractors to make and maintain records relating
to the certification and documentation a contractor may require an
employee to provide under proposed Sec. 13.5(e), including copies of
any certification or documentation provided by an employee. Proposed
Sec. 13.25(a)(12) requires contractors to make and maintain any other
records showing any tracking of or calculations related to an
employee's accrual and/or use of paid sick leave.
Proposed Sec. 13.25(a)(13) requires contractors to make and
maintain copies of any certified list of employees' accrued, unused
paid sick leave provided to a contracting officer in compliance with
proposed Sec. 13.26. Proposed Sec. 13.25(a)(14) requires contractors
to maintain any certified list of employees' accrued, unused paid sick
leave received from the contracting agency in compliance with proposed
Sec. 13.11(f). Finally, proposed Sec. 13.25(a)(15) requires
contractors to maintain a copy of the relevant covered contract.
Proposed Sec. 13.25(b) relates to the segregation of employees'
covered and non-covered work for a single contractor. It provides that
if a contractor wishes to distinguish between an employee's covered and
non-covered work (such as time spent performing work on or in
connection with a covered contract versus time spent performing work on
or in connection with non-covered contracts or time spent performing
work on or in connection with a covered contract in the United States
versus time spent performing work outside the United States, or to
establish that time spent performing solely in connection with covered
contracts constituted less than 20 percent of an employee's hours
worked during a particular workweek), the contractor must keep records
or other proof reflecting such distinctions. It further provides that
only if the contractor adequately segregates the employee's time will
time spent on non-covered contracts be excluded from hours worked
counted toward the accrual of paid sick leave, and that similarly, only
if that contractor adequately segregates the employee's time may a
contractor properly deny an employee's request to take leave under
proposed Sec. 13.5(d) on the ground that the employee was scheduled to
perform non-covered work during the time she asked to use paid sick
leave. This language reflects the policies described in the discussions
of Sec. Sec. 13.3(c), 13.4(e), 13.5(a)(1)(i), 13.5(c)(1), and
13.5(d)(3)(ii) with regard to a contractor's segregation of hours
worked for purposes of coverage as well as accrual and use of paid sick
leave. As explained with regard to those sections, requiring
contractors who wish to distinguish between covered and non-covered
time to keep adequate records reflecting that distinction is consistent
with the treatment of hours worked on SCA- and non-SCA-covered
contracts, see 29 CFR 4.178, 4.179, as well as the treatment of covered
versus non-covered time under the Minimum Wage Executive Order
rulemaking, see 79 FR 60659, 60660-61, 60672.
Proposed Sec. 13.25(c) excuses a contractor from maintaining
records of the employee's number of daily and weekly hours worked as
otherwise required under proposed Sec. 13.25(a)(4), if the SCA, DBA,
and FLSA do not require the contractor to keep records of the
employee's hours worked, such as because the employee is employed in a
bona fide executive, administrative, or professional capacity as those
terms are defined in 29 CFR part 541, and the
[[Page 9626]]
contractor elects to use the assumption permitted by proposed Sec.
13.5(a)(1)(iii).
Proposed Sec. 13.25(d) addresses requirements related to the
confidentiality of records. Proposed Sec. 13.25(d)(1) requires a
contractor to maintain as confidential in separate files/records from
the usual personnel files any records relating to medical histories or
domestic violence, sexual assault, or stalking created by or provided
to a contractor for purposes of Executive Order 13706, whether of an
employee or an employee's child, parent, spouse, domestic partner, or
other individual related by blood or affinity whose close association
with the employee is the equivalent of a family relationship. Proposed
Sec. 13.25(d)(2) requires records or documents created to comply with
the recordkeeping requirements in part 13 that are subject to the
confidentiality requirements of the Genetic Information
Nondiscrimination Act of 2008 (GINA), Pub. L. 110-233, 122 Stat. 881
(2008), and/or Americans with Disabilities Act (ADA), 42 U.S.C. 12101
et seq., to be maintained in compliance with the confidentiality
requirements of those statutes as described in 29 CFR 1635.9 and 29 CFR
1630.14(c)(1), respectively.
Proposed Sec. 13.25(d)(3) prohibits the disclosure of any
documentation used to verify the need to use 3 or more consecutive days
of paid sick leave for the purposes listed in proposed Sec.
13.5(c)(1)(iv), and requires the contractor to maintain confidentiality
about any domestic violence, sexual assault, or stalking, unless the
employee consents or the disclosure is required by law.
Proposed Sec. 13.25(e) requires contractors to permit authorized
representatives of WHD to conduct interviews with employees at the
worksite during normal working hours. This provision is derived from
similar provisions under the SCA and DBA, 29 CFR 4.6(g)(4) (SCA); 29
CFR 5.5(a)(3)(iii), and will facilitate WHD's ability to enforce the
Order and part 13.
Proposed Sec. 13.25(f) states that nothing in part 13 limits or
otherwise modifies the contractor's recordkeeping obligations, if any,
under the DBA, SCA, FLSA, FMLA, Executive Order 13658, their
implementing regulations, or other applicable law.
Section 13.26 Certified List of Employees' Accrued Paid Sick Leave
Proposed Sec. 13.26 provides that upon completion of a covered
contract, a predecessor prime contractor shall provide to the
contracting officer a certified list of the names of all employees
entitled to paid sick leave under Executive Order 13706 and part 13 who
worked on or in connection with the covered contract or any covered
subcontract(s) at any point during the 12 months preceding the date of
completion of the contract, the date each such employee separated from
the contract or any covered subcontract(s) if prior to the date of the
completion of the contract, and the amount of paid sick leave each such
employee had available for use as of the date of completion of the
contract or the date each such employee separated from the contract or
subcontract. This requirement would (in conjunction with proposed Sec.
13.11(f)) facilitate compliance by successor contractors with proposed
Sec. 13.5(b)(3), which requires that paid sick leave be reinstated for
employees rehired by a successor contractor within 12 months of the job
separation from the predecessor contractor. The terms predecessor
contract and successor contract are defined in proposed Sec. 13.2.
Section 13.27 Notice
Proposed Sec. 13.27 addresses the obligations of contractors with
respect to notice to employees of their rights under Executive Order
13706 and part 13. Proposed Sec. 13.27(a) requires that contractors
notify all employees performing work on or in connection with a covered
contract of the paid sick leave requirements of Executive Order 13706
and part 13 by posting a notice provided by the Department of Labor in
a prominent and accessible place at the worksite so it may be readily
seen by employees. The Department derived this proposal from the
Executive Order 13658 implementing regulations at 29 CFR 10.29(b); see
also 79 FR 60670 (describing the Department's decision to create a
notice poster for the Minimum Wage Executive Order). This proposal
differs from the Minimum Wage Executive Order regulations, however, in
that it requires all covered contractors, including those whose
contracts are DBA- or SCA-covered, to display the poster rather than
allowing DBA and SCA contractors to provide notice solely on wage
determinations. The Department believes that because the Order's paid
sick leave requirements, in particular the rules and restrictions
regarding accrual and use, require lengthier explanation than the
minimum wage requirements of Executive Order 13658, and because those
requirements are sufficiently detailed that the Department is not
proposing under Sec. 13.12(a) to describe them in full on wage
determinations, employees working on or in connection with DBA- and
SCA-covered contracts will be more adequately informed about the paid
sick leave requirements by a poster. The Department will make a poster,
which it will model on the Minimum Wage Executive Order poster,
available on the WHD Web site.
Proposed Sec. 13.27(b), derived from the Executive Order 13658
implementing regulations at 29 CFR 10.29(c), permits contractors that
customarily post notices to employees electronically to post the notice
electronically, provided such electronic posting is displayed
prominently on any Web site that is maintained by the contractor,
whether external or internal, and customarily used for notices to
employees about terms and conditions of employment.
Section 13.28 Timing of Pay
Proposed Sec. 13.28 describes the time by which a contractor must
compensate employees for hours during which they used paid sick leave.
Under the proposed provision, a contractor shall provide such
compensation no later than one pay period following the end of the
regular pay period in which the paid sick leave was used. The timing of
the payment obligation imposed is consistent with both the SCA's and
Executive Order 13658's implementing regulations, see 29 CFR 4.165(a)
(SCA); 29 CFR 10.25 (Executive Order 13658).
Subpart D--Enforcement
Proposed subpart D implements section 4 of Executive Order 13706,
which grants the Secretary ``authority for investigating potential
violations of and obtaining compliance with'' the Order and complies
with section 3(c) of the Order, which directs that the regulations the
Secretary issues should, to the extent practicable, incorporate
existing procedures, remedies, and enforcement processes under the
FLSA, SCA, DBA, FMLA, VAWA, and Executive Order 13658. 79 FR 54699.
Proposed subpart D is substantially similar to subpart D of 29 CFR part
10, which sets forth the remedies, procedures, and enforcement
processes under the Minimum Wage Executive Order.
Specifically, proposed subpart D incorporates many of the
provisions of the Minimum Wage Executive Order regulations, which in
turn incorporate FLSA, SCA, and DBA remedies, procedures, and
enforcement processes, as well as certain enforcement procedures set
forth in the Department's regulations implementing the Nondisplacement
Executive Order. Proposed subpart D differs in some respects from the
analogous provisions under the Minimum Wage Executive Order rulemaking
because of the differences between minimum wage
[[Page 9627]]
requirements and paid sick leave requirements as well as because
Executive Order 13706 contemplates that the Department would
incorporate remedies, procedures, and enforcement processes from the
FMLA to the extent practicable. The Department believes proposed
subpart D will facilitate investigations of potential violations of the
Order, allow for violations of the Order to be addressed and remedied,
and promote compliance with the Order.
Section 13.41 Complaints
The Department proposes a procedure for filing complaints in Sec.
13.41 identical to that which appears in 29 CFR 10.41, the section of
the Minimum Wage Executive Order regulations that addresses complaints.
Proposed Sec. 13.41(a) provides that any employee, contractor, labor
organization, trade organization, contracting agency, or other person
or entity that believes a violation of the Executive Order or part 13
has occurred may file a complaint with any office of the WHD. It also
provides that no particular form of complaint is required; a complaint
may be filed orally or in writing, and the WHD will accept a complaint
in any language if the complainant is unable to file in English.
Proposed Sec. 13.41(b) states the well-established policy of the
Department with respect to confidential sources. See 29 CFR 4.191(a);
29 CFR 5.6(a)(5). Specifically, it would provide that it is the
Department's policy to protect the identity of its confidential sources
and to prevent an unwarranted invasion of personal privacy, and
accordingly, the identity of any individual who makes a written or oral
statement as a complaint or in the course of an investigation, as well
as portions of the statement which would reveal the individual's
identity, shall not be disclosed in any manner to anyone other than
Federal officials without the prior consent of the individual. The
proposed provision further provides that disclosure of such statements
shall be governed by the provisions of the Freedom of Information Act
(5 U.S.C. 552, see 29 CFR part 70) and the Privacy Act of 1974 (5
U.S.C. 552a).
Section 13.42 Wage and Hour Division Conciliation
Proposed Sec. 13.42, which is identical to 29 CFR 10.42,
establishes an informal complaint resolution process for complaints
filed with the WHD. The provision allows WHD, after obtaining the
necessary information from the complainant regarding the alleged
violations, to contact the party against whom the complaint is lodged
and attempt to reach an acceptable resolution through conciliation.
Section 13.43 Wage and Hour Division Investigation
Proposed Sec. 13.43, which outlines WHD's investigative authority,
is identical to 29 CFR 10.43. That section of the Minimum Wage
Executive Order regulations was derived primarily from regulations
implementing the SCA and DBA. See 79 FR 60679 (citing 29 CFR 4.6(g)(4),
29 CFR 5.6(b)). Proposed Sec. 13.43 permits the Administrator to
initiate an investigation either as the result of a complaint or at any
time on his or her own initiative. As part of the investigation, the
Administrator is entitled to conduct interviews with the contractor, as
well as the contractor's employees at the worksite during normal work
hours; inspect the relevant contractor's records (including contract
documents and payrolls, if applicable); make copies and transcriptions
of such records; and require the production of any documentary or other
evidence the Administrator deems necessary to determine whether a
violation, including conduct warranting imposition of debarment, has
occurred. The section would also require Federal agencies and
contractors to cooperate with authorized representatives of the
Department in the inspection of records, in interviews with employees,
and in all aspects of investigations.
Section 13.44 Remedies and Sanctions
In Sec. 13.44, the Department sets forth proposed remedies and
sanctions for violations of the Order and part 13. Proposed Sec.
13.44(a) provides for remedies for violations of the prohibition on
interference with the accrual or use of paid sick leave described in
proposed Sec. 13.6(a). Proposed Sec. 13.44(a) provides that when the
Administrator determines that a contractor has interfered with an
employee's accrual or use of the paid sick leave in violation of Sec.
13.6(a), the Administrator will notify the contractor and the relevant
contracting agency of the interference and request the contractor to
remedy the violation. It additionally proposes that if the contractor
does not remedy the violation, the Administrator shall direct the
contractor to provide any appropriate relief to the affected
employee(s) in the Administrator's investigation findings letter issued
pursuant to proposed Sec. 13.51. The Department further proposes that
Sec. 13.44(a) provide that such relief may include any pay and/or
benefits denied or lost by reason of the violation; other actual
monetary losses sustained as a direct result of the violation; or
appropriate equitable or other relief. Furthermore, as proposed, relief
would include an amount equaling any monetary relief as liquidated
damages unless such amount is reduced by the Administrator because the
violation was in good faith and the contractor had reasonable grounds
for believing it had not violated the Order or part 13. The types of
relief available under proposed Sec. 13.44(a) are derived from the
FMLA, 29 U.S.C. 2617(a)(1), 2617(b)(2), and its implementing
regulations, 29 CFR 825.400(c). Important aspects of these FMLA
remedies, such as the inclusion of liquidated damages, are also part of
the FLSA scheme. See 29 U.S.C. 216(b), 260. The Department notes that
under the FLSA and FMLA--and by extension, for purposes of Executive
Order 13706 and part 13--liquidated damages serve the purpose of
compensating employees for the delay in receiving wages they are owed
rather than punishing the employer who violated the statute. See, e.g.,
Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 142 (2d Cir. 1999)
(FLSA); Jordan v. U.S. Postal Serv., 379 F.3d 1196, 1202 (10th Cir.
2004) (FMLA).
Under the proposed regulatory text, an example of a possible remedy
includes payment for time for which a contractor improperly denied a
request to use paid sick leave such that the employee took unpaid leave
that should have been treated as paid sick leave; in that case, the
damages would be the pay and benefits the employee would have received
for that time pursuant to proposed Sec. 13.5(c)(3), and the award
would include an equal amount of liquidated damages unless the
violation was made in good faith and the contractor had reasonable
grounds for believing it had not violated the Order or part 13. As
another example, if a contractor improperly denied a request to use
paid sick leave such that an employee came to work and hired a
babysitter to care for a sick child with whom the employee wished to
stay home, the remedy would be the amount the employee spent on the
child care, and the award would include an equal amount of liquidated
damages unless the violation was made in good faith and the contractor
had reasonable grounds for believing it had not violated the Order or
part 13. In this example, relief would not include lost pay or benefits
because the employee did not lose pay or benefits due to the violation.
Equitable relief for violations of proposed Sec. 13.6(a) could
include, but would not be limited to, requiring the contractor to allow
for accrual and use
[[Page 9628]]
of paid sick leave by an employee it erroneously treated as not covered
by the Executive Order or requiring the contractor to restore paid sick
leave it improperly deducted from an employee's accrued paid sick
leave.
Proposed Sec. 13.44(a) also provides that the Administrator may
direct that payments due on the contract or any other contract between
the contractor and the Federal Government be withheld as may be
necessary to provide any appropriate monetary relief, and that, upon
the final order of the Secretary that the monetary relief is due, the
Administrator may direct the relevant contracting agency to transfer
the withheld funds to the Department for disbursement. These portions
of the proposed provision are identical to language in the Minimum Wage
Executive Order final rule. See 29 CFR 10.44(a).
Proposed Sec. 13.44(b) sets out remedies for violations of the
prohibition on discrimination in proposed Sec. 13.6(b). It provides
that when the Administrator determines that a contractor has
discriminated against an employee in violation of proposed Sec.
13.6(b), the Administrator will notify the contractor and the relevant
contracting agency of the discrimination and request that the
contractor remedy the violation. If the contractor does not remedy the
violation, the Administrator shall direct the contractor to provide any
appropriate relief, including but not limited to employment,
reinstatement, promotion, restoration of leave, or lost pay and/or
benefits, in the Administrator's investigation findings letter issued
pursuant to proposed Sec. 13.51. As proposed, Sec. 13.44(a) also
provides that an amount equaling any monetary relief may be awarded as
liquidated damages unless such amount is reduced by the Administrator
because the violation was in good faith and the contractor had
reasonable grounds for believing the contractor had not violated the
Order or part 13. This language is derived from the FMLA remedies at 29
U.S.C. 2617(a)(1) and 29 CFR 825.400(c); see also 29 U.S.C. 2617(b)(2).
It is similar to the analogous provision in the Minimum Wage Executive
Order rulemaking, 79 FR 60728 (codified at 29 CFR 10.44(b)), which was
derived from the remedies provided for under the FLSA's antiretaliation
provision, see 29 U.S.C. 216(b), except that it allows for liquidated
damages, a remedy available under the FMLA and the FLSA, see 29 U.S.C.
2617(a)(1); 29 U.S.C. 216(b), 260. Proposed Sec. 13.44(b) further
notes that the Administrator may additionally direct that payments due
on the contract or any other contract between the contractor and the
Federal Government be withheld as may be necessary to provide any
appropriate monetary relief and that upon the final order of the
Secretary that monetary relief is due, the Administrator may direct the
relevant contracting agency to transfer the withheld funds to the
Department of Labor for disbursement.
Proposed Sec. 13.44(c) addresses the remedies for violations of
the recordkeeping requirements in proposed subpart C. It provides that
when a contractor fails to comply with the requirements of proposed
Sec. 13.25 in violation of proposed Sec. 13.6(c), the Administrator
will request that the contractor remedy the violation. Proposed Sec.
13.44(c) further provides that if a contractor fails to produce
required records upon request, the contracting officer, upon direction
of an authorized representative of the Department of Labor, or under
its own action, shall take such action as may be necessary to cause
suspension of any further payment or advance of funds on the contract
until such time as the violations are discontinued. Proposed Sec.
13.44(c) is derived from paragraph (g)(3) of the Minimum Wage Executive
Order contract clause, the analogous provision of the SCA regulations,
29 CFR 4.6(g)(3), and the analogous provision of the DBA regulations,
29 CFR 5.5(a)(3)(iii).
Proposed Sec. 13.44(d), which is effectively identical to the
corresponding provision in the Minimum Wage Executive Order rulemaking,
29 CFR 10.44(c), allows for the remedy of debarment. Specifically, it
provides that whenever a contractor is found by the Secretary to have
disregarded its obligations under Executive Order 13706 or part 13,
such contractor and its responsible officers, and any firm,
corporation, partnership, or association in which the contractor or
responsible officers have an interest, shall be ineligible to be
awarded any contract or subcontract subject to the Executive Order for
a period of up to three years from the date of publication of the name
of the contractor or responsible officer on the excluded parties list
currently maintained on the System for Award Management Web site,
http://www.SAM.gov. The ``disregarded its obligations'' standard, which
also is used in the Minimum Wage Executive Order rulemaking, is derived
from the DBA implementing regulations at 29 CFR 5.12(a)(2). See 79 FR
60680. Proposed Sec. 10.44(d) further provides that neither an order
of debarment of any contractor or its responsible officers from further
Government contracts nor the inclusion of a contractor or its
responsible officers on a published list of noncomplying contractors
under this section would be carried out without affording the
contractor or responsible officers an opportunity for a hearing before
an Administrative Law Judge.
Debarment is a long-established remedy for a contractor's failure
to fulfill its labor standards obligations under the SCA and the DBA,
see 41 U.S.C. 6706(b); 40 U.S.C. 3144(b); 29 CFR 4.188(a); 29 CFR
5.5(a)(7); 29 CFR 5.12(a)(2), and one that, as noted, was adopted in
the Minimum Wage Executive Order rulemaking, see 79 FR 60728 (codified
at 29 CFR 10.44(c)). The possibility that a contractor will be unable
to obtain Government contracts for a fixed period of time due to
debarment promotes contractor compliance with the SCA, DBA, and Minimum
Wage Executive Order, and the Department intends inclusion of the
remedy in this rulemaking to incentivize compliance with Executive
Order 13706 as well.
Proposed Sec. 13.44(e) allows for initiation of an action,
following a final order of the Secretary, against a contractor in any
court of competent jurisdiction to collect underpayments when the
amounts withheld under proposed Sec. 13.11(c) are insufficient to
reimburse all monetary relief due. Proposed Sec. 13.44(e) also
authorizes initiation of an action, following the final order of the
Secretary, in any court of competent jurisdiction when there are no
payments available to withhold. Such circumstances could arise, for
example, if at the time the Administrator discovers a contractor owes
pay and/or benefits to employees, no payments remain owing under the
contract or another contract between the same contractor and the
Federal Government, or if the covered contract is a concessions
contract under which the contractor does not receive payments from the
Federal Government. Proposed Sec. 13.44(e) additionally provides that
any sums the Department recovers shall be paid to affected employees to
the extent possible, but that sums not paid to employees because of an
inability to do so within three years would be transferred into the
Treasury of the United States. Proposed Sec. 13.44(e) is derived from
the analogous provision of the Minimum Wage Executive Order rulemaking,
29 CFR 10.44(d), which in turn was derived from the SCA, 41 U.S.C.
6705(b)(2).
In proposed Sec. 13.44(f), the Department addresses what remedy is
available when a contracting agency fails to include the contract
clause in a contract
[[Page 9629]]
subject to the Executive Order. It would provide that the contracting
agency, on its own initiative or within 15 calendar days of
notification by the Department, shall incorporate the clause in the
contract retroactive to commencement of performance under the contract
through the exercise of any and all authority that may be needed
(including, where necessary, its authority to negotiate or amend, its
authority to pay any necessary additional costs, and its authority
under any contract provision authorizing changes, cancellation, and
termination). This provision is identical to 29 CFR 10.44(e); in
promulgating that provision during the Minimum Wage Executive Order
rulemaking, the Department explained that this clause would provide the
Administrator authority to collect underpayments on behalf of affected
employees on the applicable contract retroactive to commencement of
performance under the contract. 79 FR 60681. The Department also noted
in that rulemaking that the Administrator possesses comparable
authority under the DBA, 29 CFR 1.6(f). Id. The Department believes
here, as it did with respect to the Minimum Wage Executive Order, that
a mechanism for addressing a failure to include the contract clause in
a contract subject to Executive Order 13706 will further the interest
in both remedying violations and obtaining compliance with the Order.
Furthermore, as also noted in the Minimum Wage Executive Order
rulemaking, the provision includes language reflecting the Department's
belief that a contractor is entitled to an adjustment where necessary
to pay any necessary additional costs when a contracting agency
initially omits and then subsequently includes the contract clause in a
covered contract. Id. (citing 29 CFR 4.5(c), the SCA regulation with
which this position is consistent).
Subpart E--Administrative Proceedings
Pursuant to section 4 of Executive Order 13706, proposed subpart E
establishes and describes the administrative proceedings to be
conducted under the Order. In compliance with section 3(c) of the
Order, subpart E incorporates, to the extent practicable, the DBA, SCA
and Executive Order 13658 administrative procedures necessary to remedy
potential violations and ensure compliance with the Executive Order.
Indeed, the Department has substantially modeled this subpart E on
subpart E of the Minimum Wage Executive Order regulations, which was
primarily derived from the rules governing administrative proceedings
conducted under the DBA and SCA. 79 FR 60682. The administrative
procedures included in this subpart also closely adhere to existing
procedures of the Department's Office of Administrative Law Judges and
Administrative Review Board (ARB).
Section 13.51 Disputes Concerning Contractor Compliance
Proposed Sec. 13.51, which the Department derived primarily from
the DBA's implementing regulations at 29 CFR 5.11, addresses how the
Administrator will process disputes regarding a contractor's compliance
with part 13. Proposed Sec. 13.51(a) provides that the Administrator
or a contractor may initiate a proceeding. Proposed Sec. 13.51(b)(1)
provides that when it appears that relevant facts are at issue in a
dispute covered by proposed Sec. 13.51(a), the Administrator will
notify the affected contractor(s) and the prime contractor, if
different, of the investigative findings by certified mail to the last
known address. If the Administrator determines there are reasonable
grounds to believe the contractor(s) should be subject to debarment,
the investigative findings letter would so indicate.
Proposed Sec. 13.51(b)(2) requires a contractor desiring a hearing
concerning the investigative findings letter to request a hearing by
letter postmarked within 30 calendar days of the date of the
Administrator's letter. It further requires the request to set forth
those findings that are in dispute with respect to the violation(s)
and/or debarment, as appropriate, and to explain how such findings are
in dispute, including by reference to any applicable affirmative
defenses.
Proposed Sec. 13.51(b)(3) requires the Administrator, upon receipt
of a timely request for hearing, to refer the matter to the Chief
Administrative Law Judge by Order of Reference for designation of an
Administrative Law Judge (ALJ) to conduct such hearings as may be
necessary to resolve the disputed matter in accordance with the
procedures set forth in 29 CFR part 6. It also requires the
Administrator to attach a copy of the Administrator's letter, and the
response thereto, to the Order of Reference that the Administrator
sends to the Chief Administrative Law Judge.
Proposed Sec. 13.51(c)(1) applies when it appears there are no
relevant facts at issue and there is not at that time reasonable cause
to institute debarment proceedings. It requires the Administrator to
notify the contractor, by certified mail to the contractor's last known
address, of the investigative findings and to issue a ruling on any
issues of law known to be in dispute. Proposed Sec. 13.51(c)(2)(i)
applies when a contractor disagrees with the Administrator's factual
findings or believes there are relevant facts in dispute. It allows the
contractor to advise the Administrator of such disagreement by letter
postmarked within 30 calendar days of the date of the Administrator's
letter. The response must explain in detail the facts alleged to be in
dispute and attach any supporting documentation.
Proposed Sec. 13.51(c)(2)(ii) requires that the information
submitted in the response alleging the existence of a factual dispute
must be timely in order for the Administrator to examine such
information. Where the Administrator determines there is a relevant
issue of fact, the Administrator will refer the case to the Chief
Administrative Law Judge as under proposed Sec. 13.51(b)(3). If the
Administrator determines there is no relevant issue of fact, the
Administrator will so rule and advise the contractor accordingly.
Proposed Sec. 13.51(c)(3) applies where a contractor desires
review of an Administrator's ruling under proposed Sec. 13.51(c)(1) or
the final sentence of proposed Sec. 13.51(c)(2)(ii). It requires a
contractor to file any petition for review with the ARB postmarked
within 30 calendar days of the Administrator's ruling, with a copy
thereof to the Administrator. It further requires the petitioner to
file its petition in accordance with the procedures set forth in 29 CFR
part 7.
Proposed Sec. 13.51(d) provides that the Administrator's
investigative findings letter will become the final order of the
Secretary if a timely response to the letter is not made or a timely
petition for review is not filed. It additionally provides that if a
timely response or a timely petition for review is filed, the
investigative findings letter will be inoperative unless and until the
decision is upheld by an ALJ or the ARB, or the letter otherwise
becomes a final order of the Secretary.
Section 13.52 Debarment Proceedings
Proposed Sec. 13.52, which is identical to the analogous provision
in the Minimum Wage Executive Order regulations, 29 CFR 10.52, which
the Department primarily derived from the DBA implementing regulations
at 29 CFR 5.12, 79 FR 60683, addresses debarment proceedings. Proposed
Sec. 13.52(a)(1) provides that whenever any contractor is found by the
Secretary of Labor to have disregarded its obligations to employees or
subcontractors under Executive Order or part 13, such contractor and
its responsible officers,
[[Page 9630]]
and any firm, corporation, partnership, or association in which such
contractor or responsible officers have an interest, will be ineligible
for a period of up to three years to receive any contracts or
subcontracts subject to the Executive Order from the date of
publication of the name or names of the contractor or persons on the
excluded parties list currently maintained on the System for Award
Management Web site, http://www.SAM.gov.
Proposed Sec. 13.52(b)(1) provides that where the Administrator
finds reasonable cause to believe a contractor has committed a
violation of the Executive Order or part 13 that constitutes a
disregard of its obligations to its employees or subcontractors, the
Administrator will notify by certified mail to the last known address,
the contractor and its responsible officers (and any firms,
corporations, partnerships, or associations in which the contractor or
responsible officers are known to have an interest) of the finding.
Pursuant to proposed Sec. 13.52(b)(1), the Administrator would
additionally furnish those notified a summary of the investigative
findings and afford them an opportunity for a hearing regarding the
debarment issue. Those notified would have to request a hearing on the
debarment issue, if desired, by letter to the Administrator postmarked
within 30 calendar days of the date of the letter from the
Administrator. The letter requesting a hearing would need to set forth
any findings that are in dispute and the reasons therefore, including
any affirmative defenses to be raised. Proposed Sec. 13.52(b)(1) also
requires the Administrator, upon receipt of a timely request for
hearing, to refer the matter to the Chief Administrative Law Judge by
Order of Reference, to which would be attached a copy of the
Administrator's investigative findings letter and the response thereto,
for designation to an ALJ to conduct such hearings as may be necessary
to determine the matters in dispute. Proposed Sec. 13.52(b)(2)
provides that hearings under Sec. 13.52 will be conducted in
accordance with 29 CFR part 6. If no timely request for hearing is
received, the Administrator's findings will become the final order of
the Secretary.
Section 13.53 Referral to Chief Administrative Law Judge; Amendment of
Pleadings
Proposed Sec. 13.53, as well as proposed Sec. Sec. 13.54-13.57,
are largely identical to the corresponding provisions in the Minimum
Wage Executive Order rulemaking, 29 CFR 10.53-.57, and are derived from
the SCA and DBA rules of practice for administrative proceedings
contained in 29 CFR part 6. Proposed Sec. 13.53(a) provides that upon
receipt of a timely request for a hearing under proposed Sec. 13.51
(where the Administrator has determined that relevant facts are in
dispute) or proposed Sec. 13.52 (debarment), the Administrator will
refer the case to the Chief Administrative Law Judge by Order of
Reference, to which would be attached a copy of the investigative
findings letter from the Administrator and the response thereto, for
designation of an ALJ to conduct such hearings as may be necessary to
decide the disputed matters. It further provides that a copy of the
Order of Reference and attachments thereto will be served upon the
respondent and that the investigative findings letter and the response
thereto will be given the effect of a complaint and answer,
respectively, for purposes of the administrative proceeding.
Proposed Sec. 13.53(b) states that at any time prior to the
closing of the hearing record, the complaint or answer may be amended
with permission of the ALJ upon such terms as the ALJ shall approve,
and that for proceedings initiated pursuant to proposed Sec. 13.51,
such an amendment could include a statement that debarment action is
warranted under proposed Sec. 13.52. It further provides that such
amendments will be allowed when justice and the presentation of the
merits are served thereby, provided no prejudice to the objecting
party's presentation on the merits will result. It additionally states
that when issues not raised by the pleadings were reasonably within the
scope of the original complaint and were tried by express or implied
consent of the parties, they will be treated as if they had been raised
in the pleadings, and such amendments could be made as necessary to
make them conform to the evidence. Proposed Sec. 13.53(b) further
provides that the presiding ALJ may, upon reasonable notice and upon
such terms as are just, permit supplemental pleadings setting forth
transactions, occurrences, or events that have happened since the date
of the pleadings and that are relevant to any of the issues involved.
It also authorizes the ALJ to grant a continuance in the hearing, or
leave the record open, to enable the new allegations to be addressed.
Section 13.54 Consent Findings and Order
Proposed Sec. 13.54(c) provides that parties may at any time prior
to the ALJ's receipt of evidence or, at the ALJ's discretion, at any
time prior to issuance of a decision, agree to dispose of the matter,
or any part thereof, by entering into consent findings and an order
disposing of the proceeding. Proposed Sec. 13.54(b) provides that any
agreement containing consent findings and an order disposing of a
proceeding in whole or in part shall also provide: (1) That the order
shall have the same force and effect as an order made after full
hearing; (2) that the entire record on which any order may be based
shall consist solely of the Administrator's findings letter and the
agreement; (3) a waiver of any further procedural steps before the ALJ
and the ARB regarding those matters which are the subject of the
agreement; and (4) a waiver of any right to challenge or contest the
validity of the findings and order entered into in accordance with the
agreement. Proposed Sec. 13.54(c) provides that within 30 calendar
days of receipt of any proposed consent findings and order, the ALJ
will accept the agreement by issuing a decision based on the agreed
findings and order, provided the ALJ is satisfied with the proposed
agreement's form and substance. It further provides that if the
agreement disposes of only a part of the disputed matter, a hearing
shall be conducted on the matters remaining in dispute.
Section 13.55 Proceedings of the Administrative Law Judge
Proposed Sec. 13.55 addresses the ALJ's proceedings and decision.
Proposed Sec. 13.55(a) provides that the Office of Administrative Law
Judges has jurisdiction to hear and decide appeals concerning questions
of law and fact from the Administrator's investigative findings letters
issued under proposed Sec. 13.51 and/or proposed Sec. 13.52.
Proposed Sec. 13.55(b) provides that each party may file with the
ALJ proposed findings of fact, conclusions of law, and a proposed
order, together with a supporting brief expressing the reasons for such
proposals, within 20 calendar days of filing of the transcript (or a
longer period if the ALJ permits). It also provides that each party
will serve such documents on all other parties.
Proposed Sec. 13.55(c)(1) requires an ALJ to issue a decision
within a reasonable period of time after receipt of the proposed
findings of fact, conclusions of law, and order, or within 30 calendar
days after receipt of an agreement containing consent findings and an
order disposing of the matter in whole. It further provides that the
decision will contain appropriate findings, conclusions of law, and an
order and be served upon all parties to the
[[Page 9631]]
proceeding. Proposed Sec. 13.55(c)(2) provides that if the
Administrator requests debarment, and the ALJ concludes the contractor
has violated the Executive Order or part 13, the ALJ will issue an
order regarding whether the contractor is subject to the excluded
parties list that will include any findings related to the contractor's
disregard of its obligations to employees or subcontractors under the
Executive Order or part 13.
Proposed Sec. 13.55(d) provides that the Equal Access to Justice
Act (EAJA), as amended, 5 U.S.C. 504, does not apply to proceedings
under part 13. The proceedings proposed are not required by an
underlying statute to be determined on the record after an opportunity
for an agency hearing. Therefore, an ALJ has no authority to award
attorney's fees and/or other litigation expenses pursuant to the
provisions of the EAJA for any proceeding under part 13.
Proposed Sec. 13.55(e) provides that if an ALJ concludes that a
violation of the Executive Order or part 13 occurred, the final order
shall mandate action to remedy the violation, including any monetary or
equitable relief described in proposed Sec. 13.44. It also requires an
ALJ to determine whether an order imposing debarment is appropriate, if
the Administrator has sought debarment.
Proposed Sec. 13.55(f) provides that the ALJ's decision will
become the final order of the Secretary, provided a party does not
timely appeal the matter to the ARB.
Section 13.56 Petition for Review
The Department proposes Sec. 13.56 as the process to apply to
petitions for review to the ARB from ALJ decisions. Proposed Sec.
13.56(a) provides that within 30 calendar days after the date of the
decision of the ALJ, or such additional time as the ARB grants, any
party aggrieved thereby who desires review must file a petition for
review with supporting reasons in writing to the ARB with a copy
thereof to the Chief Administrative Law Judge. It further requires the
petition to refer to the specific findings of fact, conclusions of law,
and order at issue and that a petition concerning a debarment decision
state the disregard of obligations to employees and subcontractors, or
lack thereof, as appropriate. It additionally requires a party to serve
the petition for review, and all supporting briefs, on all parties and
on the Chief Administrative Law Judge. It also states that a party must
timely serve copies of the petition and all supporting briefs on the
Administrator and the Associate Solicitor, Division of Fair Labor
Standards, Office of the Solicitor, U.S. Department of Labor.
Proposed Sec. 13.56(b) provides that if a party files a timely
petition for review, the ALJ's decision will be inoperative unless and
until the ARB issues an order affirming the decision, or the decision
otherwise becomes a final order of the Secretary. It further provides
that if a petition for review concerns only the imposition of
debarment, the remainder of the ALJ's decision will be effective
immediately. It additionally states that judicial review will not be
available unless a timely petition for review to the ARB is first
filed. Failure of the aggrieved party to file a petition for review
with the ARB within 30 calendar days of the ALJ decision will render
the decision final, without further opportunity for appeal.
Section 13.57 Administrative Review Board Proceedings
Proposed Sec. 13.57 outlines the ARB proceedings under the
Executive Order. Proposed Sec. 13.57(a)(1) states the ARB has
jurisdiction to hear and decide in its discretion appeals from the
Administrator's investigative findings letters issued under proposed
Sec. 13.51(c)(1) or the final sentence of proposed Sec.
13.51(c)(2)(ii), Administrator's rulings issued under proposed Sec.
13.58, and from ALJ decisions issued under proposed Sec. 13.55. It
further provides that in considering the matters within its
jurisdiction, the ARB will be the Secretary's authorized representative
and will act fully and finally on behalf of the Secretary. Proposed
Sec. 13.57(a)(2)(i) identifies the limitations on the ARB's scope of
review, including a restriction on passing on the validity of any
provision of part 13 and a general prohibition on receiving new
evidence in the record, because the ARB is an appellate body and must
decide cases before it based on substantial evidence in the existing
record. Proposed Sec. 13.57(a)(2)(ii) prohibits the ARB from granting
attorney's fees or other litigation expenses under the EAJA.
Proposed Sec. 13.57(b) requires the ARB to issue a final decision
within a reasonable period of time following receipt of the petition
for review and to serve the decision by mail on all parties at their
last known address, and on the Chief ALJ, if the case involved an
appeal from an ALJ's decision. Proposed Sec. 13.57(c) directs the
ARB's order to mandate action to remedy a violation, including any
monetary or equitable relief described in proposed Sec. 13.44, if the
ARB concludes a violation occurred. If the Administrator has sought
debarment, the ARB will determine whether a debarment remedy is
appropriate.
Finally, proposed Sec. 13.57(d) provides that the ARB's decision
will become the Secretary's final order in the matter.
Section 13.58 Administrator Ruling
Proposed Sec. 13.58 sets forth a procedure for addressing
questions regarding the application and interpretation of the rules
contained in part 13. Proposed Sec. 13.58(a), which the Department
derived primarily from the DBA's implementing regulations at 29 CFR
5.13, provides that such questions can be referred to the
Administrator. It further provides that the Administrator will issue an
appropriate ruling or interpretation related to the question.
Additionally, under proposed Sec. 13.58(a), requests for rulings under
this section shall be addressed to the Administrator, Wage and Hour
Division, U.S. Department of Labor, Washington, DC 20210.
Any interested party can, pursuant to proposed Sec. 13.58(b),
appeal a final ruling of the Administrator issued pursuant to proposed
Sec. 13.58(a) to the ARB within 30 calendar days of the date of the
ruling.
Appendix A (Contract Clause)
Because Executive Order 13706 requires inclusion of a contract
clause in covered contracts, the Department has set forth the text of a
proposed contract clause in appendix A to part 13. As required by the
Order, the proposed contract clause specifies employees must earn not
less than 1 hour of paid sick leave for every 30 hours worked.
Consistent with the Secretary's authority to obtain compliance with the
Order, as well as the Secretary's responsibility to issue regulations
implementing the requirements of the Order that incorporate, to the
extent practicable, existing procedures, remedies, and enforcement
processes under the FLSA, SCA, DBA, FMLA, VAWA and Executive Order
13658, the additional provisions of the contract clause are based on
the statutory text or implementing regulations of these five statutes
and Executive Order 13658 and are intended to obtain compliance with
the Order.
The introduction to the contract clause provides that the proposed
clause must be included by the contracting agency in all contracts,
contract-like instruments, and solicitations to which Executive Order
13706 applies, except for procurement contracts subject to the Federal
Acquisition Regulation (FAR). For procurement contracts subject to the
FAR, contracting agencies shall use the
[[Page 9632]]
clause set forth in the FAR developed to implement part 13. Such clause
shall accomplish the same purposes as the clause set forth in appendix
A and shall be consistent with the requirements set forth in the
Secretary's regulations.
Proposed paragraph (a) of the contract clause set forth in appendix
A provides that the contract in which the clause is included is subject
to Executive Order 13706, the regulations issued by the Secretary of
Labor at 29 CFR part 13 to implement the Order's requirements, and all
the provisions of the contract clause.
Proposed paragraph (b) identifies the contractor's general paid
sick leave obligations. Paragraph (b)(1) stipulates that contractors
must permit each employee engaged in the performance of the contract by
the prime contractor or any subcontractor, regardless of any
contractual relationship that may be alleged to exist between the
contractor and the employee, to earn not less than 1 hour of paid sick
leave for every 30 hours worked. It further provides that the
contractor must allow accrual and use of paid sick leave as required by
the Executive Order and 29 CFR part 13, particularly the accrual, use,
and other requirements set forth in 29 CFR 13.5 and 13.6, which are
incorporated by reference in the contract.
The first sentence of proposed paragraph (b)(2), which reflects
requirements in proposed Sec. Sec. 13.23 and 13.24 and was derived
from the contract clauses applicable to contracts subject to the SCA,
DBA and Executive Order 13706, see 29 CFR 4.6(h) (SCA); 29 CFR
5.5(a)(1) (DBA); 79 CFR 60731 (Executive Order 13658), aims to ensure
that employees actually receive the full pay and benefits to which they
are entitled under the Executive Order and 29 CFR part 13 when they use
paid sick leave. It requires a contractor to provide paid sick leave to
all employees when due free and clear and without subsequent deduction
(except as otherwise provided by 29 CFR 13.24), rebate, or kickback on
any account. Proposed paragraph (b)(2)'s second sentence clarifies that
employees that have used paid sick leave must receive the full pay and
benefits to which they are entitled for the period of leave used no
later than one pay period following the end of the regular pay period
in which the employee used the sick leave. This requirement appears in
proposed Sec. 13.28.
Proposed paragraph (b)(3) provides that the prime contractor and
any upper-tier subcontractor shall be responsible for the compliance by
any subcontractor or lower-tier subcontractor with the requirements of
Executive Order 13706, 29 CFR part 13, and this clause. This
responsibility on the part of prime and upper-tier contractors for
subcontractor compliance parallels that of the SCA, DBA and Executive
Order 13658. See 29 CFR 4.114(b) (SCA); 29 CFR 5.5(a)(6) (DBA); 29 CFR
10.21(b) (Executive Order 13658). It also appears in proposed Sec.
13.21(b).
Proposed paragraphs (c) and (d) of the contract clause are derived
primarily from the contract clauses applicable to contracts subject to
the SCA, DBA and Executive Order 13658, see 29 CFR 4.6(i) (SCA); 29 CFR
5.5(a)(2), (7) (DBA); 79 FR 60731 (Executive Order 13658). Paragraph
(c) provides that the contracting officer shall, upon its own action or
upon written request of an authorized representative of the Department
of Labor, withhold or cause to be withheld from the prime contractor
under the contract or any other Federal contract with the same prime
contractor, so much of the accrued payments or advances as may be
considered necessary to pay employees the full amount owed to
compensate for any violation of the requirements of Executive Order
13706, 29 CFR part 13, or this clause, including any pay and/or
benefits denied or lost by reason of its violation; other actual
monetary losses sustained as a direct result of the violation; and
liquidated damages. Consistent with withholding procedures under the
SCA, DBA and Executive Order 13658, paragraph (c) would allow the
contracting agency and the Department to effect withholding of funds
from the prime contractor on not only the contract covered by the
Executive Order but also on any other contract that the prime
contractor has entered into with the Federal Government.
Proposed paragraph (d) states the circumstances under which the
contracting agency and/or the Department may suspend or terminate a
contract, or debar a contractor, for violations of the Executive Order.
It provides that in the event of a failure to comply with any term or
condition of the Executive Order, 29 CFR part 13, or the clause, the
contracting agency may on its own action, or after authorization or by
direction of the Department and written notification to the contractor,
take action to cause suspension of any further payment, advance or
guarantee of funds until such violations have ceased. Paragraph (d)
additionally provides that any failure to comply with the contract
clause may constitute grounds for termination of the right to proceed
with the contract work and, in such event, for the Federal Government
to enter into other contracts or arrangements for completion of the
work, charging the contractor in default with any additional cost.
Paragraph (d) also provides that a breach of the contract clauses may
be grounds to debar the contractor as provided in proposed 29 CFR part
13.52.
Proposed paragraph (e), which implements section 2(f) of the
Executive Order, provides that the paid sick leave required by the
Executive Order, 29 CFR part 13, and the clause is in addition to a
contractor's obligations under the SCA and DBA, and that a contractor
may not receive credit toward its prevailing wage or fringe benefit
obligations under those Acts for any paid sick leave provided in
satisfaction of the requirements of the Executive Order and 29 CFR part
13.
Proposed paragraph (f), which implements section 2(l) of the
Executive Order, provides that nothing in Executive Order 13658 or 29
CFR part 13 shall excuse noncompliance with or supersede any applicable
Federal or State law, any applicable law or municipal ordinance, or a
collective bargaining agreement requiring greater paid sick leave or
leave rights than those established under Executive Order 13760 and 29
CFR part 13. Proposed Sec. 13.5(f)(2)(i) and proposed Sec. 13.1(b)
also implement sections 2(f) and 2(l) of the Executive Order, and the
preamble discussions related to proposed Sec. 13.5(f)(2)(i) and
proposed Sec. 13.1(b) accordingly describe the operation of paragraphs
(e) and (f) in greater detail.
Proposed paragraph (g) sets forth recordkeeping and related
obligations that are consistent with the Secretary's authority under
section 4 of the Order to obtain compliance with the Order, and that
the Department views as essential to determining whether the contractor
has satisfied its obligations under the Executive Order. The Department
derived the obligations set forth in paragraph (g) from the FLSA, SCA,
DBA, FMLA and Executive Order 13658. The recordkeeping obligations
proposed in paragraph (g) duplicate those in proposed Sec. 13.25; a
description of those obligations accordingly appears in the preamble
related to Sec. 13.25.
Proposed paragraph (h) requires the contractor to both insert the
contract clause in all its covered subcontracts and to require its
subcontractors to include the clause in any covered lower-tier
subcontracts.
Proposed paragraph (i), which is derived from the SCA contract
clause, 29 CFR 4.6(n), and the Executive Order 13658 contract clause,
79 FR 60731, sets forth the certifications of eligibility the
contractor makes by entering into the contract. Paragraph (i)(1)
stipulates that
[[Page 9633]]
by entering into the contract, the contractor and its officials certify
that neither the contractor nor any person or firm with an interest in
the contractor's firm is a person or firm ineligible to be awarded
Government contracts by virtue of the sanctions imposed pursuant to
section 5 of the SCA, section 3(a) of the DBA, or 29 CFR 5.12(a)(1).
Paragraph (i)(2) constitutes a certification that no part of the
contract shall be subcontracted to any person or firm on the list of
persons or firms ineligible to receive Federal contracts currently
maintained on the System for Award Management Web site, http://www.SAM.gov. Paragraph (i)(3) contains an acknowledgement by the
contractor that the penalty for making false statements is prescribed
in the U.S. Criminal Code at 18 U.S.C. 1001.
Proposed paragraph (j) implements section 2(k) of the Executive
Order. The text of paragraph (j) mirrors the proposed regulatory text
at proposed Sec. Sec. 13.6(a) and Sec. 13.6(b). A full description of
the operation of the proposed contractor obligations not to interfere
with or discriminate against employees with respect to the accrual or
use of paid sick leave accordingly appears in the preamble related to
proposed Sec. Sec. 13.6(a) and Sec. 13.6(b).
Proposed paragraph (k) provides that employees cannot waive, nor
may contractors induce employees to waive, their rights under Executive
Order 13706, 29 CFR part 13, or the clause. As discussed in greater
detail in the preamble related to proposed Sec. 13.7, the Department
included a provision prohibiting the waiver of rights in the
regulations implementing the Minimum Wage Executive Order and believes
it is appropriate to adopt the same policy here.
Proposed paragraph (l) requires that contractors notify all
employees performing work on or in connection with a covered contract
of the paid sick leave requirements of Executive Order 13706, 29 CFR
part 13, and the clause by posting a notice provided by the Department
of Labor in a prominent and accessible place at the worksite so it may
be readily seen by employees. It additionally permits contractors that
customarily post notices to employees electronically to post the notice
electronically, provided such electronic posting is displayed
prominently on any Web site that is maintained by the contractor,
whether external or internal, and customarily used for notices to
employees about terms and conditions of employment. The notice
obligations contained in paragraph (l) mirror those contained in
proposed Sec. 13.27(a)-(b), which the Department derived from the
Minimum Wage Executive Order implementing regulations at 29 CFR
10.29(b)-(c). The preamble related to those sections contains a
discussion of the Department's rationale for including the particular
notice obligation it is proposing. Proposed paragraph (m) is based on
section 5(b) of the Executive Order and provides that disputes related
to the application of the Executive Order to the contract shall not be
subject to the contract's general disputes clause. Instead, such
disputes shall be resolved in accordance with the dispute resolution
process set forth in 29 CFR part 10. Paragraph (m) also provides that
disputes within the meaning of the clause include disputes between the
contractor (or any of its subcontractors) and the contracting agency,
the U.S. Department of Labor, or the workers or their representatives.
IV. Paperwork Reduction Act
As part of its continuing effort to reduce paperwork and respondent
burden, the Department conducts a preclearance consultation program to
provide the general public and Federal agencies with an opportunity to
comment on proposed and continuing collections of information in
accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C.
3506(c)(2)(A). This program helps to ensure that requested data can be
provided in the desired format, reporting burden (time and financial
resources) is minimized, collection instruments are clearly understood,
and the impact of collection requirements on respondents can be
properly assessed. The PRA typically requires an agency to provide
notice and seek public comments on any proposed collection of
information contained in a proposed rule. See 44 U.S.C. 3506(c)(2)(B);
5 CFR 1320.8. Persons are not required to respond to the information
collection requirements until they are approved by OMB under the PRA at
the final rule stage.
Purpose and use: This NPRM, which implements the paid sick leave
requirements of Executive Order 13706, contains provisions that are
considered collections of information under the PRA. Pursuant to
proposed Sec. 13.21, the contractor and any subcontractors shall
include in any covered subcontracts the applicable Executive Order paid
sick leave contract clause referred to in proposed Sec. 13.11(a) and
shall require, as a condition of payment, that the subcontractor
include the contract clause in any lower-tier subcontracts. Pursuant to
proposed Sec. 13.25, contractors and each subcontractor performing
work subject to Executive Order 13706 and these proposed regulations
shall make and maintain during the course of the covered contract, and
preserve for no less than three years thereafter, records containing
the information specified in paragraphs (a)(1) through (15) of proposed
Sec. 13.25 for each employee and shall make them available for
inspection, copying, and transcription by authorized representatives of
the Wage and Hour Division. These include: (1) Name, address, and
Social Security number of each employee; (2) The employee's
occupation(s) or classification(s); (3) The rate or rates of wages
paid; (4) The number of daily and weekly hours worked; (5) Any
deductions made; (6) The total wages paid each pay period; (7) A copy
of notifications to employees of the amount of paid sick leave the
employees have accrued as required under Sec. 13.5(a)(2); (8) A copy
of employees' requests to use paid sick leave, if in writing, or, if
not in writing, any other records reflecting such employee requests;
(9) Dates and amounts of paid sick leave used by employees; (10) A copy
of any written denials of employees' requests to use paid sick leave,
including explanations for such denials, as required under Sec.
13.5(d)(3); (11) Any records reflecting the certification and
documentation a contractor may require an employee to provide under
Sec. 13.5(e), including copies of any certification or documentation
provided by an employee; (12) Any other records showing any tracking of
or calculations related to an employee's accrual and/or use of paid
sick leave; (13) A copy of any certified list of employees' accrued,
unused paid sick leave provided to a contracting officer in compliance
with Sec. 13.26; (14) Any certified list of employees' accrued, unused
paid sick leave received from the contracting agency in compliance with
Sec. 13.11(f); and (15) The relevant covered contract.
Additionally, under proposed Sec. 13.25, if a contractor wishes to
distinguish between an employee's covered and non-covered work, the
contractor must keep records reflecting such distinctions.
The Department notes that many of the proposed recordkeeping
requirements in this NPRM related to paid sick leave are new
requirements. As a result, the Department will create a new information
collection titled ``Government Contractor Paid Sick Leave'' and submit
it to OMB for approval under OMB control number 1235-0NEW. A new
information collection request (ICR) has been submitted to the OMB that
would provide PRA authorization for control
[[Page 9634]]
number 1235-0NEW to incorporate the recordkeeping provisions in this
proposed rule and to incorporate burdens associated with the new
recordkeeping requirements. Additionally, the Department will submit to
OMB for approval a revision to ICR 1235-0018 incorporating certain
recordkeeping provisions in this proposed rule even though the proposed
rule does not increase a paperwork burden on the regulated community of
the information collection provisions contained in ICR 1235-0018. The
ICR under OMB control number 1235-0018 contains the general FLSA
recordkeeping requirements and burdens. Overlapping recordkeeping
requirements are located in proposed Sec. 13.25(a)(1)--(6) (including
an overlapping exemption located in proposed Sec. 13.25(c)). Such
burden is already captured in the ICR for all employers.
The WHD obtains PRA clearance under control number 1235-0021 for an
information collection covering complaints alleging violations of
various labor standards that the agency administers and enforces. An
ICR has been submitted to revise the approval to incorporate the
provisions in this proposed rule applicable to complaints and adjust
burden estimates to reflect any increase in the number of complaints
filed against contractors who fail to comply with the paid sick leave
requirements of Executive Order 13706 and 29 CFR part 13.
Subpart E of this proposed rule establishes administrative
proceedings to resolve investigation findings. Particularly with
respect to hearings, the rule imposes information collection
requirements. The Department notes that information exchanged between
the respondent in a civil or an administrative action and the agency in
order to resolve the action would be exempt from PRA requirements. See
44 U.S.C. 3518(c)(1)(B); 5 CFR 1320.4(a)(2). This exemption applies
throughout the civil or administrative action (such as an investigation
and any related administrative hearings); therefore, the Department has
determined the administrative requirements contained in subpart E of
this proposed rule are exempt from needing OMB approval under the PRA.
Information and technology: There is no particular order or form of
records prescribed by the proposed regulations. A contractor may meet
the requirements of this proposed rule using paper or electronic means.
The WHD, in order to reduce burden caused by the filing of complaints
that are not actionable by the agency, uses a complaint filing process
that has complainants discuss their concerns with WHD professional
staff. This process allows agency staff to refer complainants raising
concerns that are not actionable under wage and hour laws and
regulations to an agency that may be able to offer assistance.
Public comments: The Department seeks comments on its analysis that
this NPRM creates a slight paperwork burden associated with ICR 1235-
0021 but does not create a paperwork burden on the regulated community
of the information collection provisions contained in ICR 1235-0018.
Additionally, the Department seeks comments on its analysis that this
NPRM creates a new paperwork burden on the regulated community as
described in the new information collection provisions contained in ICR
1235-0NEW. Commenters may send their views to the Department in the
same way as all other comments (e.g., through the http://www.regulations.gov Web site). While much of the information provided
to OMB in support of the information collection request appears in the
preamble, interested parties may obtain a copy of the full
recordkeeping and complaint process supporting statements by sending a
written request to the mail address shown in the ADDRESSES section at
the beginning of this preamble. In addition to having an opportunity to
file comments with the Department, comments about the paperwork
implications of the proposed regulations may be addressed to the OMB.
Comments to the OMB should be directed to: Office of Information and
Regulatory Affairs, Attention OMB Desk Officer for the Wage and Hour
Division, Office of Management and Budget, Room 10235, Washington, DC
20503; Telephone: 202-395-7316/Fax: 202-395-6974 (these are not toll-
free numbers). The OMB will consider all written comments that agency
receives within 30 days of publication of this proposed rule. As
previously indicated, written comments directed to the Department may
be submitted within 30 days of publication of this proposed rule.
The OMB and the Department are particularly interested in comments
that:
Evaluate whether the proposed collections of information
are necessary for the proper performance of the functions of the
agency, including whether the information will have practical utility;
Evaluate the accuracy of the agency's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used;
Enhance the quality, utility, and clarity of the
information to be collected; and
Minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submission of responses.
Total burden for the recordkeeping and complaint process
information collections, including the burdens that will be unaffected
by this proposed rule and any changes are summarized as follows:
Type of Review: Revision to currently approved information
collections.
Agency: Wage and Hour Division, Department of Labor.
Title: Records to be Kept by Employers--Fair Labor Standards
Act.
OMB Control Number: 1235-0018.
Affected Public: Private sector businesses or other for-profits,
farms, not-for-profit institutions, state, local and tribal
governments, and individuals or households.
Estimated Number of Respondents: 3,911,600 (unaffected by this
rulemaking).
Estimated Number of Responses: 40,998,533 (unaffected by this
rulemaking).
Estimated Burden Hours: 1,250,164 (unaffected by this
rulemaking).
Estimated Time per Response: Various (unaffected by this
rulemaking).
Frequency: Various (unaffected by this rulemaking).
Other Burden Cost: 0.
Title: Employment Information Form.
OMB Control Number: 1235-0021.
Affected Public: Businesses or other for-profit, not-for-profit
institutions, state and local governments, and individuals or
households.
Total Respondents: 35,511 (161 from this rulemaking).
Estimated Number of Responses: 35,511 (161 from this
rulemaking).
Estimated Burden Hours: 11,837 (54 from this rulemaking).
Estimated Time per Response: 20 minutes (unaffected by this
rulemaking).
Frequency: once.
Other Burden Cost: 0.
Type of Review: Approval of New Information Collection.
Agency: Wage and Hour Division, Department of Labor.
Title: Government Contractor Paid Sick Leave.
OMB Control Number: 1235-0NEW.
Affected Public: Businesses or other for-profit, farms, not-for-
profit institutions, state, local and tribal governments, and
individuals or households.
Total Respondents: 322,067.
Estimated Number of Responses: 6,326,198.
Estimated Burden Hours: 134,263.
[[Page 9635]]
Estimated Time per Response: various.
Frequency: on occasion.
Other Burden Cost: $246,713 (maintenance and operations).
V. Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of an intended regulation and to propose or adopt a
regulation only upon a reasoned determination that the intended
regulation's net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity)
justify its costs. Executive Order 13563 emphasizes the importance of
quantifying both costs and benefits where possible, reducing costs,
harmonizing rules, and promoting flexibility.
Under Executive Order 12866, the Office of Management and Budget
(OMB) must determine whether a regulatory action is a ``significant
regulatory action,'' which includes an action that has an annual effect
of $100 million or more on the economy. Significant regulatory actions
are subject to review by OMB. As described below, this proposed rule is
economically significant. Therefore, the Department has prepared a
Preliminary Regulatory Impact Analysis (PRIA) in connection with this
proposed rule as required under section 6(a)(3) of Executive Order
12866, and OMB has reviewed the proposed rule.
A. Introduction
i. Background and Need for Rulemaking
Executive Order 13706 (EO) provides that employees can earn up to
seven days of paid sick leave annually on specified categories of
contracts with the Federal Government where either the solicitation has
been issued, or the contract has been awarded outside the solicitation
process, on or after January 1, 2017. The Executive Order states that
the Federal Government's procurement interests in economy and
efficiency are promoted when the Federal Government contracts with
sources that allow their employees to earn paid sick leave.\2\ This
rulemaking implements the Executive Order, consistent with the
authorization in section 3 of the Order.
---------------------------------------------------------------------------
\2\ The phrase ``economy and efficiency'' is used here only in
the sense implied by the Federal Property and Administrative
Services Act.
---------------------------------------------------------------------------
ii. Summary of Affected Employees, Costs, Benefits, and Transfers
The Department estimated the number of employees who would as a
result of the Executive Order and this proposed rule receive some
amount of paid sick leave, i.e., ``affected employees.'' There are
accordingly two categories of affected employees: Those covered
employees who currently receive no paid sick leave, and those covered
employees who currently receive paid sick leave in an amount less than
they would be entitled to receive under the Executive Order (up to 7
days annually). As discussed in detail below, because the proposed rule
only applies to ``new contracts,'' and the Department has estimated it
will take five years for the universe of possibly covered contracts to
become ``new,'' the full impact of the rulemaking will not likely occur
before Year 5. In Year 5, the Department estimates there will be
828,200 affected employees (Table 1).\3\ This includes approximately
436,700 employees who currently receive no paid sick leave and 391,400
employees who receive some paid sick leave but would be entitled to
receive additional paid sick leave under the proposed rulemaking.
---------------------------------------------------------------------------
\3\ This includes projected net job growth and so is somewhat
larger than five times the number of affected employees in Year 1.
Net job growth takes into account both workers entering government
contracting and workers leaving government contracting.
---------------------------------------------------------------------------
The Department also estimated costs and transfer payments
associated with this rulemaking. During the first 10 years the rule is
in effect, average annualized direct employer costs are estimated to be
$18.4 million. (This estimation assumes a 7 percent real discount rate;
hereafter, unless otherwise specified, average annualized values will
be presented using a 7 percent real discount rate.) This estimated
annualized cost includes $6.0 million for regulatory familiarization,
$5.6 million for initial implementation costs, $2.5 million for
recurring implementation costs, and $4.3 million for administrative
costs. For a discussion of how the Department estimated these numbers,
please see Section C.ii.
Transfer payments are transfers of income from employers to
employees. Estimated average annualized transfer payments are $250.1
million per year over 10 years. Lastly, the Department estimated
deadweight loss (DWL). DWL occurs when a market operates at less than
optimal equilibrium output, which happens anytime the conditions for a
perfectly competitive market are not met, including due to a labor
market intervention. The Department estimated that average annualized
DWL will be $526,000 per year during the first ten years of the rule.
This will be primarily due to a decrease in employment that may be
caused by the proposed rule.
Table 1--Summary of Affected Employees, Regulatory Costs, and Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Future years (1,000s) Average annualized value
Year 1 ------------------------------------------------ (1,000s)
(1,000s) -------------------------------
Year 2 Year 5 Year 10 3% Real rate 7% Real rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Affected employees...................................... 153.8 322.0 828.2 909.1 .............. ..............
Direct employer costs (2014$)........................... $92,148 $6,398 $9,960 $6,205 $16,674 $18,362
Regulatory familiarization.......................... $45,132 $0 $0 $0 $5,137 $6,005
Initial implementation.............................. $41,765 $0 $0 $0 $4,754 $5,557
Recurring implementation............................ $4,201 $4,201 $4,201 $0 $2,255 $2,452
Administrative...................................... $1,050 $2,198 $5,759 $6,205 $4,528 $4,347
Transfers (2014$)....................................... $58,897 $123,977 $323,299 $364,109 $260,761 $250,051
DWL (2014$)............................................. $127 $266 $684 $751 $548 $526
--------------------------------------------------------------------------------------------------------------------------------------------------------
iii. Terminology and Abbreviations
The following terminology and abbreviations will be used throughout
this Regulatory Impact Analysis (RIA).
ATUS: American Time Use Survey.
BLS: Bureau of Labor Statistics.
CPI-U: Consumer Price Index for all urban consumers.
CPS: Current Population Survey.
DWL: Deadweight loss, which is the loss of economic efficiency that
can occur when the market equilibrium for a good or service is not
achieved.
[[Page 9636]]
ECEC: Employer Costs for Employee Compensation.
FY: Fiscal year. The Federal fiscal year is from October 1 through
September 30.
NCS: National Compensation Survey.
OES: Occupational Employment Statistics.
PTO: Paid time-off.
Price elasticity of labor demand (with respect to wage): The
percentage change in labor hours demanded in response to a one percent
increase in wages.
Real dollars (2014$): Dollars adjusted using the CPI-U to reflect
their purchasing power in 2014.
RIA: Regulatory Impact Analysis. This will be used to reference the
analysis conducted to assess the impact of this regulation.
SAM: System for Award Management
SBA: Office of Advocacy of the U.S. Small Business Administration.
B. Methodology To Determine the Number of Affected Employees
i. Overview and Data
This section explains the methodology the Department used to
estimate the number of affected employees. The first step in estimating
the number of affected employees is determining the total number of
employees working on Federal contracts (``Federal contract
employees''). However, there are no data on the number of Federal
contract employees. To estimate the number of Federal contract
employees, the Department employed the approach used in the
Department's final rule implementing Executive Order 13658.\4\
---------------------------------------------------------------------------
\4\ See 79 FR 60634, 60692-60720.
---------------------------------------------------------------------------
After determining the total number of Federal contract employees,
the Department estimated the share who will receive additional days of
paid sick leave due to the rulemaking. The 2015 NCS provides data on
the percentage of employees with paid sick leave and the annual number
of days of leave that each employee receives. This distribution allowed
the Department to estimate the number of employees who receive less
than the amount of paid sick leave required under the proposed rule.
Note that the Executive Order generally measures paid sick leave in
hours but because the NCS tabulates paid sick leave in days, the
Department converted sick leave hours to days to use the NCS. The
Department assumes 8 hours worked per day, so the Executive Order
provides a maximum accrual of 7 days of paid sick leave annually. The
2015 NCS does not provide data for the agriculture industry. Therefore,
the Department supplemented the 2015 NCS data on paid sick leave with
data from the 2011 ATUS Leave Module.
ii. Number of Affected Employees
First, the Department estimated the number of employees who work on
federal contracts that will be covered by the Executive Order. This
represents the number of ``potentially affected workers.'' Then the
Department estimated the share of potentially affected workers who will
receive new or additional paid sick leave as a result of the EO. These
workers are referred to as ``affected.''
The Department estimated the number of potentially affected
employees by taking the ratio of Federal contracting expenditure to
total output, by industry, and applying this ratio to total employment
in that industry (Table 2). This analysis was conducted at the 2-digit
NAICS level. The Department derived total Federal contracting
expenditure from USASpending.gov data, which tabulates data on Federal
contracting through the Federal Procurement Data System--Next
Generation (FPDS-NG). The Congressional Budget Office (CBO) has stated
that this is the ``only comprehensive source of information about
federal spending on contracts.'' \5\ According to data from
USASpending.gov, the government spent $619 billion on procurement
contracts in FY2014. The Department excluded expenditures to state and
local governments both because government employees generally receive
at least seven days of paid sick leave and because the DBA does not
apply to construction performed by state or local government employees.
The Department also excluded contracts performed outside the U.S.
because the proposed rule only covers contracts to the extent they are
performed in the U.S. These two adjustments reduce the relevant Federal
government's expenditures to $407 billion. Next, the Department
excluded expenditures on goods purchased by the Federal government
because the proposed rule does not apply to contracts subject to the
Walsh-Healey Public Contracts Act (PCA) and hence would not apply to
contracts for the manufacturing and furnishing of materials and
supplies.\6\ Subtracting Federal expenditures on goods purchased, the
Department found that the Federal government spent $230.2 billion on
services (including construction) provided by government contractors in
FY2014.\7\ To determine the share of all output associated with
government contracts the Department divided industry level contracting
expenditures by that industry's gross output.\8\ For example, in the
information industry, $6.6 billion in contracting expenditures was
divided by $1.5 trillion in total output, resulting in an estimate that
covered government contracts compose 0.43 percent of every dollar of
total output in the information industry.
---------------------------------------------------------------------------
\5\ Congressional Budget Office. (2015). Federal Contracts and
the Contracted Workforce. P. 3. Available at: https://www.cbo.gov/publication/49931.
\6\ For example, the government purchases pencils; however, a
contract solely to purchase pencils would be subject to the PCA and
accordingly would not be covered by the Executive Order.
\7\ USASpending.gov does not capture certain types of
concessions contracts and contracts in connection with Federal
property or lands and related to offering services for Federal
employees, their dependents or the general public that will be
covered by this proposed rule. However, a portion of contracts in
some product service codes will not be covered by this proposed
rule. Therefore, while the Department's estimate of the number of
affected workers may be somewhat imprecise, the overinclusion of
contracts from the applicable product service codes and the
exclusion of some concessions contracts and contracts in connection
with Federal property or lands related to offering services will
offset each other to some degree in calculating the total number of
affected workers.
\8\ Bureau of Economic Analysis, National Income and Product
Accounts (NIPA) Tables, Gross output. 2014.
---------------------------------------------------------------------------
The Department multiplied the ratio of covered-to-gross output by
private sector employment at the industry level to estimate the share
of employees working on covered contracts. The Department combined
these ratios and employment figures from the 2014 OES for each 2-digit
NAICS industry.\9\ For example, in the information industry, there were
approximately 2.7 million private sector employees in 2014. The
Department multiplied 2.7 million by 0.43 percent to estimate that
12,000 employees in the information industry will be potentially
affected by the EO.10 11
---------------------------------------------------------------------------
\9\ Bureau of Labor Statistics. Occupational Employment
Statistics. May 2014. Available at: http://www.bls.gov/oes/.
\10\ The North American Industry Classification System is a
method by which Federal statistical agencies classify business
establishments in order to collect, analyze, and publish data about
certain industries. Each industry is categorized by a 2-6 digit
number. United States Census Bureau. ``North American Industry
Classification System: Introduction to NAICS.'' U.S. Department of
Commerce. http://www.census.gov/eos/www/naics/.
\11\ Note that number of employees aggregated across industry
analysis does not match the total number of employees derived using
totals due to the order of multiplying and summing.
[[Page 9637]]
Table 2--Number of Potentially Affected Employees
--------------------------------------------------------------------------------------------------------------------------------------------------------
Covered Share Total Potentially
Private Total contracting output from contract affected in
Industry NAICS employees output output covered employees first year
(1,000s) (billions) (millions) contracting (1,000s) (1,000s)
\a\ \b\ \c\ (percent) \d\ \e\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and.............................. 11 410 $463 $242 0.05 0 0
Mining.......................................................... 21 824 687 82 0.01 0 0
Utilities....................................................... 22 548 413 2,993 0.73 4 1
Construction.................................................... 23 6,094 1,217 22,263 1.83 111 22
Manufacturing................................................... 31-33 12,101 6,144 18,965 0.31 37 7
Wholesale trade................................................. 42 5,780 1,590 237 0.01 1 0
Retail trade.................................................... 44-45 15,473 1,553 2,189 0.14 22 4
Transportation and warehousing.................................. 48-49 4,590 1,057 8,733 0.83 38 8
Information..................................................... 51 2,736 1,517 6,590 0.43 12 2
Finance and insurance........................................... 52 5,619 2,152 17,651 0.82 46 9
Real estate and rental and leasing.............................. 53 2,018 3,142 952 0.03 1 0
Professional, scientific, and................................... 54 8,232 1,888 106,347 5.63 464 93
Management of companies and..................................... 55 2,207 601 1 0.00 0 0
Administrative and waste services............................... 56 8,627 820 27,884 3.40 293 59
Educational services............................................ 61 2,728 335 2,500 0.75 20 4
Health care and social assistance............................... 62 17,370 2,131 9,576 0.45 78 16
Arts, entertainment, and recreation............................. 71 2,199 295 52 0.02 0 0
Accommodation and food services................................. 72 12,549 891 1,307 0.15 18 4
Other services.................................................. 81 3,938 619 1,592 0.26 10 2
---------------------------------------------------------------------------------------
Total private............................................... ........ 114,039 27,514 230,155 0.84 1,157 231
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Source: OES May 2014.
\b\ Source: Bureau of Economic Analysis, NIPA Tables, Gross output. 2014.
\c\ Source: USASpending.gov. Contracting expenditures for covered contracts in FY2014.
\d\ Assumes share of expenditure on contracting is same as share of employment. Assumes all employees work exclusively on Federal contracts. Thus this
may be an underestimate if some employees are not working entirely on Federal contracts.
\e\ 20 percent of employees on Federal contracts are considered new in Year 1.
Because the EO only applies to ``new contracts,'' coverage of the
estimated total number of potentially affected employees (1.2 million)
will occur on a staggered year-by-year basis. The Department
accordingly needed to devise a method to estimate at what rate the
staggered coverage would occur. The Executive Order defines a new
contract to be either one for which a solicitation has been issued, or
for which the contract has been awarded outside the solicitation
process, on or after January 1, 2017. Consistent with the Department's
approach in the rulemaking implementing Executive Order 13658, see 79
FR 34568, 34596; 79 FR 60693, the Department estimated that twenty
percent of contracts will qualify as ``new'' in Year 1. If
approximately twenty percent of contracts are new each year, then
almost all contracts should qualify as new for purposes of the
Executive Order by Year 5.\12\ The Department assumed employee coverage
would also occur on a uniform twenty percent year-by-year basis. The
Department accordingly multiplied the 1.2 million total potentially
affected employees by 0.2 to estimate that 231,300 employees may be
impacted in Year 1.
---------------------------------------------------------------------------
\12\ If some contracts last longer than 5 years, then not all
contracts will be covered by Year 5.
---------------------------------------------------------------------------
Next the Department used the 2015 NCS to determine how many of the
potentially affected employees already receive paid sick leave. The
2015 NCS estimates that nationally 61 percent of all private sector
employees currently receive some paid sick leave.13 14
However, this average can vary substantially by industry and hours
worked. To account for these differences the Department performed its
analysis by industry and full-time/part-time status.\15\ In general,
the BLS reports the share of employees who receive paid leave
disaggregated by industry (Table 3). The NCS does not publish data by
industry and full-time status; however, for this proposed rulemaking
BLS provided this breakdown using the NCS microdata for industries with
sufficient observations to meet their publication criteria. For
industries not available from the NCS by part-time status, the
Department estimated the rates.\16\ The NCS does not include employees
in the agriculture, forestry, fishing and hunting industries;
therefore, the Department estimated the share of employees with access
to paid sick leave in those industries based on the 2011 ATUS Leave
Module.\17\
---------------------------------------------------------------------------
\13\ National Compensation Survey, March 2015, ``Table 32. Leave
benefits: Access, private industry employees''.
\14\ Data on paid sick leave are not available specifically for
Federal contractors. The Department assumes rates of paid sick leave
for Federal contractors are similar to all private sector workers.
\15\ The Department's analysis categorizes as full-time those
individuals who work 32 hours or more per workweek, and as part-time
those individuals who work less than 32 hours per workweek (rounded
to the nearest integer). This represents the line of demarcation
between workers who would and would not accrue 56 hours of paid sick
leave a year if they work a full year. The Department's designation
herein of certain individuals as ``full-time'' and other individuals
as ``part-time'' based on their usual hours worked is solely for
purposes of facilitating the economic analysis in this rulemaking.
\16\ The Department used the share of employees with sick leave,
for all employees and full-time employees, and the ratio of full-
time to part-time employees in each industry to estimate the shares
for part-time employees in those industries without part-time
employees' shares. The Department used data from the CPS to
calculate the ratio of full- to part-time employees.
\17\ The 2011 ATUS Leave Module is a special supplement to the
annual ATUS survey sponsored by the BLS and conducted by the U.S.
Census Bureau. It surveys employees nationally on use of leave. The
Department estimated the number of hours of leave taken the previous
week by employees in the agriculture, forestry, fishing and hunting
industries who (1) receive paid sick leave and (2) took leave for
``own illness or medical care'' or ``illness or medical care of
another family member''. The weekly number of hours was multiplied
by 52 weeks to estimate annual number of hours of sick leave taken.
[[Page 9638]]
Table 3--Share of Employees With Paid Sick Leave by Industry and Full-Time Status
----------------------------------------------------------------------------------------------------------------
% With Some Paid Sick Leave
Industry NAICS -----------------------------------------------
Total \a\ Full-Time \b\ Part-Time \b\
----------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and hunting \c\.. 11 26 30 10.
Mining.......................................... 21 64 65 \d\ 23.
Utilities....................................... 22 89 89 \d\ 89.
Construction.................................... 23 41 42 25.
Manufacturing................................... 31-33 65 67 \d\ 21.
Wholesale trade................................. 42 77 80 \d\ 35.
Retail trade.................................... 44-45 50 73 27.
Transportation and warehousing.................. 48-49 74 75 73.
Information..................................... 51 92 95 51.
Finance and insurance........................... 52 90 93 57.
Real estate and rental and leasing.............. 53 72 80 \d\ 36.
Professional, scientific, and technical services 54 78 85 \d\ 25.
Management of companies and enterprises......... 55 90 91 \d\ 85.
Administrative and waste services............... 56 44 53 15.
Educational services............................ 61 73 90 24.
Health care and social assistance............... 62 72 85 36.
Arts, entertainment, and recreation............. 71 48 71 29.
Accommodation and food services................. 72 25 46 11.
Other services.................................. 81 57 73 24.
Total private................................... .............. 61 73 25.
----------------------------------------------------------------------------------------------------------------
\a\ Source: National Compensation Survey, March 2015, ``Table 32. Leave benefits: Access, private industry
workers'' (unless otherwise noted). Assumes distribution of paid leave is similar for Federal contractors and
other private employees.
\b\ The NCS does not publish data by industry and full-time status; however, for this proposed rulemaking the
BLS provided this breakdown using the NCS microdata for industries with sufficient observations to meet their
publication criteria. Full-time is defined as 32 or more hours per week, as explained above.
\c\ NCS does not include information for this industry. Used 2011 ATUS Leave Module to estimate share of
employees in this industry with paid sick leave. Assumes distribution of paid leave is similar for Federal
contractors and other private sector employees.
\d\ NCS does not include information for this industry and part-time status. The Department estimated these
rates.
The Department separated the 231,300 employees potentially impacted
in Year 1 into approximately 198,200 full-time employees and 33,100
part-time employees.\18\ For full-time employees, across all
industries, 73 percent receive some paid sick leave and 27 percent
currently receive no paid sick leave. For part-time employees, 25
percent receive some paid sick leave and 75 percent receive no paid
leave. All employees with no paid sick leave will be affected
regardless of how many hours per week they work (assuming they work a
sufficient number of hours to accrue paid sick leave).
---------------------------------------------------------------------------
\18\ These estimates were calculated based on NCS data when
possible. Otherwise, the Department used 2014 CPS data. The
estimates assume the share of government contractors that are full-
time is similar to private industry overall. As noted, full-time is
defined for purposes of this analysis as 32 or more hours per week.
---------------------------------------------------------------------------
Additionally, some employees who currently receive paid sick leave
will also be affected by the proposed rule if they receive less than
the required number of days. To determine how many of these employees
are affected the Department used NCS data on the distribution of days
of leave. The 2015 NCS provides the share of employees with a range of
days of paid sick leave (e.g., 5 to 9 days per year).\19\ The NCS
publishes these data aggregated across all industries. However, since
this analysis is conducted by industry, the BLS provided the Department
these ranges of days disaggregated by industry based on the NCS (see
Appendix A). The Department then used the categorical distribution of
days for all workers and full-time workers to approximate these values
for both full-time and part-time workers.\20\ This results in a
distribution by categories of days of sick leave by industry and full-
time status.
---------------------------------------------------------------------------
\19\ Table 35. Paid sick leave: Number of annual days by service
requirement, private industry workers, National Compensation Survey,
March 2015. Available at: http://www.bls.gov/ncs/ebs/benefits/2015/ownership/private/table35a.htm.
\20\ The distribution is available for all workers and full-time
workers but not part-time workers. Combining these data with the
share of workers who are full-time allowed the Department to
approximate the distribution for part-time workers.
---------------------------------------------------------------------------
The Department distributed the share of employees within each NCS
category (e.g., 5 to 9 days per year) of paid sick leave days across
the individual number of days in that category (e.g., 5, 6, 7, 8, 9)
using a Poisson distribution that approximates the entire distribution
of days of paid sick leave provided to workers with this benefit.\21\
For example, using the NCS data the Department estimates that 53
percent of full-time employees with paid sick leave receive 5 to 9 days
of leave. Applying the Poisson distribution, the Department estimated
10 percent of employees with paid sick leave currently receive 5 sick
days, 13 percent currently receive 6 sick days, etc.\22\ The percent
distributions of days of paid sick leave are presented in Appendix A.
---------------------------------------------------------------------------
\21\ The Poisson distribution is frequently used for discrete
count data. The data were consistent with a Poisson distribution.
The distribution of days of sick leave is continuous but was
approximated using integers to allow use of the Poisson distribution
and to simplify the analysis. Aggregate findings would be highly
comparable if a continuous distribution had been used instead.
\22\ Some additional manipulations were made to the data in
cases where the Poisson distribution resulted in numbers
contradictory to the reported medians (see Appendix A).
---------------------------------------------------------------------------
To estimate the number of affected employees the Department summed
the number of employees with less than 7 days of paid sick leave (7
days with 8 hours of paid leave per day is equal to the maximum of 56
hours of paid sick leave). The Department estimates 72,700 contract
employees have access to paid sick leave but receive fewer than 7 days
of paid sick leave (48.4 percent of workers with some paid sick leave)
and are thus classified as affected employees. Next, the Department
estimated the number of additional paid sick leave days these employees
would need to receive to meet Executive Order 13706. This was done
somewhat differently for full-time and part-time employees. For full-
time employees with no paid sick leave the Department estimated they
will receive 7 additional
[[Page 9639]]
days of paid sick leave. For full-time employees with between 1 and 6
days of leave the Department estimated the number of additional days
they would need to receive to reach 7 days of paid leave (e.g., if
currently receive 1 day then will receive an additional 6 days).
To estimate the additional number of paid sick days per year that
would accrue to part-time employees as a result of the rule, the
Department first had to estimate hours of paid sick leave per year
currently available to these workers.
To estimate paid sick leave hours currently available to part-time
employees required additional calculations because the NCS reports days
of paid sick leave per year, not hours. Therefore the Department
adjusted part-time employees' days of paid sick leave by assuming that
the number of hours of paid sick leave associated with ``one day'' of
leave is equivalent to average hours worked in a day. For example, if a
part-time worker averages 6 hours of work per day, then one day of paid
sick leave will also be equal to 6 hours. To do this, the Department
divided part-time workers' average hours worked per week by 5 to
calculate their average hours worked per day by industry. The
Department then multiplied average work hours per day by NCS reported
paid days of sick leave per year to estimate part-time employees' hours
of paid sick leave currently available per year.
Next, the Department calculated the total hours of paid sick leave
per year that might accrue to a part-time worker as a result of this
EO. Because paid sick leave is accrued at a rate of 1 hour per every 30
hours worked, the Department divided mean annual hours worked for part-
time workers in an industry by 30 to estimate the number of hours of
paid sick leave required under the EO. The difference between hours of
paid sick leave currently available per year and hours of paid sick
leave per year required under the EO results in the additional hours
that accrue to part-time workers. This was then divided by 8 to express
the additional paid sick hours in terms of standardized 8-hour days.
Table 6 presents the adjusted numbers for part-time employees.
A total of 153,800 employees were estimated to be affected in Year
1 (Table 4). The total number of additional days of paid sick leave is
then calculated by multiplying the number of employees affected by the
number of additional days of paid sick leave provided by the proposed
rulemaking (Table 5 and Table 6). The Department estimated that the
proposed rulemaking will result in a total of 681,700 additional days
of paid sick leave provided (563,000 days for full-time workers and
118,700 days for part-time workers).\23\
---------------------------------------------------------------------------
\23\ The following estimate is based on the marginal number of
paid sick days employers would have to provide due to this
regulation. To the extent employers that currently provide paid sick
leave do not modify their existing paid sick leave policies in
accordance with section 2(g) of the Executive Order and proposed
section 13.5(f), and to the extent SCA- or DBA-covered employers
provide paid sick leave as an SCA or DBA fringe benefit, this
estimate may not entirely reflect the total marginal number of days
employers would have to provide. However, the Department assumes
firms will be able to and will choose to apply the currently
provided days of paid sick leave toward the requirements of the
Executive Order and this rule, and the Department similarly
understands that contractors generally do not provide paid sick
leave as an SCA or DBA fringe benefit.
Table 4--Number of Affected Employees in Year 1
----------------------------------------------------------------------------------------------------------------
Affected Employees
-------------------------------------------------------------------------------
Industry With no paid With some paid
Total Full-time \a\ Part-time \a\ sick leave sick leave
----------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing 37 29 9 32 5
and hunting....................
Mining.......................... 13 13 0 7 6
Utilities....................... 101 98 2 87 13
Construction.................... 19,071 17,332 1,739 13,255 5,816
Manufacturing................... 5,538 5,238 300 2,615 2,923
Wholesale trade................. 122 112 10 40 82
Retail trade.................... 3,051 1,993 1,059 1,741 1,311
Transportation and warehousing.. 4,022 3,545 476 1,914 2,108
Information..................... 918 715 203 254 663
Finance and insurance........... 2,465 2,158 307 845 1,620
Real estate and rental and 78 60 18 34 44
leasing........................
Professional, scientific, and 56,571 47,074 9,497 20,403 36,168
technical services.............
Management of companies and 0 0 0 0 0
enterprises....................
Administrative and waste 47,336 36,748 10,588 31,861 15,475
services.......................
Educational services............ 1,360 700 661 954 407
Health care and social 8,415 6,196 2,219 3,724 4,691
assistance.....................
Arts, entertainment, and 56 33 23 34 22
recreation.....................
Accommodation and food services. 3,270 1,827 1,443 2,514 756
Other services.................. 1,421 934 487 818 603
-------------------------------------------------------------------------------
Total private............... 153,846 124,803 29,042 81,132 72,713
----------------------------------------------------------------------------------------------------------------
\a\ Part-time is defined as working less than 32 hours per week.
Table 5--Current Distribution of Days of Paid Leave, Additional Days of Leave, and Affected Employees in Year 1, Full-Time Employees
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of full-time potentially affected employees accruing annually Days
the following number of days of sick leave Affected additional
Industry ------------------------------------------------------------------------ employees sick leave
0 1 2 3 4 5 6 7+ available
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing.......................... 24 0 0 1 2 1 1 5 29 180
Mining.................................................. 7 0 0 0 0 1 5 6 13 54
Utilities............................................... 85 0 0 0 0 3 10 678 98 614
Construction............................................ 11,826 144 445 918 1,419 1,356 1,224 3,058 17,332 97,737
[[Page 9640]]
Manufacturing........................................... 2,358 48 197 542 1,119 487 487 1,907 5,238 24,764
Wholesale trade......................................... 32 1 5 14 28 16 15 49 112 444
Retail trade............................................ 847 21 64 133 205 356 367 1,145 1,993 8,601
Transportation and warehousing.......................... 1,680 20 92 283 657 319 494 3,176 3,545 16,575
Information............................................. 103 3 13 41 94 181 280 1,353 715 1,893
Finance and insurance................................... 606 7 41 168 520 267 550 6,504 2,158 7,801
Real estate and rental and leasing...................... 20 1 3 6 9 11 11 40 60 242
Professional, scientific, and........................... 12,280 307 1,266 3,481 7,181 9,498 13,060 34,794 47,074 161,657
Management of companies................................. 0 0 0 0 0 0 0 0 0 1
Administrative and waste services....................... 22,266 271 1,119 3,077 6,347 1,739 1,927 10,627 36,748 199,845
Educational services.................................... 324 2 13 49 140 59 112 2,538 700 3,194
Health care and social assistance....................... 1,918 65 267 735 1,516 714 981 6,591 6,196 25,047
Arts, entertainment, and recreation..................... 15 0 1 3 5 4 4 18 33 151
Accommodation and food services......................... 1,179 18 55 113 175 142 146 356 1,827 10,036
Other services.......................................... 397 8 32 88 182 96 132 537 934 4,207
-----------------------------------------------------------------------------------------------
Total private....................................... 55,968 915 3,614 9,652 19,598 15,250 19,806 73,382 124,803 563,043
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers do not always add to total due to rounding.
Table 6--Current Distribution of Days of Paid Leave, Additional Days of Leave, and Affected Employees in Year 1, Part-Time Employees
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of part-time potentially affected employees accruing annually Days
the following number of days of sick leave additional
Industry ------------------------------------------------------------------------ Affected sick leave
employees available
0 1 2 3 4 5 6 7+ \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and hunting.............. 8 0 0 0 0 0 0 0 9 34
Mining.................................................. 0 0 0 0 0 0 0 0 0 2
Utilities............................................... 2 0 0 0 0 0 0 16 2 8
Construction............................................ 1,429 10 28 52 70 78 72 166 1,739 7,453
Manufacturing........................................... 257 1 3 8 15 8 8 27 300 1,269
Wholesale trade......................................... 7 0 0 0 1 1 1 1 10 35
Retail trade............................................ 894 4 11 20 27 54 49 165 1,059 4,373
Transportation and warehousing.......................... 234 3 14 38 78 46 63 390 476 1,552
Information............................................. 151 0 1 4 7 17 23 105 203 719
Finance and insurance................................... 239 0 2 8 21 14 24 248 307 1,265
Real estate and rental and leasing...................... 14 0 0 1 1 1 1 4 18 69
Professional, scientific, and technical................. 8,123 16 58 141 256 409 494 1,375 9,497 36,921
Management of companies and............................. 0 0 0 0 0 0 0 0 0 0
Administrative and waste services....................... 9,595 25 89 215 389 129 146 700 10,588 45,055
Educational services.................................... 630 0 1 4 10 5 9 169 661 2,631
Health care and social assistance....................... 1,806 8 30 74 133 76 92 603 2,219 8,977
Arts, entertainment, and recreation..................... 19 0 0 1 1 1 1 4 23 83
Accommodation and food services......................... 1,336 4 10 19 25 24 25 57 1,443 6,353
Other services.......................................... 421 1 5 11 20 13 16 66 487 1,894
-----------------------------------------------------------------------------------------------
Total private....................................... 25,164 74 255 594 1,054 876 1,025 4,097 29,042 118,693
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers do not always add to total due to rounding.
\a\ This is expressed in terms of standardized 8-hour days, as described in the text.
To estimate the number of affected employees in later years, the
Department calculated the average annual geometric growth rate in
employment based on the ten-year employment projection for 2012 to 2022
from BLS' Employment Projections program. Table 7 shows the number of
affected employees in Years 1 through 10, along with the number of
employees with no paid sick leave, with some paid sick leave, and by
full-time/part-time status. The share of employees working full-time in
2014 and the share of employees with no paid sick leave were applied to
projected years.
Table 7--Affected Employees in Years 1 Through 10
----------------------------------------------------------------------------------------------------------------
Affected employees (1,000s)
-------------------------------------------------------------------------------
Year With no paid With some paid
Total Full-time Part-time sick leave sick leave
----------------------------------------------------------------------------------------------------------------
Year 1.......................... 153.8 124.8 29.0 81.1 72.7
Year 2.......................... 322.0 261.2 60.8 169.8 152.2
Year 3.......................... 490.4 397.8 92.6 258.6 231.8
Year 4.......................... 659.1 534.7 124.4 347.6 311.5
Year 5.......................... 828.2 671.8 156.3 436.7 391.4
Year 6.......................... 843.7 684.4 159.3 444.9 398.8
[[Page 9641]]
Year 7.......................... 859.5 697.3 162.3 453.3 406.3
Year 8.......................... 875.7 710.4 165.3 461.8 413.9
Year 9.......................... 892.2 723.8 168.4 470.5 421.7
Year 10......................... 909.1 737.5 171.6 479.4 429.7
----------------------------------------------------------------------------------------------------------------
C. Impacts of Proposed Rule
i. Overview
This section presents direct employer costs, transfer payments and
DWL associated with the proposed rulemaking. These impacts were
projected for 10 years. The Department estimated average annualized
direct employer costs of $18.4 million, transfer payments of $250.1
million and DWL of $526,000. As these numbers demonstrate, the largest
impact of the proposed rulemaking will be the transfer of income from
employers to employees.
ii. Costs
The Department quantified three direct employer costs: (1)
Regulatory familiarization costs; (2) implementation costs; and (3)
recurring administrative costs. Other employer costs are considered
qualitatively. Certain key inputs to the cost calculations, such as the
amount of time required for regulatory familiarization and other
compliance-related activities, are uncertain due to lack of data, and
we therefore request comment and data that would allow for refinement
of these estimates.
1. Regulatory Familiarization Costs
The proposed rulemaking would impose regulatory familiarization
costs on contractors that have or expect to have EO-covered contracts
because such contractors will need to determine whether they are in
compliance with the paid sick leave requirements. According to the
General Services Administration's (GSA) System for Award Management
(SAM) in August 2015 there were 543,900 Federal contracting firms.\24\
The Department understands that many entities listed in SAM provide not
only prime contracting, but also subcontracting, services on (distinct)
Federal government contracts. However, we were unable to determine the
prevalence of subcontractors in the SAM database because SAM only
includes information on prime contractor awards. Therefore, the
Department examined five years of USASpending data \25\ and found
20,600 first-tier subcontractors who do not hold contracts as primes
(and thus may not be included in SAM), and added these firms to the
total from SAM to obtain a total estimate of 564,400 contracting firms.
The Department believes this is an overestimate of the number of
covered contracting firms because it includes contractors that strictly
provide materials and supplies to the government (and other firms with
no Federal contracts covered by the Executive Order). However,
information was not available to eliminate these firms.\26\
---------------------------------------------------------------------------
\24\ Data released in monthly files. Available at: https://www.sam.gov/portal/SAM/#1.
\25\ The Department identified subawardees from the
USASpending.gov data between FY 2010 and FY 2014 who did not perform
work as a prime during those years.
\26\ This may also be an overestimate because some firms in the
SAM database do not currently have contracts with the Federal
government, and the Department did not exclude firms that might be
registered on SAM solely to apply for grants. Conversely, some
covered firms may be excluded from this estimate. For example, the
SAM database may not include some concessions contractors, and some
contractors offering services for Federal employees, their
dependents or the general public in connection with Federal property
or lands. We invite comments and data that would facilitate
refinement our estimates of affected entities.
---------------------------------------------------------------------------
The Department drafted this proposed rule consistent with the
directive in section 3(c) of the Executive Order that any regulations
issued pursuant to the Order should, to the extent practicable,
incorporate existing definitions and procedures from the FLSA, SCA,
DBA, FMLA, VAWA and Executive Order 13658. As a result, contractors
will likely already be familiar with many of the requirements the
proposed rule imposes. For example, the Department expects that most,
if not all, contractors that Executive Order 13706 will cover are
either parties to contracts that Executive Order 13658 already covers,
or will be parties to contracts Executive Order 13658 covers by the
time the contractor enters into a contract that Executive Order 13706
covers. Contract, and employee, coverage under Executive Order 13658
and Executive Order 13706 are virtually identical, and the difference
in coverage in Executive Order 13706, i.e., inclusion of employees who
qualify for an exemption from the FLSA's minimum wage and overtime
provisions, should cause no additional familiarization costs because
covered contractors already need to differentiate between FLSA-exempt
employees and employees not exempt from the FLSA. Furthermore, covered
contractors will need to familiarize themselves with the application of
the proposed rule's requirements to employees whose wages are governed
by the FLSA, SCA or DBA, and these requirements apply essentially
identically to employees who qualify for an exemption from the FLSA's
minimum wage and overtime provisions. Thus, costs with respect to
familiarization with the Executive Order's coverage requirements should
be minimal.
In addition, the proposed rule's fundamental obligations are to
allow covered employees to accrue an hour of paid sick leave for every
thirty hours worked on covered contracts, and to use such accrued sick
leave for the reasons specified in section 2(c) of Executive Order
13706. Once contract coverage is established, familiarization with
these obligations is not overly complicated. The Department accordingly
believes, as it similarly believed in the Executive Order 13658
proposed rulemaking, that to understand Executive Order's 13706 basic
obligations, contractors will generally only need to review the
contract clause, which the Department expects will constitute
approximately two pages in the Federal Register.
The Department understands that the proposed rule imposes
requirements beyond the fundamental obligations described above, and
that contractors should seek to familiarize themselves with these
requirements. However, the contract clause specifically describes some
of these other obligations, including recordkeeping and notice
requirements, the obligation not to interfere with an employee's use or
accrual of paid sick leave, and the obligation not to discriminate
against an employee for exercising certain rights. Moreover, to the
extent contractors seek
[[Page 9642]]
additional guidance on the contract clause's operation or on a subject
the contract clause may not directly address, they are likely to
consult the compliance assistance materials the Department will produce
in conjunction with this rulemaking, which will be available on the
Department's Web site. Because the Department will design the
compliance materials to succinctly and clearly address what it expects
to be the most common contractor inquiries, the Department expects that
contractors will not spend a considerable amount of time in those
instances when they consult the compliance materials for information
related to the Executive Order and the Department's rulemaking.
For these reasons, the Department estimated that contractors will,
on average, use one hour of a human resources manager's time for
regulatory familiarization purposes.\27\ The Department further
estimated the cost of this time to be the mean wage for a human
resource manager of $79.96 per hour.\28\ The Department understands,
however, that public stakeholders may believe that regulatory
familiarization costs will differ from the Department's estimate. The
Department accordingly invites any comments related to its estimate of
regulatory familiarization costs.
---------------------------------------------------------------------------
\27\ As discussed below, the Department is calculating the costs
attendant to accounting for the accrual and use of paid sick leave
in its costs of implementation. The Department is also including as
implementation costs the ten hours it estimates covered contractors
will need to develop a sick leave policy that complies with the
Executive Order, if such contractors currently have no paid sick
leave policy. Therefore, the one hour the Department expects
contractors' human resources managers will spend familiarizing
themselves with the rule does not include time related to adjusting
payroll systems to account for accrual and use of EO-required paid
sick leave, or to creating paid sick leave policies.
\28\ This includes the mean base wage of $54.88 from the
Occupational Employment Statistics (OES) plus benefits paid at a
rate of 46 percent of the base wage, as estimated from the BLS's
Employer Costs for Employee Compensation (ECEC) data. OES data
available at: http://www.bls.gov/oes/current/oes113121.htm. The
inclusion of only fringe benefits, rather than both fringe benefits
and overhead costs, in the loaded wage would have a relatively small
impact on the overall cost estimate for this proposed rule. However,
the Department invites comment on both the propriety of including
overhead costs in this particular regulatory impact analysis and the
appropriate quantitative adjustment to base wages to account for
overhead.
---------------------------------------------------------------------------
Using the estimate of one hour of a human resources manager's time
for regulatory familiarization purposes, the Department estimated
regulatory familiarization costs to be $45.1 million ($79.96 per hour x
1 hour x 564,400 contractors) (Table 8). A contractor likely would only
familiarize itself with the rule once it is poised to have a covered
contract (i.e., a new contract within one of the 4 covered categories).
However, since many contractors will have at least one new contract in
Year 1, and the Department has no data on when contractors will first
be affected, the Department has modeled these costs as if each
contractor will have at least one covered ``new contract'' in 2017.
Therefore, all regulatory familiarization costs occur in Year 1.\29\
---------------------------------------------------------------------------
\29\ The Department has not estimated the additional marginal
cost for new entrants to familiarize themselves with this
requirement because the Department believes this cost to be small.
We invite comment on this assumption.
Table 8--Year 1 Costs
----------------------------------------------------------------------------------------------------------------
Initial
Regulatory implementation Initial Recurring Recurring
Variable familiarization costs (no implementation implementation administrative
costs current costs (current costs costs
policy) policy)
----------------------------------------------------------------------------------------------------------------
Hours per affected firm........ 1 10 1 N/A N/A
Hours per employee............. N/A N/A N/A 1 0.25
Affected firms \a\............. 564,440 107,244 457,197 N/A N/A
Newly affected employees....... N/A N/A N/A 153,846 N/A
Total affected employees....... N/A N/A N/A N/A 153,846
Loaded wage rate............... $79.96 $27.30 $27.30 $27.30 $27.30
Base wage b................ $54.88 $18.74 $18.74 $18.74 $18.74
Benefits adj. factor c..... 1.46 1.46 1.46 1.46 1.46
Cost ($1,000s)................. $45,132 $29,282 $12,483 $4,201 $1,050
----------------------------------------------------------------------------------------------------------------
\a\ Total number of firms from the GSA's System for Award Management (SAM) August 2014 and subcontractors from
USASpending.gov. Split between firms with and without a sick leave policy based on results from SHRM survey.
\b\ Regulatory familiarization uses OES mean wage for human resource managers in 2014. Available at: http://www.bls.gov/oes/current/oes113121.htm. Other costs use OES mean wage for human resources assistants, except
payroll and timekeeping in 2014. Available at: http://www.bls.gov/oes/current/oes434161.htm.
\c\ Ratio of loaded wage to unloaded wage. Source: 2014 Employer Costs for Employee Compensation (ECEC).
2. Implementation Costs
Firms will incur implementation costs. The Department believes some
of these costs may be incurred in Year 1 but others will be incurred as
workers become covered. Therefore, the Department modeled this in two
parts. First, firms will incur upfront implementation costs (e.g.,
costs associated with adjusting accounting and payroll software).
Second, because this proposed rule will only apply to employees on new
contracts, the Department estimates it will take approximately five
years to phase in the coverage over nearly all affected employees.
Therefore, implementation costs will generally be spread over the first
five years that the regulation is in effect. As each contract becomes
affected, the covered contractors will need to spend some time updating
the accounting systems used to track paid sick leave and training
managers responsible for implementing the requirements of the E.O. and
this rule. Therefore, the Department modeled implementation costs as a
function of newly affected employees for the first five years.
Thus, implementation costs comprise both a fixed cost (i.e., the
initial implementation costs) and a second component that is a function
of the number of affected employees within a contracting firm (i.e.,
recurring implementation costs). Therefore, costs are partially related
to the size of the firm, but a firm twice as large as another firm will
have costs somewhat less than twice the other's costs.
As noted above, the Department estimated there are 564,400 Federal
contracting firms. The Department estimated initial implementation
costs separately for firms with a paid sick leave policy in place and
firms who would need to create a policy.
[[Page 9643]]
According to a survey conducted by the Survey of Human Resource
Management, 81 percent of companies provided some form of paid sick
leave.\30\ Therefore, the Department estimated 107,200 firms will need
to create a sick leave policy (19 percent of 564,400 firms). The
Department assumed these firms will spend on average 10 hours of time
developing this policy. For the remaining 457,200 firms, the Department
assumed on average one hour of a human resources worker's time will be
spent implementing the necessary changes per affected firm.\31\ The
cost of this time is the mean wage for a human resource worker of
$27.30 per hour.\32\ Initial implementation costs in Year 1 were
estimated to be $41.8 million ($27.30 per hour x 10 hours x 107,200
contractors plus $27.30 per hour x 1 hour x 457,200 contractors) (Table
8). The Department assumes recurring implementation costs will use one
hour of a human resource worker's time per newly affected employee. As
stated above, the Department found that the average wage with benefits
for a human resources worker is $27.30 per hour. The estimated number
of newly affected employees in Year 1 is 153,800 (Table 8). Therefore,
total Year 1 recurring implementation costs were estimated to equal
$4.2 million ($27.30 x 1 hour x 153,800 employees).
---------------------------------------------------------------------------
\30\ Available at: https://www.shrm.org/Research/SurveyFindings/Articles/Documents/09-0228_Paid_Leave_SR_FNL.pdf.
\31\ The Department identified little applicable data from which
to estimate the amount of time required to make these adjustments.
One source, based on a small sample, finds the average one-time
implementation costs of 0.125 percent of revenue. See Romich, J., et
al. (2014). Implementation and Early Outcomes of the City of Seattle
Paid Sick and Safe Time Ordinance.
\32\ This includes the mean base wage of $18.74 from the
Occupational Employment Statistics (OES) plus benefits paid at a
rate of 46 percent of the base wage, as estimated from the BLS's
Employer Costs for Employee Compensation (ECEC) data. OES data
available at: http://www.bls.gov/oes/current/oes113121.htm.
---------------------------------------------------------------------------
3. Recurring Administrative Costs
Firms may incur recurring administrative costs associated with
maintaining records of paid sick leave and adjusting scheduling. The
Department assumed an HR worker will spend on average an additional
fifteen minutes per affected employee annually on ongoing
administrative costs. We believe these costs will be negligible because
employers already have systems in place and already incur many of these
costs for employees who take sick leave (both paid or unpaid). For
example, managers may need to adjust scheduling when workers take time
off due to illness regardless of whether that sick leave is paid or
unpaid. Under these assumptions, administrative costs in Year 1 will
total $1.1 million ($27.30 x (15 minutes/60 minutes) x 153,800
employees). Although these costs are relatively small in Year 1, they
will occur annually and thus be a significant share of costs in the
long run.
4. Projected Costs
Table 9 shows estimated costs for each of the first 10 years as
well as average annualized costs over the same period. Regulatory
familiarization and initial implementation costs will only accrue in
Year 1 but recurring implementation costs and recurring administrative
costs will accrue in multiple years. Recurring implementation costs are
incurred over the first 5 years since the Department has estimated it
will take five years for the universe of covered contracts to become
``new.''
When estimating projected costs the Department used the same method
used for Year 1 but used projected wages and numbers of affected
employees. The Department calculated the average annual geometric
growth rate in median nominal wages from CPS data between 2005 and
2014. The geometric growth rate is the constant annual growth rate that
when compounded yields the last historical year's wage. The CPI-U was
then used to convert this nominal growth rate to a real growth rate.
The employment growth rate was calculated as the geometric annual
growth rate based on the ten-year employment projection for 2012 to
2022 from BLS' Employment Projections program.
Table 9--Direct Employer Costs in Years 1 Through 10
[Millions of 2014$]
----------------------------------------------------------------------------------------------------------------
Regulatory Initial Recurring Recurring
Year/Discount rate familiarization implementation implementation administrative Total
costs costs costs \a\ costs
----------------------------------------------------------------------------------------------------------------
Years 1 Through 10
----------------------------------------------------------------------------------------------------------------
Year 1......................... $45.1 $41.8 $4.2 $1.1 $92.1
Year 2......................... 0.0 0.0 4.2 2.2 6.4
Year 3......................... 0.0 0.0 4.2 3.3 7.5
Year 4......................... 0.0 0.0 4.2 4.5 8.7
Year 5......................... 0.0 0.0 4.2 5.7 9.9
Year 6......................... 0.0 0.0 0.0 5.8 5.8
Year 7......................... 0.0 0.0 0.0 5.9 5.9
Year 8......................... 0.0 0.0 0.0 6.0 6.0
Year 9......................... 0.0 0.0 0.0 6.1 6.1
Year 10........................ 0.0 0.0 0.0 6.2 6.2
----------------------------------------------------------------------------------------------------------------
Average Annualized Amounts
----------------------------------------------------------------------------------------------------------------
3% discount rate............... 5.1 4.8 2.3 4.5 16.7
7% discount rate............... 6.0 5.6 2.5 4.3 18.4
----------------------------------------------------------------------------------------------------------------
\a\ Recurring implementation costs are incurred for the first 5 years as since the Department has estimated it
will take five years for the universe of possibly covered contracts to become ``new.''
[[Page 9644]]
5. Other Potential Costs
In addition to the costs discussed above, there may be additional
costs that have not been quantified. These include potential costs to
consumers and reduced production. However, based on similar rules in
states and municipalities, the Department expects these costs to be
small.\33\
---------------------------------------------------------------------------
\33\ See: http://www.dol.gov/featured/PaidLeave/get-the-facts-sicktime.pdf.
---------------------------------------------------------------------------
Consumer costs: The relevant consumer is the Federal government.
If, as expected, contractors pass along part or all of the increased
cost to the government, in the form of higher contract prices, then
government expenditures may rise (though, as discussed later, benefits
of the Executive Order are expected to accompany any such increase in
expenditures). Because direct costs to employers and transfers are
relatively small compared to Federal covered contract expenditures, the
Department believes that any potential increase in contract prices will
be negligible. In 2014 Federal expenditures for covered contracting
service firms were $230.2 billion. Employer costs and transfers
(estimated below) in Year 5 (the year when all employees are affected)
are estimated to be $333.3 million. Therefore, employer costs are 0.14
percent of contracting revenue (assuming no growth in contracting
expenditures and without accounting for the benefits of the proposed
rule).
Production costs: If the number of days of sick leave taken remains
unchanged by the proposed rulemaking, then production should not be
affected by the rule (unless productivity changes which will be
discussed below and in the section on benefits). However, employees may
take more sick days if the number of compensated sick days available to
them increases; it is via this path that the rule might result in
production costs to employers.\34\ If these hours are not transferred
to another worker then the employer (or the consumer) incurs costs
associated with this lost production and the employee receives benefits
associated with the paid sick leave. Conversely, if employers hire
workers to cover these lost hours of production, then the additional
cost of hiring a worker is offset by the increased production
attributed to this worker. This results in a zero net additional cost
to the employer (because the cost of providing the paid sick leave has
already been quantified). In both cases, costs and benefits should
offset each other to the extent that workers are paid according to
their marginal productivity, and the productivity of the replacement
worker matches that of the original worker. Although these assumptions
are not likely to be exactly met, conceptually small deviations from
the assumptions should result in only small deviations of net costs or
benefits. In addition, there are no data available on which to estimate
these net costs or benefits.
---------------------------------------------------------------------------
\34\ There is some evidence that workers take more sick leave
when it is paid. Using the ATUS 2011 Leave Module, the Department
estimated workers with paid sick leave take on average an additional
9 hours of paid sick leave annually. Using the National Health
Interview Survey (NHIS) the Department found workers with paid sick
leave took on average 0.77 more days of sick leave.
---------------------------------------------------------------------------
Replacement costs: As demonstrated above, if the worker who takes
sick leave is temporarily replaced by another worker, the marginal cost
of hiring the additional worker is offset by the productivity of the
replacement worker. Therefore, the Department estimates there will be
very few additional costs associated with hiring workers to cover work
normally performed by workers on sick leave (in addition to the cost of
paying the sick worker). If workers are more likely to take off when
sick days are paid, and replacement workers must be hired, and can only
be hired at their overtime wage rate, then there may be some additional
cost associated with hiring the other worker. A 2010 survey of
employers providing paid sick days in San Francisco found 8.4 percent
reported ``always'' or ``frequently'' hiring a replacement for a sick
worker and 23.6 percent saying they ``rarely'' hire replacement
workers''.\35\
---------------------------------------------------------------------------
\35\ Drago, R. and Lovell, V. (2011). San Francisco's Paid Sick
Leave Ordinance: Outcomes for Employers and Employees. Institute for
Women's Policy Research.
---------------------------------------------------------------------------
iii. Transfer Payments
1. Calculating Transfer Payments
To calculate transfer payments, the Department has assumed solely
for purposes of discussion and ease of presentation that no offsetting
cost- and productivity-related benefits will be realized as a result of
the Executive Order and this proposed rule. As discussed in Section
C.v, however, numerous benefits of providing paid sick leave under in
the Executive Order can be expected, and such benefits can be expected
to accompany the transfer payments and other costs discussed above and
below.
The most important factor in determining transfer payments is the
number of additional days of paid sick leave for which employees will
be compensated. In order to estimate transfer payments the Department
needed to:
Assign a monetary value to these days of paid sick leave
taken.
Determine what share of the additional 681,700 days of
paid sick leave accrued (calculated above in Section B.ii) will be
taken.
The proposed rule requires contractors to provide an employee the
same pay and benefits for hours of paid sick leave used that the
employee would have received had he been working. Thus, the Department
needed to estimate both a base hourly wage for affected employees and a
base hourly benefit rate. The Department assumed an eight hour work day
to place a monetary value on the transfer payment associated with a day
of paid sick leave used. The Department used data from the 2014 CPS to
estimate base hourly wage rates by industry and full-time status. The
Department is not aware of a data source to precisely determine an
average base hourly benefit rate of affected employees. The SCA
nationwide fringe benefit rate, which applies to most contracts covered
by the SCA, currently is $4.27 per hour. Because many of the contracts
covered by the Executive Order will be subject to the SCA, and many
employees performing on or in connection with contracts covered by the
Executive Order but not covered by the SCA will nonetheless be
performing service-related work similar in character to work performed
by SCA-covered service employees, the Department estimated that most
affected employees will average a base hourly benefit rate of
$4.27.\36\ The exception is the construction industry, for which the
Department used the benefits to wage ratio from the ECEC because
employees in the construction industry will be performing on or in
connection with DBA contracts rather than SCA contracts.
---------------------------------------------------------------------------
\36\ The rate in Year 1 is for 2015. This analysis generally
uses data from 2014 for year 1 because it is often the most recently
available data. However, Year 1 will likely occur in 2017.
Therefore, the most recent data available is most appropriate.
---------------------------------------------------------------------------
Although the Executive Order will allow employees to accrue up to
56 hours of paid sick leave annually, many employees will not use all
paid sick leave that they accrue (and many others will not work a
sufficient number of hours on covered contracts to accrue 56 hours of
paid sick leave in an accrual year). If employees take less than the
full amount of paid sick leave accrued, then transfer payments must be
adjusted to include only some of the additional days accrued. The
Department expects employees on average to use fewer days than
allocated. To estimate the share of accrued days employees will use,
the
[[Page 9645]]
Department used data from the 2015 NCS and ECEC by industry (provided
by the BLS and reported in Table 10). While the numbers vary by
industry, over all industries, these data show that employees with paid
sick leave take an average of 4 days of sick leave annually.\37\
Employees with access to a fixed number of paid sick leave days per
year accrued an average of 8 days annually. Dividing the average hours
of paid sick leave taken by the average hours of paid sick leave
accrued annually, the Department estimated that employees use on
average 50 percent of days allotted.\38\ This may be an overestimate in
Year 1 when workers may have fewer days available since they will not
start to accrue paid sick leave until they commence work on a covered
contract, nor carry over any days from the previous year.\39\
---------------------------------------------------------------------------
\37\ BLS calculated this using the ECEC data based on workers in
paid sick leave plans where a cost was incurred by the employer in
the reference period.
\38\ Although it seems likely that a higher percentage would be
used at the low end of the accrual distribution, we have limited
data with which to estimate the distribution and therefore invite
comment and data that would allow for refinement of this aspect of
the analysis.
\39\ This assumes employees with sick leave in the NCS are
allowed to carry over sick days. The larger the share of these
employees without carryover privileges, the more appropriate the
number is for Year 1 and the less appropriate it is for future
years.
Table 10--Ratio of Days of Sick Leave Available That Are Taken
----------------------------------------------------------------------------------------------------------------
Average number of days \a\ Total additional days of paid
-------------------------------- Ratio of days sick leave \c\
Industry available -------------------------------
Available Taken taken Available Taken
----------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing .............. .............. 0.50 214 107
\b\............................
Mining.......................... 27 2 0.07 56 4
Utilities....................... 21 6 0.29 622 178
Construction.................... 6 2 0.33 105,190 35,063
Manufacturing................... 8 3 0.38 26,033 9,762
Wholesale trade................. 8 3 0.38 480 180
Retail trade.................... 6 2 0.33 12,974 4,325
Transportation and warehousing.. 9 4 0.44 18,127 8,056
Information..................... 9 4 0.44 2,612 1,161
Finance and insurance........... 12 5 0.42 9,066 3,778
Real estate and rental and 6 4 0.67 310 207
leasing........................
Professional, scientific, and... 8 4 0.50 198,578 99,289
Management of companies and..... 12 4 0.33 1 0
Administrative and waste 8 2 0.25 244,900 61,225
services.......................
Educational services............ 11 5 0.45 5,825 2,648
Health care and social 8 4 0.50 34,024 17,012
assistance.....................
Arts, entertainment, and 6 3 0.50 235 117
recreation.....................
Accommodation and food services. 6 2 0.33 16,389 5,463
Other services.................. 8 3 0.38 6,101 2,288
Total private................... 8 4 0.50 681,736 250,863
----------------------------------------------------------------------------------------------------------------
\a\ For this proposed rulemaking the BLS provided this breakdown using NCS and ECEC data for industries with
sufficient observations to meet their publication criteria.
\b\ NCS does not include information for this industry. Used average across all private employees.
\c\ Total additional days of paid sick leave taken is not equal to the number of paid sick leave days available
multiplied by the share of 50 percent. This is because the analysis was conducted at the industry level and
days were aggregated to estimate the total. Due to rounding by the BLS of the number of days, the aggregated
total number of days taken and the total using aggregated number of days available and taken differ.
Therefore, of the 681,700 days of additional paid sick leave
accrued, 250,900 days are estimated to be taken and result in transfer
payments. Using wage data by industry results in Year 1 transfer
payments of $58.9 million (Table 11). This is 0.03 percent of revenue
from federal contracts for these firms (since many covered contractors
garner revenue from private work, the transfer payment estimate is
almost certainly a lower percentage of their total revenues). If all
days of paid sick leave were used, transfers would be $151.5 million in
Year 1 or 0.07 percent of federal contracting revenues.
Table 11--Transfer Payments in Year 1
----------------------------------------------------------------------------------------------------------------
Transfer as
Adjusted Covered share of
Industry NAICS transfer contracting contracting
($1,000s) revenue revenue
(Millions) \a\ (percent)
----------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and hunting...... 11 $16 $242 0.01
Mining.......................................... 21 1 82 0.00
Utilities....................................... 22 46 2,993 0.00
Construction.................................... 23 8,837 22,263 0.04
Manufacturing................................... 31-33 2,142 18,965 0.01
Wholesale trade................................. 42 40 237 0.02
Retail trade.................................... 44-45 699 2,189 0.03
Transportation and warehousing.................. 48-49 1,631 8,733 0.02
Information..................................... 51 274 6,590 0.00
[[Page 9646]]
Finance and insurance........................... 52 955 17,651 0.01
Real estate and rental and leasing.............. 53 44 952 0.00
Professional, scientific, and technical......... 54 28,543 106,347 0.03
Management of companies and..................... 55 0 1 0.01
Administrative and waste services............... 56 10,336 27,884 0.04
Educational services............................ 61 574 2,500 0.02
Health care and social assistance............... 62 3,554 9,576 0.04
Arts, entertainment, and recreation............. 71 21 52 0.04
Accommodation and food services................. 72 764 1,307 0.06
Other services.................................. 81 419 1,592 0.03
---------------------------------------------------------------
Total private............................... .............. 58,897 230,155 0.03
----------------------------------------------------------------------------------------------------------------
\a\ Source: USASpending.gov. Contracting expenditures for covered contracts.
To project transfers, the Department projected wage growth (as
discussed in Section C.ii.4) and employment growth (as discussed in
Section B.ii). The real growth rate for benefit payments was calculated
using the geometric growth rate in nominal SCA benefit rates between
2006 and 2015 and converted to a real rate using the CPI-U.\40\ For
projected transfers the Department used the same method used for Year 1
but used the projected number of employees and wages. Table 12 shows
projected transfers through Year 10. It also contains average
annualized transfers using both 3 percent and 7 percent discount rates.
---------------------------------------------------------------------------
\40\ Growth rate based on 10 previous years. Generally data for
2014 was used for year 1 because it is often the most recently
available data; projections are then based on 2005-2014. However,
the SCA benefit rate in 2015 was available and used; projections are
then based on 2006-2015.
Table 12--Transfers in Years 1 Through 10
------------------------------------------------------------------------
Transfers
Year/Discount rate (millions of
2014$)
------------------------------------------------------------------------
Years 1 through 10
------------------------------------------------------------------------
Year 1.................................................. $58.9
Year 2.................................................. 124.0
Year 3.................................................. 189.7
Year 4.................................................. 256.2
Year 5.................................................. 323.3
Year 6.................................................. 331.0
Year 7.................................................. 338.9
Year 8.................................................. 347.1
Year 9.................................................. 355.5
Year 10................................................. 364.1
------------------------------------------------------------------------
Average Annualized Amounts
------------------------------------------------------------------------
3% discount rate........................................ 260.8
7% discount rate........................................ 250.1
------------------------------------------------------------------------
2. Additional Considerations
The Department based its method of calculating transfers on the
number of full-time-equivalent (FTE) employees working on Federal
contracts. To the extent that Federal contract work is conducted by
part-time employees or split between employees, these transfer
estimates may be overestimates. The current method attributes the full-
time hours worked on a Federal contract to one employee. For example,
if that employee currently receives five paid sick leave days per year,
he or she would receive a transfer of two additional days of paid sick
leave. If instead half this work was completed by one employee and half
by another employee, the Executive Order would require that each
receive 3.5 sick days per year; however, since each employee already
receives 5 days of paid sick leave, there would be no incremental
transfer. The Department estimated that the maximum size of the
overestimate due to the assumption of FTE employees is $18.1 million in
Year 1 (30.7 percent of the $58.9 million in total transfers).\41\
---------------------------------------------------------------------------
\41\ The maximum possible overestimate was calculated by
eliminating transfers associated with employees who currently
receive any paid sick leave.
---------------------------------------------------------------------------
Another consideration is that some of the transfers may be reduced
by employer responses to the rule. Employers may reduce vacation time,
reduce wages, or increase health insurance premiums in order to
diminish some of their increased costs. (These outcomes may be unlikely
in the short run due to stickiness of wages.) Employers may also
reallocate days of leave to keep benefits the same. For example, an
employer who used to provide 5 sick days and 5 vacation days could now
provide 5 sick days, 3 vacation days, and 2 days that can be used for
any purpose. This would leave exactly zero employer-employee transfers
because an employee could take 7 days paid sick leave if necessary but
could still only take a maximum of 5 days of vacation. (Provided the
policy met the requirements of section 2 of the Order and this proposed
rule and employees could use paid sick leave accrued for the same
purposes and under the same conditions as described in the Order and
this proposed rule, the employer would be in compliance and transfers
would be zero). We invite comment that would allow for these potential
employer responses to be incorporated into our quantitative estimates
of the rule's impact.
Finally the Department notes that regardless of the direct impact
on contract costs, there are other important channels through which the
proposed rule might affect government expenditures. The transfer of
income resulting from this proposed rulemaking may result in the
reduction of social assistance, and thus decreased government
expenditures, although the effects are likely to be small. Studies have
shown that the more paid family leave an employee receives, the less
likely he/she is to utilize various social assistance programs. For
example, a 2012 study by Rutgers University's Center for Women and Work
showed that women who received paid maternity leave reported spending
$413 less in public assistance in the year after their child was born
than women who took no leave after childbirth.\42\ Similarly, providing
access to paid sick leave to these employees may reduce eligibility for
government social assistance programs, leading to lower government
expenditures.
[[Page 9647]]
iv. Deadweight Loss
Deadweight loss (DWL) occurs when a market operates at less than
optimal equilibrium output. This typically results from an intervention
that sets, in the case of a labor market, compensation above their
equilibrium level.\43\ The higher cost of labor leads to a decrease in
the total number of labor hours that are purchased on the market. DWL
is a function of the difference between the compensation the employers
were willing to pay for the hours lost and the compensation employees
were willing to take for those hours. In other words, DWL represents
the total loss in economic surplus resulting from a ``wedge'' between
the employer's willingness to pay and the employee's willingness to
accept work arising from the proposed change. DWL may vary in magnitude
depending on market parameters, but it is typically small when wage
changes are small or when labor supply and labor demand are relatively
inelastic with respect to compensation.
---------------------------------------------------------------------------
\43\ The estimate of DWL assumes the market meets the
theoretical conditions for an efficient market in the absence of
this intervention (e.g., all conditions of a perfectly competitive
market hold: Full information, no barriers to entry, etc.). Since
labor markets are generally not perfectly competitive, this is
likely an overestimate of the DWL.
---------------------------------------------------------------------------
The DWL resulting from this proposed rulemaking was estimated based
on the average decrease in hours worked and increase in average hourly
compensation (again, without accounting for offsetting benefits of the
Executive Order and the proposed rule). As the cost of labor rises due
to the requirement to pay sick leave, the demand for labor decreases,
which results in fewer hours worked. To calculate the DWL, the annual
increase in compensation (i.e., transfers per worker) was divided by
the total number of hours worked to estimate the average hourly
increase in compensation.\44\ Using the estimated percent change in
compensation and the elasticity of labor demand with respect to wage
(as a proxy for compensation), the Department estimated the percent
decrease in average hours per employee.\45\ To estimate the percent
decrease in average hourly wages associated with labor supply, the
Department used the decrease in average hours per employee and the
elasticity of labor supply with respect to wage (again, as a proxy for
compensation).\46\
---------------------------------------------------------------------------
\44\ For the purposes of the DWL calculation, we treat the
increase in employee benefits resulting from the paid leave
requirement as if it were equivalent to an increase in employees'
hourly wage. This is necessary because the parameters needed to
evaluate the DWL (i.e., the wage elasticities) are expressed
strictly in terms of wages. However, to the extent that employers
may replace (``crowd out'') some of their employees' wages with the
required paid sick benefit, this will result in an overestimate of
DWL.
\45\ An elasticity of -0.2 was used based on the Department's
analysis of Lichter, A., Peichl, A. & Siegloch, A. (2014). The Own-
Wage Elasticity of Labor Demand: A Meta-Regression Analysis. IZA DP
No. 7958.
\46\ An elasticity of 0.15 was used based on a literature review
and specifically results from Bargain, O., Orsini, K., Peichl, A.
(2011). Labor Supply Elasticities in Europe and the US. IZA DP No.
5820.
---------------------------------------------------------------------------
Using these values the Department calculated DWL per affected
employee (Table 13). This was multiplied by the number of affected
employees to estimate total DWL; $126,900 in Year 1. Projected DWL is
shown in Table 14. Average annualized DWL during the first ten years
the rule is in effect is estimated to be $526,000.
Table 13--Deadweight Loss Calculation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent change in wage
Average from base \a\ Average Percent DWL per
Industry base -------------------------- annual change in affected Affected Total DWL
hourly wage Change in Change in hours per hours employee employees
Ld wage Ls wage employee
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ag., forestry, fish. and hunting................ $14.37 1.47 -1.96 2,146 -0.29 $1.56 37 $58
Mining.......................................... 27.35 0.12 -0.16 2,530 -0.02 0.02 13 0
Utilities....................................... 28.38 0.75 -1.00 2,168 -0.15 0.81 101 82
Construction.................................... 21.66 1.01 -1.35 2,124 -0.20 1.10 19,071 21,009
Manufacturing................................... 23.12 0.78 -1.04 2,157 -0.16 0.71 5,538 3,939
Wholesale trade................................. 23.34 0.68 -0.90 2,152 -0.14 0.54 122 65
Retail trade.................................... 15.86 0.83 -1.11 1,805 -0.17 0.46 3,051 1,406
Transportation and warehousing.................. 20.92 0.91 -1.21 2,156 -0.18 0.87 4,022 3,494
Information..................................... 25.83 0.63 -0.85 1,972 -0.13 0.48 918 439
Finance and insurance........................... 27.46 0.70 -0.94 2,082 -0.14 0.66 2,465 1,617
Real estate and rental and leasing.............. 22.26 1.38 -1.84 1,954 -0.28 1.94 78 152
Professional, sci., and tech. services.......... 31.70 0.85 -1.14 2,055 -0.17 1.10 56,571 62,486
Management of cos. and enterprises.............. 24.85 0.48 -0.64 2,037 -0.10 0.27 0 0
Administrative and waste services............... 16.68 0.70 -0.93 1,925 -0.14 0.37 47,336 17,316
Educational services............................ 22.70 1.28 -1.70 1,601 -0.26 1.38 1,360 1,884
Health care and social assistance............... 21.85 1.11 -1.48 1,864 -0.22 1.17 8,415 9,842
Arts, entertainment, and recreation............. 17.84 1.35 -1.80 1,672 -0.27 1.27 56 71
Accommodation and food services................. 13.00 1.10 -1.46 1,696 -0.22 0.62 3,270 2,028
Other services.................................. 18.53 0.96 -1.28 1,805 -0.19 0.72 1,421 1,028
-------------------------------------------------------------------------------------------------------
Total private............................... ........... ........... ........... ........... ........... ........... 153,846 126,917
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ This is the change in the wage rate associated with the labor supply (Ls) or labor demand (Ld) curve and the new level of hours.
[[Page 9648]]
Table 14--DWL in Years 1 Through 10
------------------------------------------------------------------------
DWL (Millions
Year/Discount rate of 2014$)
------------------------------------------------------------------------
Years 1 through 10
------------------------------------------------------------------------
Year 1.................................................. 0.1
Year 2.................................................. 0.3
Year 3.................................................. 0.4
Year 4.................................................. 0.5
Year 5.................................................. 0.7
Year 6.................................................. 0.7
Year 7.................................................. 0.7
Year 8.................................................. 0.7
Year 9.................................................. 0.7
Year 10................................................. 0.8
------------------------------------------------------------------------
Average Annualized Amounts
------------------------------------------------------------------------
3% discount rate........................................ 0.5
7% discount rate........................................ 0.5
------------------------------------------------------------------------
v. Benefits
There are a variety of benefits associated with this rule; however,
due to data limitations these are not monetized. The following benefits
are discussed qualitatively: Improved employee health, improved health
of dependents, increased productivity, improved firm profits, reduced
hiring costs, decreased healthcare expenditures, and job growth.
Improved Employee Health
Multiple studies have shown that paid sick leave greatly reduces
the chance of employee injury and/or exposure. When sick employees
attend their jobs, they engage in a practice known as ``presenteeism.''
Understandably, presenteeism is detrimental to productivity, and
increases the probability of workplace injury and illness, resulting in
greater employer and employee costs. In one study from the American
Journal of Public Health, researchers used data from multiple
industries (construction, retail, manufacturing, health care, etc.) to
show that employees with access to paid sick leave were 28 percent less
likely to incur a non-fatal work injury than their counterparts without
paid sick leave.\47\ In a similar study, data from the outbreak of the
2009 H1N1 pandemic showed that individuals who did not receive pay if
they did not attend work had a 4.4 percentage point greater change of
contracting an influenza-type illness than those with sick leave pay
(9.2 percent versus 13.6 percent; only the rate for workers without
paid leave is statistically significant at the 10 percent level).\48\
Diminishing the practice of presenteeism by providing paid sick leave
can be expected to have positive impacts on employee health, as it
would reduce the possibility that sick employees could potentially
expose their colleagues to infection or disease. Other studies have
also linked the incidence of presenteeism to a lack of paid sick leave.
For instance, a 2010 survey found that 37 percent of the working
respondents who had paid sick leave, had attended work with a
contagious illness.\49\ Meanwhile, 55 percent of employees with no paid
sick leave had attended work with a contagious illness.\50\
---------------------------------------------------------------------------
\47\ Asfaw et al. (2012). Paid Sick Leave and Nonfatal
Occupational Injuries. American Journal of Public Health, 102(9),
e59-e64.
\48\ Kumar et al. (2011) The Impact of Workplace Policies and
Other Social Factors on Self-Reported Influenza-like Illness
Incidence During the 2009 H1N1 Pandemic. American Journal of Public
Health, 102(1), 134-140.
\49\ Smith, T.W. and Kim, J. (2010). Paid Sick Days: Attitude
and Experiences. Public Welfare Foundation.
\50\ These proportions are suggestive of a difference between
employees with and without paid sick leave, but no standard errors
or sample sizes were provided to determine if these are
statistically significantly different proportions.
---------------------------------------------------------------------------
Improved Health of Dependents
A potential positive externality of the sick-day proposed
rulemaking is its indirect effect on the health of an employee's
dependents (i.e., children). Paid leave has a substantial impact on
parents' ability to care for sick children. One study, using the
Baltimore Parenthood Study and multivariate analysis found parents with
paid sick leave or vacation leave were 5.2 times more likely to remain
home to care for their sick child.\51\ According to a study in San
Francisco by the Institute for Women's Policy Research, parents that
did not have sick pay were more than 20 percentage points more likely
to send their children to school with a contagious disease (75.9
compared with 53.8).\52\ This ``child presenteeism'' is problematic
because these pupils have the potential to expose other students and
teachers to the disease, decreasing others' health.
---------------------------------------------------------------------------
\51\ Heymann, S.J., et al. (1999) Working Parents: What Factors
are involved in Their Ability to Take Time off from Work When Their
Children Are Sick? Archives of Pediatrics and Adolescent Medicine,
153(8): 870-874.
\52\ Drago, R. & Lovell, V. (2011). San Francisco's Paid Sick
Leave Ordinance: Outcomes for Employees and Employers. Institute for
Women's Policy Research.
---------------------------------------------------------------------------
Improved Firm Profits/Earnings
Some studies have suggested there may be a positive relationship
between paid sick leave and profits. In one such study from 2001,
researchers discovered that having a paid sick leave policy had a
positive effect on firms' profits.\53\ The authors note, however, that
efficiency wage theory underpins their empirical result and thus
requires compensation to increase which is not guaranteed to result
from this rule because employers may respond to the paid sick leave
requirement by reducing other fringe benefits, such as paid vacation,
or by decreasing base wages, as permitted by law; therefore, it may not
be valid to assume that Meyer et al.'s results would be comparable.
---------------------------------------------------------------------------
\53\ Meyer, C.S., Mukerjee, S., and Sestero, A. (2001). Work-
family Benefits: Which Ones Maximize Profits? Journal of Managerial
Issues, 13(1), 28-44.
---------------------------------------------------------------------------
Increased Productivity
The Department expects the costs to employers of paying for sick
time will be partially offset by increased employee productivity. This
increased productivity will occur through numerous channels, such as
improved health, retention, and effort. When workers attend work sick
they tend to have diminished productivity. Goetzel et al. (2004) found
that on-the-job productivity loss due to sickness represented 18
percent to 60 percent of employer costs associated with 10 health
conditions.\54\
---------------------------------------------------------------------------
\54\ Goetzel, R.Z., et al. (2004). Health, Absence, Disability,
and Presenteeism Cost Estimates of Certain Physical and Mental
Health Conditions Affecting U.S. Employers. JOEM, 46(4), 398-412.
---------------------------------------------------------------------------
A strand of economic research, commonly referred to as ``efficiency
wage'' theory, considers how an increase in compensation may be met
with greater productivity.\55\ To the degree that the proposed rule
increases employee compensation (an outcome that, as we note elsewhere
in this analysis, is not guaranteed because employers may respond to
the paid sick leave requirement by reducing other fringe benefits, such
as paid vacation, or by decreasing base wages), it could yield some of
the benefits associated with efficiency wages. Efficiency wages reduce
employer costs first by reducing turnover, allowing for workers to gain
more firm-specific human capital that enhances their productivity and
reducing the cost of replacing workers. Second, efficiency wages may
elicit greater effort on the part of workers, making them more
effective on the job.\56\ A higher wage implies a larger cost of losing
one's job; employees will put in more effort in order to reduce the
[[Page 9649]]
risk of losing the job. This is commonly referred to as the shirking
model.\57\
---------------------------------------------------------------------------
\55\ Akerlof, G. A. (1982). Labor Contracts as Partial Gift
Exchange. The Quarterly Journal of Economics, 97(4), 543-569.
\56\ Another model of efficiency wages, which is less applicable
here, is the adverse selection model in which higher wages raise the
quality of the pool of applicants.
\57\ Shapiro, C., & Stiglitz, J. E. (1984). Equilibrium
Unemployment as a Worker Discipline Device. The American Economic
Review, 74(3), 433-444.
---------------------------------------------------------------------------
Providing paid sick leave to employees has been associated with
decreased job separations. In one 2013 study, the author showed that
paid sick leave is associated with a decrease in the probability of job
separation of 25 percent.\58\ Such a reduction in job separation would
increase marginal productivity because new employees have less firm-
specific capital (i.e., skills and knowledge that have productive value
in their particular company) and thus require additional supervision
and training to become productive.\59\ Other research supports the
hypothesis that paid leave encourages employees to remain at their
respective companies. In a survey of two hundred human resource
managers, two-thirds cited family-supportive policies as the single
most important factor in attracting and retaining employees.\60\ By
providing paid leave, companies may be able to reduce the firm's
turnover rate and increase productivity (and therefore reduce hiring
costs, see the section on reduced hiring costs below).
---------------------------------------------------------------------------
\58\ Hill, H. (2013). Paid Sick Leave and Job Stability. Work
and Occupations, 40(2), 10.
\59\ Argote, L., Insko, C. A., Yovetich, N., and Romero, A. A.
(1995). Group Learning Curves: The Effects of Turnover and Task
Complexity on Group Performance. Journal of Applied Social
Psychology, 25(6), 512-529.
Shaw, J. D. (2011). Turnover Rates and Organizational
Performance: Review, Critique, and Research Agenda. Organizational
Psychology Review, 1(3), 187-213.
Dube, A., Lester,T.W., & Reich, M.. 2013. Minimum Wage Shocks,
Employment Flows and Labor Market Frictions. IRLE Working Paper
#149-13.
\60\ Williams, J. (2001). Unbending Gender: Why Work and Family
Conflict and What to Do About It. Oxford University Press.
---------------------------------------------------------------------------
Reduced Hiring Costs
By providing paid sick leave, employers may experience lower job
turnover, resulting in higher productivity and lower hiring costs,
which both would positively impact profits (the benefit of increased
productivity was discussed above). Multiple studies demonstrate an
inverse relationship between sick leave pay and employee turnover. One
2003 study from the University of Michigan found that when employers in
upstate New York implemented a paid sick leave policy, they experienced
modest reductions in employee turnover.\61\ Reduced employee turnover
reduces hiring costs, boosting profitability. Various research shows
that firms incur a substantial cost for hiring new employees. A review
of 27 case studies found that the median cost of replacing an employee
was 21 percent of the employee's annual salary.\62\ These costs might
be diminished by incorporating paid sick leave into family friendly
policies. Even though marginal labor costs may rise when employers
provide paid sick leave, the new, higher wages will be offset by
increased productivity, and reduced hiring and training costs for
firms.
---------------------------------------------------------------------------
\61\ Baughman, R., Holtz-Eakin, D. and DiNaridi, D. (2002).
Productivity and Wage Effects of ``Family-Friendly'' Fringe
Benefits. International Journal of Manpower, 24(3), 247-259.
\62\ Boushey, H. and Glynn, S. (2012). There are Significant
Business Costs to Replacing Employees. Center for American Progress.
---------------------------------------------------------------------------
The potential reduction in turnover is a function of several
variables: the current wage, hours worked, turnover rate, industry, and
occupation. Additionally, the estimated cost of replacing a separated
employee, and providing paid sick leave to an employee, vary
significantly based on factors such as industry and geographic
region.\63\ Therefore, quantifying the potential benefits associated
with a decrease in turnover attributed to this proposed rule requires
many sources of data and assumptions.
---------------------------------------------------------------------------
\63\ One 2008 study conducted by professors at San Francisco
State University showed that in California providing sick leave to
employees in the construction, retail, restaurant, and hotel
industries could increase employer's payroll costs from $299 to $862
per employee. Potepan, M.J. (2008). Paid Sick Leave: Access, Costs
and Feasibility of Implementation at the State Level. Sacramento
State: Center for California Studies.
---------------------------------------------------------------------------
Government Expenditures
As noted earlier, contractors may pass along part or all of the
increased cost to the government in the form of higher contract prices.
If the benefits from increased productivity and reduced turnover occur,
then government expenditures will not rise by the full monetized value
of the newly taken sick leave.
Decreased Healthcare Expenditures
One positive externality of mandating paid sick leave benefits
would be that employees could mitigate future health costs by more
frequently investing in preventive care. For example, employees would
likely use paid sick leave to visit a physician, who could diagnose
illnesses and other ailments before they become more serious and more
costly to patients. Studies analyzing data from the 2008 National
Health Interview Survey show that, if provided paid sick leave,
employees were 12 percent more likely to have visited a doctor in the
past year.\64\ Additionally, there was generally a greater probability
that patients with sick pay would have received preventive procedures
such as an endoscopy (9.6 percent) or mammogram (7.8 percent).\65\
Researchers at the Institute for Women's Policy Research used data from
the National Health Interview Survey (NHIS) on emergency room visits by
workers with and without sick leave to project that requiring all
employers to provide paid sick leave would prevent roughly 1.3 million
hospital emergency department visits nationally each year, resulting in
$1.1 billion in medical savings annually.\66\
---------------------------------------------------------------------------
\64\ Peipins et al. (2012). The lack of paid sick leave as a
barrier to cancer screening and medical care seeking. BMC Public
Health, 12(250), 1-9.
\65\ Ibid.
\66\ Miller, K., Williams, C., and Youngmin Yi. (2011). Paid
Sick Days and Health: Cost Savings from Reduced Emergency Department
Visits. Institute for Women's Policy Research, 1-33.
---------------------------------------------------------------------------
Job Growth
One critique of the proposal to mandate paid leave has been that
the transfer of income from employers to employees might result in
increased unemployment. However, various studies have argued the
opposite, claiming that paid sick leave might yield greater job growth.
Recently, it has been shown that counties in which a city has
implemented paid sick leave have experienced greater job growth than
neighboring counties with no cities with paid leave laws. San Francisco
County, for example, saw a 3.5 percent increase in employment between
the years of 2006 (when a paid sick leave law was implemented) and
2010, while the five counties surrounding it experienced an employment
decrease of 3.4 percent on average (the analysis did not control for
other characteristics that may affect employment or assess statistical
significance).\67\ Additionally, King County, the county in which
Seattle (which instituted a similar paid sick leave policy to San
Francisco in 2011) is located, found that the rate of annual job growth
in the food and retail industries increased much faster than within the
state of Washington as a whole between 2011 and 2013.\68\ We note,
however, that these results might also be associated with other
economic factors, such as labor migration as a
[[Page 9650]]
result of the Great Recession, and historically greater employment
trends in the urban areas of San Francisco and Seattle in comparison to
neighboring regions.
---------------------------------------------------------------------------
\67\ Petro, J. (2010). Paid Sick Leave Does Not Harm Business
Growth or Job Growth. Drum Major Institute for Public Policy.
\68\ Paid Sick Days and the Seattle Economy: Job Growth and
Business Formation at the 1-year Anniversary of Seattle's Paid Sick
and Safe Leave Law. The Main Street Alliance of Washington.
September 2013.
---------------------------------------------------------------------------
vi. Regulatory Alternatives
The Department notes that Executive Order 13706 delegates to the
Secretary the authority only to issue regulations to ``implement the
requirements of this order.'' Because the Executive Order itself
establishes the basic paid sick leave requirements that the Department
is responsible for implementing, many potential regulatory alternatives
would be beyond the scope of the Department's authority in issuing this
proposed rule. The Department considered a range of alternatives to
determine the correct balance between providing benefits to employees
and imposing compliance costs on covered contractors. For illustrative
purposes only, this section presents an alternative to the provisions
set forth in this proposed rule. The Department notes, however, that it
considers this alternative to be beyond the scope of the Department's
authority under the Executive Order.
This alternative considers how transfer payments would be affected
if employees could accrue an unlimited number of hours of paid sick
leave as long as they kept a maximum balance of 56 hours. For example,
if paid sick leave is used periodically throughout the year, an
employee who works 80 hours per week could accrue and use 138.7 hours
of paid sick leave (80 hours x 52 weeks x accrual rate of one hour per
30 hours worked (\1/30\)). To calculate transfers associated with this
alternative, employees may accrue more than 7 days of paid sick leave
annually. The number of days of leave accrued is based on the mean
number of hours worked among full-time employees in an industry. For
example, in administrative and waste services full-time employees work
on average 41.7 hours per week. With no cap on paid leave accrual, this
would result in 9.0 days of leave accrued annually for employees in
this industry. Using this alternative across all industries, the
Department estimated 870,200 additional days of paid sick leave would
be accrued by full-time employees in Year 1. If only a share are taken
(as assumed earlier in the analysis and shown in Table 10) then 328,700
days will be taken by full-time employees and total transfer payments
would be $89.5 million. This is 52 percent higher than the current
transfer estimate of $58.9 million.
Appendix A
Table 15--Percent of Workers With Fixed Number of Paid Sick Leave Plans, by Number of Days Offered, Private Industry Workers, March 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Greater Median
Industry Less than 5 5 to 9 days 10 to 14 15 to 29 than 29 Mean number number of
days days days days of days days
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and hunting................... - - - - - - -
Mining and logging........................................... - 42 15 - - 27 6
Utilities.................................................... - 34 38 - - 21 10
Construction................................................. 31 57 11 - - 6 5
Manufacturing................................................ 30 53 12 - - 8 5
Wholesale trade.............................................. 26 61 8 - - 8 5
Retail trade................................................. 21 70 7 - - 6 6
Transportation and warehousing............................... 16 44 34 - - 9 7
Information.................................................. 6 65 26 - - 9 7
Finance and insurance........................................ 7 49 39 - - 12 8
Real estate and rental and leasing........................... - 65 - - - 6 6
Professional, scientific, and technical services............. 11 59 22 - - 8 6
Management of companies and enterprises...................... 14 66 - - - 12 6
Administrative and waste services............................ 36 40 22 - - 8 5
Educational services......................................... 8 35 52 - - 11 10
Health care and social assistance............................ 22 42 34 - - 8 7
Arts, entertainment, and recreation.......................... - 47 - - - 6 6
Accommodation and food services.............................. 37 58 - - - 6 5
Other services............................................... 22 47 21 - - 8 6
------------------------------------------------------------------------------------------
Total private............................................ 21 53 21 3 2 8 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Bureau of Labor Statistics, National Compensation Survey; Unpublished data.
Note: Dashes indicate data not available or do not meet publication criteria.
BILLING CODE 4510-27-P
[[Page 9651]]
[GRAPHIC] [TIFF OMITTED] TP25FE16.000
[[Page 9652]]
[GRAPHIC] [TIFF OMITTED] TP25FE16.001
[[Page 9653]]
BILLING CODE 4510-27-C
VI. Initial Regulatory Flexibility Analysis (IRFA)
The Regulatory Flexibility Act of 1980 (RFA), as amended by the
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA),
hereafter jointly referred to as the RFA, requires agencies to prepare
regulatory flexibility analyses and make them available for public
comment when they propose regulations that will have a significant
economic impact on a substantial number of small entities. See 5 U.S.C.
603. The Department is publishing this initial regulatory flexibility
analysis to aid stakeholders in understanding the small entity impacts
of the proposed rule and to obtain additional information on the small
entity impacts. The Department invites interested persons to submit
comments on the following estimates, including the number of small
entities affected by the Executive Order paid sick leave requirements,
the compliance cost estimates, and whether alternatives exist that will
reduce the burden on small entities while still remaining consistent
with the objectives of Executive Order 13706. The Chief Counsel for
Advocacy of the Small Business Administration (SBA) was notified of
this rule upon submission of the rule to OMB under E.O. 12866.
The RFA defines a ``small entity'' as a (1) small not-for-profit
organization, (2) small governmental jurisdiction, or (3) small
business. The Department used SBA's entity size standards to classify
entities as small for the purpose of this analysis. SBA establishes
separate standards for each 6-digit NAICS industry code, and standard
cutoffs are typically based on either the average annual number of
employees or average annual receipts. For example, the SBA has two
widely used size standards: 500 employees for manufacturing, and $7
million in annual receipts for nonmanufacturing services.\69\
---------------------------------------------------------------------------
\69\ Some exceptions exist. For example, depository institutions
(including credit unions, commercial banks, and non-commercial
banks) are classified by total assets. Small governmental
jurisdictions are another noteworthy exception; they are defined as
the governments of cities, counties, towns, townships, villages,
school districts, or special districts with population of less than
50,000 people. See http://www.sba.gov/advocacy/regulatory-flexibility-act.
---------------------------------------------------------------------------
A. Number of Small Entities and Employees to Which the Proposed Rule
Will Apply
The number of contracting entities was estimated based on the GSA's
System for Award Management (SAM) for August 2015 (543,900).\70\ The
Department understands that many entities listed in SAM provide not
only prime contracting, but also subcontracting, services on (distinct)
Federal government contracts. However, we were unable to determine the
prevalence of subcontractors in the SAM database. Therefore, the
Department examined five years of USASpending data \71\ and found
20,600 first-tier subcontractors who do not hold contracts as primes
(and thus may not be included in SAM), and added these firms to the
total from SAM to obtain a total estimate of 564,400 contracting firms.
The Department believes this is an overestimate of the number of
covered contracting firms because it includes contractors that strictly
provide materials and supplies to the government (and other firms with
no Federal contracts covered by the Executive Order). However,
information was not available to eliminate these firms.\72\ Of these
564,400 firms, an estimated 422,400 are considered small contracting
firms.\73\ The Department assumed all firms will accrue regulatory
familiarization costs and therefore will be affected.
---------------------------------------------------------------------------
\70\ Data are released in monthly files.
\71\ The Department identified subawardees from the
USASpending.gov data between FY2010 and FY2014 who did not perform
work as a prime during those years.
\72\ This may also be an overestimate because some firms in the
SAM database do not currently have contracts with the Federal
government, and the Department did not exclude firms that might be
registered on SAM solely to apply for grants. Conversely, some
covered firms may be excluded from this estimate. For example, the
SAM database may not include some concessions contractors, and some
contractors offering services for Federal employees, their
dependents or the general public in connection with Federal property
or lands, including some businesses with leases in federal
buildings.
\73\ SAM data for August 2015 and USASpending for FY2010 through
FY2014. All subcontractors as considered small due to lack of data.
---------------------------------------------------------------------------
The number of employees in small contracting firms is unknown. The
Department estimated the share of total Federal contracting
expenditures in the USASpending data associated with firms labeled as
small, by industry. The Department then applied these shares to all
affected employees to estimate the share of affected employees in small
firms. However, based on 2015 NCS data, smaller firms are less likely
to offer sick leave pay, and therefore employees in small firms are
more likely to be affected. The Department adjusted for this using data
from the 2015 NCS on the distribution of employees with paid sick leave
by employer size. For these purposes, small businesses were
approximated as those having less than 500 employees. The Department
found that employees in firms with less than 500 employees were 1.1
times more likely to not have paid sick leave than employees in all
firms. Therefore, the Department multiplied the estimated share of
affected employees working for small firms (e.g., 22.1 percent in the
information industry) by 1.1 to estimate the percent of affected
employees in small businesses in each industry (e.g., 24.7 percent in
the information industry). The Department then multiplied the percent
affected that are in small businesses by the total number of affected
employees by industry then summed over all industries to find that
46,300 employees employed by small contractors in Year 1 would be
affected by the rule.
Table 18--Small Federal Contracting Firms and Their Employees
--------------------------------------------------------------------------------------------------------------------------------------------------------
Firms \a\ % Employees Affected Employees In
-------------------------- % Employees in small Year 1
Industry NAICS in small firms and -------------------------
Total Small \b\ firms \c\ affected
\d\ Total Small
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and hunting................... 11 11,060 5,523 84.9 95.0 37 36
Mining....................................................... 21 2,094 1,732 52.8 59.1 13 8
Utilities.................................................... 22 4,217 2,910 9.7 10.9 101 11
Construction................................................. 23 76,286 65,514 54.4 60.9 19,071 11,606
Manufacturing................................................ 31-33 88,963 75,185 10.2 11.4 5,538 630
Wholesale trade.............................................. 42 37,379 31,587 45.7 51.2 122 62
Retail trade................................................. 44-45 16,333 12,955 30.7 34.4 3,051 1,049
Transportation and warehousing............................... 48-49 15,646 11,470 23.5 26.3 4,022 1,058
[[Page 9654]]
Information.................................................. 51 18,002 14,450 22.1 24.7 918 227
Finance and insurance........................................ 52 3,543 2,169 0.8 0.9 2,465 23
Real estate and rental and leasing........................... 53 27,109 20,493 20.6 23.0 78 18
Professional, scientific, and technical services............. 54 128,650 88,155 26.1 29.2 56,571 16,509
Management of companies and enterprises...................... 55 346 217 22.0 24.7 0 0
Administrative and waste services............................ 56 41,329 34,445 20.9 23.4 47,336 11,083
Educational services......................................... 61 17,527 11,778 13.5 15.1 1,360 206
Health care and social assistance............................ 62 35,723 16,125 26.7 29.8 8,415 2,510
Arts, entertainment, and recreation.......................... 71 5,322 3,970 66.5 74.5 56 41
Accommodation and food services.............................. 72 11,658 9,131 22.6 25.3 3,270 826
Other services............................................... 81 23,254 14,639 27.2 30.5 1,421 433
------------------------------------------------------------------------------------------
Total private............................................ -- 564,440 422,447 24.4 27.3 153,846 46,336
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Source: GSA's System for Award Management (SAM) for August 2015. Companies without a primary NAICS code are distributed proportionately amongst all
industries. All firms are assumed to be affected. Includes 20,600 additional first-tier subcontractors identified in USASpending.gov.
\b\ SAM for August 2015. Companies without a primary NAICS code are distributed proportionately amongst all industries. All small firms are assumed to
be affected. Assume all 20,600 additional subcontractors identified in USASpending.gov are small.
\c\ Source: USASpending.gov. Percentage of contracting expenditures for covered contracts in small businesses in FY2012-FY2014.
\d\ Employees in firms with less than 500 employees were 1.1 times more likely to have no paid sick leave than employees in all firms. The Department
adjusted upward the number of affected employees by 1.1.
B. Small Entity Costs of the Proposed Rule
Employers would need to keep additional records for affected
employees if the NPRM were to be made final without change. As
indicated in this analysis, the NPRM would require the accrual of paid
sick leave. This would result in an increase in employer burden, which
was estimated in the PRA portion (section VI.) of this NPRM. Note that
the burdens reported for the PRA section of this NPRM include the
entire information collection and not merely the additional burden
estimated as a result of this NPRM.
Small entities will also have regulatory familiarization,
implementation, administrative, and payroll costs (i.e., transfers).
These are discussed in Section C. Total direct costs (i.e., excluding
transfers) to small firms in Year 1 were estimated to be $66.6 million
(Table 19). This is 72 percent of total direct costs in Year 1.
Calculation of these costs are discussed in the following paragraphs.
Estimated regulatory familiarization costs and initial
implementation costs in Year 1 apply to nearly all small Federal
contractors. Regulatory familiarization costs were assumed to take 1
hour of time in Year 1, on average across firms of all sizes. An hour
of a human resource manager's time was valued at $79.96 per
hour.74 75 Initial implementation costs, the upfront cost
that is thought to be comparable across firms of all sizes, and thus is
a fraction of the total implementation costs, were estimated as taking
1 hour of a human resource worker's time (or 10 hours depending on
whether a firm has a paid leave system in place), valued at $27.30 per
hour.\76\
---------------------------------------------------------------------------
\74\ This includes the mean base wage of $54.88 from the
Occupational Employment Statistics (OES) plus benefits paid at a
rate of 46 percent of the base wage, as estimated from the BLS's
Employer Costs for Employee Compensation (ECEC) data. OES data
available at: http://www.bls.gov/oes/current/oes113121.htm.
\75\ Time and wage estimates for small establishments are the
same as used in the analysis for all firms. We have not tailored
these to small businesses due to lack of data. The Department
requests relevant data from commenters.
\76\ This includes the mean base wage of $18.74 from the
Occupational Employment Statistics (OES) plus benefits paid at a
rate of 46 percent of the base wage, as estimated from the BLS's
Employer Costs for Employee Compensation (ECEC) data. OES data
available at: http://www.bls.gov/oes/current/oes113121.htm.
---------------------------------------------------------------------------
In addition to upfront implementation costs, firms will experience
recurring implementation costs as employees gradually become covered.
As each employee is affected, the firm will need to spend some time
updating the accounting systems used to track paid sick leave.
Therefore, implementation costs are modeled as a function of newly
affected employees for the first five years.\77\ Because of this
component, costs vary with firm size. The Department estimated one hour
of time per newly affected employee will be spent by a human resources
worker on implementation costs. Firms may also incur recurring
administrative costs associated with maintaining records of paid sick
leave and adjusting scheduling. The Department assumed a human resource
worker will spend an additional fifteen minutes per affected employee
annually on ongoing administrative costs.
---------------------------------------------------------------------------
\77\ The proposed rule will only apply to employees on new
contracts. The Department estimates it will take five years for all
employees to be affected. Therefore, adjustment costs will accrue
over the first five years.
---------------------------------------------------------------------------
To calculate payroll costs, the Department began with total
transfers estimated in SectionV.C.iii, then multiplied the ratio of
affected employees in small firms to all affected employees by total
transfers. This yields the share of transfers occurring in small
Federal contractor firms, $18.7 million in Year 1 (Table 19). This is
32 percent of total transfers, for all contracting firms, in Year 1. As
noted in V.C.iii, total transfers may be an overestimate if contractors
tend to perform work for multiple clients, rather than working
exclusively on Federal contracts. This may be especially pertinent for
small business since according to a report by American Express Open,
Federal contracting comprises 19 percent of revenues for small
contracting firms.\78\ Table 20 contains the average costs and
transfers per small firm by industry.
[[Page 9655]]
Average Year 1 costs and transfers per small firm with affected
employees range from $155 to $658.
---------------------------------------------------------------------------
\78\ American Express OPEN. (2013). Trends in Federal
Contracting for Small Businesses: A Research Summary for the
American Express OPEN for Government Contracts Program.
---------------------------------------------------------------------------
To estimate whether these costs and transfers will have a
detrimental impact to small entities they are compared to total
revenues. Based on Survey of United States Businesses (SUSB) data,
small Federal contractors had total annual revenues of $1.4 trillion in
2014 from all sources (Table 21).\79\ Transfers from small firms and
costs to small firms in Year 1 ($85.3 million) are less than 0.01
percent of revenues on average and no more than 0.11 percent in any
industry. Therefore, the Department believes this proposed rulemaking
will not have a significant impact on small businesses.
---------------------------------------------------------------------------
\79\ Based on 2012 SUSB data inflated to 2014$.
---------------------------------------------------------------------------
To estimate average annualized costs to small contracting firms the
Department projected small business costs and transfers forward 9
years. To do this the Department calculated the ratio of affected
employees in small firms to all affected employees in Year 1, then
multiplied this ratio by the 10-year projections of national costs and
transfers (see Section V.C.vii). This yields the share of projected
costs and transfers attributable to small businesses (Table 22).
Table 19--Costs and Transfers to Small Firms in Year 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct employer costs ($1,000s)
------------------------------------------------------------------------------ Transfers
Industry NAICS Regulatory Initial Recurring Recurring ($1,000s)
familiarization implementation implementation administrative Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and . . ......... 11 $442 $409 $1 $0 $852 $15
Mining.......................................... 21 138 128 0 0 267 1
Utilities....................................... 22 233 215 0 0 448 5
Construction.................................... 23 5,238 4,848 317 79 10,482 5,377
Manufacturing................................... 31-33 6,012 5,563 17 4 11,596 244
Wholesale trade................................. 42 2,526 2,337 2 0 4,865 20
Retail trade.................................... 44-45 1,036 959 29 7 2,030 240
Transportation and warehousing.................. 48-49 917 849 29 7 1,802 429
Information..................................... 51 1,155 1,069 6 2 2,232 68
Finance and insurance........................... 52 173 161 1 0 335 9
Real estate and rental and leasing.............. 53 1,639 1,516 0 0 3,156 10
Professional, scientific, and . . .............. 54 7,049 6,523 451 113 14,135 8,329
Management of companies and . . ................ 55 17 16 0 0 33 0
Administrative and waste services............... 56 2,754 2,549 303 76 5,681 2,420
Educational services............................ 61 942 872 6 1 1,820 87
Health care and social assistance............... 62 1,289 1,193 69 17 2,568 1,060
Arts, entertainment, and recreation............. 71 317 294 1 0 613 16
Accommodation and food services................. 72 730 676 23 6 1,434 193
Other services.................................. 81 1,170 1,083 12 3 2,268 128
Total private............................... ........... 33,779 31,258 1,265 316 66,618 18,652
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 20--Average Costs and Transfers per Small Firm with Affected Employees in Year 1
----------------------------------------------------------------------------------------------------------------
Direct Total costs
Industry NAICS employer costs Transfers per and transfers
per small firm small firm per small firm
----------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and hunting...... 11 $155.05 $13.77 $168.82
Mining.......................................... 21 154.73 1.79 156.52
Utilities....................................... 22 154.60 8.71 163.30
Construction.................................... 23 184.18 410.40 594.59
Manufacturing................................... 31-33 155.38 16.21 171.60
Wholesale trade................................. 42 154.29 3.22 157.51
Retail trade.................................... 44-45 167.77 92.73 260.50
Transportation and warehousing.................. 48-49 169.70 187.05 356.75
Information..................................... 51 156.63 23.45 180.09
Finance and insurance........................... 52 155.73 20.15 175.87
Real estate and rental and leasing.............. 53 154.10 2.47 156.58
Professional, scientific, and technical services 54 185.91 472.43 658.34
Management of companies and enterprises......... 55 154.03 0.52 154.54
Administrative and waste services............... 56 208.86 351.29 560.15
Educational services............................ 61 156.94 36.94 193.88
Health care and social assistance............... 62 180.52 328.77 509.29
Arts, entertainment, and recreation............. 71 155.73 19.71 175.44
Accommodation and food services................. 72 169.40 105.68 275.08
Other services.................................. 81 159.00 43.60 202.60
Total private............................... .............. 172.67 220.76 393.43
----------------------------------------------------------------------------------------------------------------
[[Page 9656]]
Table 21--Costs and Transfers as Share of Revenue in Small Contracting Firms in Year 1
----------------------------------------------------------------------------------------------------------------
Total
transfers & Small firm Total as share
Industry NAICS costs revenues of revenues
($1,000s) (billions) \a\ (%)
----------------------------------------------------------------------------------------------------------------
Agriculture, forestry, fishing and hunting...... 11 $867 $5.5 0.016
Mining.......................................... 21 268 9.6 0.003
Utilities....................................... 22 453 3.2 0.014
Construction.................................... 23 15,860 262.9 0.006
Manufacturing................................... 31-33 11,840 487.2 0.002
Wholesale trade................................. 42 4,885 209.7 0.002
Retail trade.................................... 44-45 2,271 25.6 0.009
Transportation and warehousing.................. 48-49 2,231 15.3 0.015
Information..................................... 51 2,300 254.7 0.001
Finance and insurance........................... 52 344 5.5 0.006
Real estate and rental and leasing.............. 53 3,166 22.3 0.014
Professional, scientific, and technical services 54 22,465 60.8 0.037
Management of companies and enterprises......... 55 33 0.2 0.020
Administrative and waste services............... 56 8,101 25.8 0.031
Educational services............................ 61 1,907 10.6 0.018
Health care and social assistance............... 62 3,628 14.9 0.024
Arts, entertainment, and recreation............. 71 628 3.0 0.021
Accommodation and food services................. 72 1,627 1.6 0.102
Other services.................................. 81 2,396 7.7 0.031
Total private............................... .............. 85,270 1,426.1 0.006
----------------------------------------------------------------------------------------------------------------
\a\ Source: Total revenue for small firms from 2012 SUSB; inflated to 2014$ using the CPI-U. Adjusted with ratio
of small contracting firms to all small firms.
Table 22--Projected Costs to Small Businesses
[Millions of 2014$]
----------------------------------------------------------------------------------------------------------------
Direct
Year/discount rate employer costs Transfers Total
----------------------------------------------------------------------------------------------------------------
Years 1 Through 10
----------------------------------------------------------------------------------------------------------------
Year 1.......................................................... $66.6 $18.7 $85.3
Year 2.......................................................... 1.93 39.3 41.2
Year 3.......................................................... 2.3 60.1 62.4
Year 4.......................................................... 2.6 81.1 83.7
Year 5.......................................................... 3.0 102.4 105.4
Year 6.......................................................... 1.7 104.8 106.6
Year 7.......................................................... 1.8 107.3 109.1
Year 8.......................................................... 1.8 109.9 111.7
Year 9.......................................................... 1.8 112.6 114.4
Year 10......................................................... 1.9 115.3 117.2
----------------------------------------------------------------------------------------------------------------
Average Annualized Amounts
----------------------------------------------------------------------------------------------------------------
3% discount rate................................................ 9.4 82.6 92.0
7% discount rate................................................ 10.7 79.2 89.9
----------------------------------------------------------------------------------------------------------------
C. Differing Compliance and Reporting Requirements for Small Entities
This NPRM provides no differing compliance and reporting
requirements for small entities.
D. Least Burdensome Option or Explanation Required
The Department believes it has chosen the most effective option
that implements the EO, and results in the least burden. Taking no
regulatory action does not address the Department's concerns discussed
above (see Need for Regulation section) and would contravene the
Executive Order. The Department also found the option to allow
unlimited accrual (Section V.C.vi) to be overly burdensome on business
as well as beyond the scope of the Executive Order.
Pursuant to section 603(c) of the RFA, the following alternatives
are to be addressed:
i. Differing compliance or reporting requirements for small
entities. To establish differing compliance or reporting requirements
for small businesses would undermine the impact of the rule. The
Department makes available a variety of resources to employers for
understanding their obligations and achieving compliance. Therefore the
Department has not proposed differing compliance or reporting
requirements for small businesses.
ii. The clarification, consolidation, or simplification of
compliance and reporting requirements for small entities. The
Department makes available a variety of resources to employers for
understanding their obligations and achieving compliance. As such, the
Department has not proposed clarification, consolidation, or
simplification of the rule.
iii. The use of performance rather than design standards. The
Department makes available a variety of resources to employers for
understanding their
[[Page 9657]]
obligations and achieving compliance. Therefore, the Department has not
proposed relying upon performance to determine compliancy.
iv. An exemption from coverage of the rule, or any part thereof,
for such small entities.
To exempt small businesses from the proposed rulemaking would
undermine the impact of the rule. The Department makes available a
variety of resources to employers for understanding their obligations
and achieving compliance. Therefore, the Department has not proposed a
``small business'' exemption.
E. Identification, to the Extent Practicable, of all Relevant Federal
Rules That May Duplicate, Overlap, or Conflict With the Proposed Rule
The Department is not aware of any federal rules that duplicate,
overlap, or conflict with this NPRM.
VII. Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1532,
requires that agencies prepare a written statement, which includes an
assessment of anticipated costs and benefits, before proposing any
Federal mandate that may result in excess of $100 million (adjusted
annually for inflation) in expenditures in any one year by State,
local, and tribal governments in the aggregate or by the private
sector. The current (2015) threshold after adjustment for inflation is
approximately $157,000,000.
As explained in the economic analysis set forth in the section
discussing Executive Orders 12866 and 13563 above, the Department
estimates that the proposed rule may result in transfers of up to $315
million per year (beginning in 2021), with steady increases up to that
level over the intervening years). Because this proposed rule applies
only to contracts for which the solicitation will be issued on or after
January 1, 2017, contractors would have the information necessary to
factor into their bids the labor costs resulting from the paid sick
leave requirement, and thus it may be likely that the Federal
Government would bear the burden of the transfers. However, most
contracts covered by this proposed rule are paid through appropriated
funds, and how Congress and agencies respond to rising bids is subject
to political processes whose unpredictability limits the Department's
ability to project rule-induced outcomes. The Department therefore
acknowledges that this proposed rule may yield effects that make it
subject to UMRA requirements. The Department carried out the requisite
cost-benefit analysis in preceding sections of this document.
VIII. Executive Order 13132, Federalism
The Department has (1) reviewed this rule in accordance with
Executive Order 13132 regarding federalism and (2) determined that it
does not have federalism implications. The proposed rule would not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.
IX. Executive Order 13175, Indian Tribal Governments
This proposed rule would not have tribal implications under
Executive Order 13175 that would require a tribal summary impact
statement. The proposed rule would not have substantial direct effects
on one or more Indian tribes, on the relationship between the Federal
government and Indian tribes, or on the distribution of power and
responsibilities between the Federal government and Indian tribes.
X. Effects on Families
The undersigned hereby certifies that the proposed rule would not
adversely affect the well-being of families, as discussed under section
654 of the Treasury and General Government Appropriations Act, 1999.
XI. Executive Order 13045, Protection of Children
This proposed rule would have no environmental health risk or
safety risk that may disproportionately affect children.
XII. Environmental Impact Assessment
A review of this proposed rule in accordance with the requirements
of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321
et seq.; the regulations of the Council on Environmental Quality, 40
CFR 1500 et seq.; and the Departmental NEPA procedures, 29 CFR part 11,
indicates that the rule would not have a significant impact on the
quality of the human environment. There is, thus, no corresponding
environmental assessment or an environmental impact statement.
XIII. Executive Order 13211, Energy Supply
This proposed rule is not subject to Executive Order 13211. It will
not have a significant adverse effect on the supply, distribution, or
use of energy.
XIV. Executive Order 12630, Constitutionally Protected Property Rights
This proposed rule is not subject to Executive Order 12630 because
it does not involve implementation of a policy that has takings
implications or that could impose limitations on private property use.
XV. Executive Order 12988, Civil Justice Reform Analysis
This proposed rule was drafted and reviewed in accordance with
Executive Order 12988 and will not unduly burden the Federal court
system. The proposed rule was: (1) Reviewed to eliminate drafting
errors and ambiguities; (2) written to minimize litigation; and (3)
written to provide a clear legal standard for affected conduct and to
promote burden reduction.
List of Subjects in 29 CFR Part 13
Administrative practice and procedure, Construction, Government
contracts, Law enforcement, Paid sick leave, Reporting and
recordkeeping requirements.
David Weil,
Administrator, Wage and Hour Division.
For the reasons set out in the preamble, the Department of Labor
proposes to amend Title 29 part 13 of the Code of Federal Regulations
by adding part 13 to read as follows:
PART 13--ESTABLISHING PAID SICK LEAVE FOR FEDERAL CONTRACTORS
Subpart A--General
Sec.
13.1 Purpose and scope.
13.2 Definitions.
13.3 Coverage.
13.4 Exclusions.
13.5 Paid sick leave for Federal contractors and subcontractors.
13.6 Prohibited acts.
13.7 Waiver of rights.
Subpart B--Federal Government Requirements
13.11 Contracting agency requirements.
13.12 Department of Labor requirements.
Subpart C--Contractor Requirements
13.21 Contract clause.
13.22 Paid sick leave.
13.23 Deductions.
13.24 Anti-kickback.
13.25 Records to be kept by contractors.
13.26 Certified list of employees' accrued paid sick leave.
13.27 Notice.
13.28 Timing of pay.
Subpart D--Enforcement
13.41 Complaints.
[[Page 9658]]
13.42 Wage and Hour Division conciliation.
13.43 Wage and Hour Division investigation.
13.44 Remedies.
Subpart E--Administrative Proceedings
13.51 Disputes concerning contractor compliance.
13.52 Debarment proceedings.
13.53 Referral to Chief Administrative Law Judge; amendment of
pleadings.
13.54 Consent findings and order.
13.55 Administrative Law Judge proceedings.
13.56 Petition for review.
13.57 Administrative Review Board proceedings.
13.58 Administrator ruling.
Appendix A to Part 13--Contract Clause
Authority: 4 U.S.C. 301; Executive Order 13706, 80 FR 54697;
Secretary's Order 01-2014, 79 FR 77527.
Subpart A--General
Sec. 13.1 Purpose and scope.
(a) Purpose. This part contains the Department of Labor's rules
relating to the administration and enforcement of Executive Order 13706
(Executive Order or the Order), ``Establishing Paid Sick Leave for
Federal Contractors.'' The Order states that providing paid sick leave
to employees will improve the health and performance of employees of
Federal contractors and will bring benefits packages offered by Federal
contractors in line with model employers, ensuring they remain
competitive in the search for dedicated and talented employees. The
Executive Order concludes that providing paid sick leave will result in
savings and quality improvements in the work performed by parties who
contract with the Federal Government that will in turn lead to improved
economy and efficiency in Government procurement.
(b) Policy. Executive Order 13706 sets forth the general position
of the Federal Government that providing access to paid sick leave on
Federal contracts will increase efficiency and cost savings for the
Federal Government. The Order therefore provides that executive
departments and agencies shall, to the extent permitted by law, ensure
that new covered contracts, contract-like instruments, and
solicitations (collectively referred to as ``contracts'') include a
clause, which the contractor and any subcontractors shall incorporate
into lower-tier subcontracts, specifying, as a condition of payment,
that employees will earn not less than 1 hour of paid sick leave for
every 30 hours worked on or in connection with covered contracts.
Nothing in Executive Order 13706 or this part shall excuse
noncompliance with or supersede any applicable Federal or State law,
any applicable municipal law or ordinance, or a collective bargaining
agreement requiring greater paid sick leave or leave rights than those
established under the Order or this part.
(c) Scope. Neither Executive Order 13706 nor this part creates or
changes any rights under the Contract Disputes Act or creates any
private right of action. The Executive Order provides that disputes
regarding whether a contractor has provided paid sick leave as
prescribed by the Order, to the extent permitted by law, shall be
disposed of only as provided in this part. However, nothing in the
Order or this part is intended to limit or preclude a civil action
under the False Claims Act, 31 U.S.C. 3730, or criminal prosecution
under 18 U.S.C. 1001. The Order and this part similarly do not preclude
judicial review of final decisions by the Secretary of Labor in
accordance with the Administrative Procedure Act, 5 U.S.C. 701 et seq.
Sec. 13.2 Definitions.
For purposes of this part:
Accrual year means the 12-month period during which a contractor
may limit an employee's accrual of paid sick leave to no less than 56
hours.
Administrative Review Board (ARB or Board) means the Administrative
Review Board, U.S. Department of Labor.
Administrator means the Administrator of the Wage and Hour Division
and includes any official of the Wage and Hour Division authorized to
perform any of the functions of the Administrator under this part.
As soon as is practicable means as soon as both possible and
practical, taking into account all of the facts and circumstances of
the individual case.
Certification issued by a health care provider means any type of
written document created or signed by a health care provider (or by a
representative of the health care provider) that contains information
verifying that the physical or mental illness, injury, medical
condition, or need for diagnosis, care, or preventive care or other
need for care referred to in Sec. 13.5(c)(1)(i), (ii), or (iii)
exists.
Child means:
(1) A biological, adopted, step, or foster son or daughter of the
employee;
(2) A person who is a legal ward or was a legal ward of the
employee when that individual was a minor or required a legal guardian;
(3) A person for whom the employee stands in loco parentis or stood
in loco parentis when that individual was a minor or required someone
to stand in loco parentis; or
(4) A child, as described in paragraphs (1) through (3) of this
definition, of an employee's spouse or domestic partner.
Concessions contract or contract for concessions means a contract
under which the Federal Government grants a right to use Federal
property, including land or facilities, for furnishing services. The
term concessions contract includes, but is not limited to, a contract
the principal purpose of which is to furnish food, lodging, automobile
fuel, souvenirs, newspaper stands, and/or recreational equipment,
regardless of whether the services are of direct benefit to the
Government, its personnel, or the general public.
Contract or contract-like instrument means an agreement between two
or more parties creating obligations that are enforceable or otherwise
recognizable at law. This definition includes, but is not limited to, a
mutually binding legal relationship obligating one party to furnish
services (including construction) and another party to pay for them.
The term contract includes all contracts and any subcontracts of any
tier thereunder, whether negotiated or advertised, including any
procurement actions, lease agreements, cooperative agreements, provider
agreements, intergovernmental service agreements, service agreements,
licenses, permits, or any other type of agreement, regardless of
nomenclature, type, or particular form, and whether entered into
verbally or in writing. The term contract shall be interpreted broadly
to include, but not be limited to, any contract that may be consistent
with the definition provided in the Federal Acquisition Regulation
(FAR) or applicable Federal statutes. This definition includes, but is
not limited to, any contract that may be covered under any Federal
procurement statute. Contracts may be the result of competitive bidding
or awarded to a single source under applicable authority to do so. In
addition to bilateral instruments, contracts include, but are not
limited to, awards and notices of awards; job orders or task letters
issued under basic ordering agreements; letter contracts; orders, such
as purchase orders, under which the contract becomes effective by
written acceptance or performance; and bilateral contract
modifications. The term contract includes contracts covered by the
Service Contract Act, contracts covered by the Davis-Bacon Act,
concessions contracts not subject to the Service Contract Act, and
contracts in
[[Page 9659]]
connection with Federal property or land and related to offering
services for Federal employees, their dependents, or the general
public.
Contracting officer means a representative of an executive
department or agency with the authority to enter into, administer, and/
or terminate contracts and make related determinations and findings.
This term includes certain authorized representatives of the
contracting officer acting within the limits of their authority as
delegated by the contracting officer.
Contractor means any individual or other legal entity that is
awarded a Federal Government contract or subcontract under a Federal
Government contract. The term contractor refers to both a prime
contractor and all of its subcontractors of any tier on a contract with
the Federal Government. The term contractor includes lessors and
lessees. The term employer is used interchangeably with the terms
contractor and subcontractor in various sections of this part. The U.S.
Government, its agencies, and instrumentalities are not contractors,
subcontractors, employers, or joint employers for purposes of
compliance with the provisions of the Executive Order.
Davis-Bacon Act (DBA) means the Davis-Bacon Act of 1931, as
amended, 40 U.S.C. 3141 et seq., and its implementing regulations.
Domestic partner means an adult in a committed relationship with
another adult. A committed relationship is one in which the employee
and the domestic partner of the employee are each other's sole domestic
partner (and are not married to or domestic partners with anyone else)
and share responsibility for a significant measure of each other's
common welfare and financial obligations. This includes, but is not
limited to, any relationship between two individuals of the same or
opposite sex that is granted legal recognition by a State or by the
District of Columbia as a marriage or analogous relationship
(including, but not limited to, a civil union).
Domestic violence means:
(1) Felony or misdemeanor crimes of violence (including threats or
attempts) committed:
(i) By a current or former spouse, domestic partner, or intimate
partner of the victim;
(ii) By a person with whom the victim shares a child in common;
(iii) By a person who is cohabitating with or has cohabitated with
the victim as a spouse, domestic partner, or intimate partner;
(iv) By a person similarly situated to a spouse of the victim under
domestic or family violence laws of the jurisdiction in which the
victim resides or the events occurred; or
(v) By any other adult person against a victim who is protected
from that person's acts under the domestic or family violence laws of
the jurisdiction in which the victim resides or the events occurred.
(2) Domestic violence also includes any crime of violence
considered to be an act of domestic violence according to State law.
Employee means any person engaged in performing work on or in
connection with a contract covered by the Executive Order, and whose
wages under such contract are governed by the Service Contract Act, the
Davis-Bacon Act, or the Fair Labor Standards Act, including employees
who qualify for an exemption from the Fair Labor Standards Act's
minimum wage and overtime provisions, regardless of the contractual
relationship alleged to exist between the individual and the employer.
The term employee includes any person performing work on or in
connection with a covered contract and individually registered in a
bona fide apprenticeship or training program registered with the U.S.
Department of Labor's Employment and Training Administration, Office of
Apprenticeship, or with a State Apprenticeship Agency recognized by the
Office of Apprenticeship.
Executive departments and agencies means executive departments,
military departments, or any independent establishments within the
meaning of 5 U.S.C. 101, 102, and 104(1), respectively, and any wholly
owned Government corporation within the meaning of 31 U.S.C. 9101.
Executive Order 13495 or Nondisplacement Executive Order means
Executive Order 13495 of January 30, 2009, Nondisplacement of Qualified
Workers Under Service Contracts, 74 FR 6103 (Feb. 4, 2009), and its
implementing regulations at 29 CFR part 9.
Executive Order 13658 or Minimum Wage Executive Order means
Executive Order 13658 of February 12, 2014, Establishing a Minimum Wage
for Contractors, 79 FR 9851 (Feb. 20, 2014), and its implementing
regulations at 29 CFR part 10.
Fair Labor Standards Act (FLSA) means the Fair Labor Standards Act
of 1938, as amended, 29 U.S.C. 201 et seq., and its implementing
regulations.
Family and Medical Leave Act (FMLA) means the Family and Medical
Leave Act of 1993, as amended, 29 U.S.C. 2601 et seq., and its
implementing regulations.
Family violence means any act or threatened act of violence,
including any forceful detention of an individual that results or
threatens to result in physical injury and is committed by a person
against another individual (including an elderly individual) to or with
whom such person is related by blood, is or was related by marriage or
is or was otherwise legally related, or is or was lawfully residing.
Federal Government means an agency or instrumentality of the United
States that enters into a contract pursuant to authority derived from
the Constitution or the laws of the United States. For purposes of the
Executive Order and this part, this definition does not include the
District of Columbia, any Territory or possession of the United States,
or any independent regulatory agency within the meaning of 44 U.S.C.
3502(5).
Health care provider means any practitioner who is licensed or
certified under Federal or State law to provide the health-related
service in question or any practitioner recognized by an employer or
the employer's group health plan. The term includes, but is not limited
to, doctors of medicine or osteopathy, podiatrists, dentists,
psychologists, optometrists, chiropractors, nurse practitioners, nurse-
midwives, clinical social workers, physician assistants, physical
therapists, and Christian Science Practitioners listed with the First
Church of Christ, Scientist in Boston, Massachusetts.
Independent agencies means independent regulatory agencies within
the meaning of 44 U.S.C. 3502(5).
Individual related by blood or affinity whose close association
with the employee is the equivalent of a family relationship means any
person with whom the employee has a significant personal bond that is
or is like a family relationship, regardless of biological or legal
relationship.
Intimate partner means a person who is or has been in a social
relationship of a romantic or intimate nature with the victim, where
the existence of such a relationship shall be determined based on a
consideration of the length of the relationship; the type of
relationship; and the frequency of interaction between the persons
involved in the relationship.
New contract means a contract that results from a solicitation
issued on or after January 1, 2017, or a contract that is awarded
outside the solicitation
[[Page 9660]]
process on or after January 1, 2017. This term includes both new
contracts and replacements for expiring contracts. It does not apply to
the unilateral exercise of a pre-negotiated option to renew an existing
contract by the Federal Government. For purposes of the Executive
Order, a contract that is entered into prior to January 1, 2017 will
constitute a new contract if, through bilateral negotiation, on or
after January 1, 2017:
(1) The contract is renewed;
(2) The contract is extended, unless the extension is made pursuant
to a term in the contract as of December 31, 2016 providing for a
short-term limited extension; or
(3) The contract is amended pursuant to a modification that is
outside the scope of the contract.
Obtain additional counseling, seek relocation, seek assistance from
a victim services organization, or take related legal action, used in
reference to domestic violence, sexual assault, or stalking, means to
spend time arranging, preparing for, or executing acts related to
addressing physical injuries or mental or emotional impacts resulting
from being a victim of domestic violence, sexual assault, or stalking.
Such acts include finding and using services of a counselor or victim
services organization intended to assist a victim to respond to or
prevent future incidents of domestic violence, sexual assault, or
stalking; identifying and moving to a different residence to avoid
being a victim of domestic violence, sexual assault, or stalking; or a
victim's pursuing any related legal action.
Obtaining diagnosis, care, or preventive care from a health care
provider means receiving services from a health care provider, whether
to identify, treat, or otherwise address an existing condition or to
prevent potential conditions from arising. The term includes time spent
traveling to and from the location at which such services are provided
or recovering from receiving such services.
Office of Administrative Law Judges means the Office of
Administrative Law Judges, U.S. Department of Labor.
Option means a unilateral right in a contract by which, for a
specified time, the Government may elect to purchase additional
supplies or services called for by the contract, or may elect to extend
the term of the contract.
Paid sick leave means compensated absence from employment that is
required by Executive Order 13706 and this part.
Parent means:
(1) A biological, adoptive, step, or foster parent of the employee,
or a person who was a foster parent of the employee when the employee
was a minor;
(2) A person who is the legal guardian of the employee or was the
legal guardian of the employee when the employee was a minor or
required a legal guardian;
(3) A person who stands in loco parentis to the employee or stood
in loco parentis to the employee when the employee was a minor or
required someone to stand in loco parentis; or
(4) A parent, as described in paragraphs (1) through (3) of this
definition, of an employee's spouse or domestic partner.
Physical or mental illness, injury, or medical condition means any
disease, sickness, disorder, or impairment of, or any trauma to, the
body or mind.
Predecessor contract means a contract that precedes a successor
contract.
Procurement contract for construction means a procurement contract
for the construction, alteration, or repair (including painting and
decorating) of public buildings or public works and which requires or
involves the employment of mechanics or laborers, and any subcontract
of any tier thereunder. The term procurement contract for construction
includes any contract subject to the Davis-Bacon Act.
Procurement contract for services means a contract the principal
purpose of which is to furnish services in the United States through
the use of service employees, and any subcontract of any tier
thereunder. The term procurement contract for services includes any
contract subject to the Service Contract Act.
Related legal action or related civil or criminal legal proceeding,
used in reference to domestic violence, sexual assault, or stalking,
means any type of legal action, in any forum, that relates to the
domestic violence, sexual assault, or stalking, including, but not
limited to, family, tribal, territorial, immigration, employment,
administrative agency, housing matters, campus administrative or
protection or stay-away order proceedings, and other similar matters;
and criminal justice investigations, prosecutions, and post-trial
matters (including sentencing, parole, and probation) that impact the
victim's safety and privacy.
Secretary means the Secretary of Labor and includes any official of
the U.S. Department of Labor authorized to perform any of the functions
of the Secretary of Labor under this part.
Service Contract Act (SCA) means the McNamara-O'Hara Service
Contract Act of 1965, as amended, 41 U.S.C. 6701 et seq., and its
implementing regulations.
Sexual assault means any nonconsensual sexual act proscribed by
Federal, tribal, or State law, including when the victim lacks capacity
to consent.
Solicitation means any request to submit offers, bids, or
quotations to the Federal Government.
Spouse means the other person with whom an individual entered into
marriage as defined or recognized under State law for purposes of
marriage in the State in which the marriage was entered into or, in the
case of a marriage entered into outside of any State, if the marriage
is valid in the place where entered into and could have been entered
into in at least one State. This definition includes an individual in a
common law marriage that was entered into in a State that recognizes
such marriages or, if entered into outside of any State, is valid in
the place where entered into and could have been entered into in at
least one State.
Stalking means engaging in a course of conduct directed at a
specific person that would cause a reasonable person to fear for his or
her safety or the safety of others or suffer substantial emotional
distress.
Successor contract means a contract for the same or similar
services as were provided by a different predecessor contractor at the
same location.
United States means the United States and all executive
departments, independent establishments, administrative agencies, and
instrumentalities of the United States, including corporations of which
all or substantially all of the stock is owned by the United States, by
the foregoing departments, establishments, agencies, and
instrumentalities, including nonappropriated fund instrumentalities.
When used in a geographic sense, the United States means the 50 States
and the District of Columbia.
Victim services organization means a nonprofit, nongovernmental, or
tribal organization or rape crisis center, including a State or tribal
coalition, that assists or advocates for victims of domestic violence,
sexual assault, or stalking, including domestic violence shelters,
faith-based organizations, and other organizations, with a documented
history of effective work concerning domestic violence, sexual assault,
or stalking.
Violence Against Women Act (VAWA) means the Violence Against Women
Act of 1994, 42 U.S.C. 13925 et seq., and its implementing regulations.
Wage and Hour Division means the Wage and Hour Division, U.S.
Department of Labor.
[[Page 9661]]
Sec. 13.3 Coverage.
(a) This part applies to any new contract with the Federal
Government, unless excluded by Sec. 13.4, provided that:
(1)(i) It is a procurement contract for construction covered by the
Davis-Bacon Act;
(ii) It is a contract for services covered by the Service Contract
Act;
(iii) It is a contract for concessions, including any concessions
contract excluded from coverage under the Service Contract Act by
Department of Labor regulations at 29 CFR 4.133(b); or
(iv) It is a contract in connection with Federal property or lands
and related to offering services for Federal employees, their
dependents, or the general public; and
(2) The wages of employees performing on or in connection with such
contract are governed by the Davis-Bacon Act, the Service Contract Act,
or the Fair Labor Standards Act, including employees who qualify for an
exemption from the Fair Labor Standards Act's minimum wage and overtime
provisions.
(b) For contracts covered by the Service Contract Act or the Davis-
Bacon Act, this part applies to prime contracts only at the thresholds
specified in those statutes. For procurement contracts where employees'
wages are governed by the Fair Labor Standards Act, this part applies
when the prime contract exceeds the micro-purchase threshold, as
defined in 41 U.S.C. 1902(a). For all other prime contracts covered by
Executive Order 13706 and this part and for all subcontracts awarded
under prime contracts covered by Executive Order 13706 and this part,
this part applies regardless of the value of the contract.
(c) This part only applies to contracts with the Federal Government
requiring performance in whole or in part within the United States. If
a contract with the Federal Government is to be performed in part
within and in part outside the United States and is otherwise covered
by the Executive Order and this part, the requirements of the Order and
this part would apply with respect to that part of the contract that is
performed within the United States.
(d) This part does not apply to contracts for the manufacturing or
furnishing of materials, supplies, articles, or equipment to the
Federal Government that are subject to the Walsh-Healey Public
Contracts Act, 41 U.S.C. 6501 et seq.
Sec. 13.4 Exclusions.
(a) Grants. The requirements of this part do not apply to grants
within the meaning of the Federal Grant and Cooperative Agreement Act,
as amended, 31 U.S.C. 6301 et seq.
(b) Contracts and agreements with and grants to Indian Tribes. This
part does not apply to contracts and agreements with and grants to
Indian Tribes under the Indian Self-Determination and Education
Assistance Act, as amended, 25 U.S.C. 450 et seq.
(c) Procurement contracts for construction that are excluded from
coverage of the Davis-Bacon Act. Procurement contracts for construction
that are not covered by the Davis-Bacon Act are not subject to this
part.
(d) Contracts for services that are exempted from coverage under
the Service Contract Act. Service contracts, except for those expressly
covered by Sec. 13.3(a)(1)(iii) or (iv), that are exempt from coverage
of the Service Contract Act pursuant to its statutory language at 41
U.S.C. 6702(b) or its implementing regulations, including those at 29
CFR 4.115 through 4.122 and 29 CFR 4.123(d) and (e), are not subject to
this part.
(e) Employees performing in connection with covered contracts for
less than 20 percent of their work hours in a given workweek. The
accrual requirements of this part do not apply to employees performing
in connection with covered contracts, i.e., those employees who perform
work duties necessary to the performance of the contract but who are
not directly engaged in performing the specific work called for by the
contract, who spend less than 20 percent of their hours worked in a
particular workweek performing in connection with such contracts. This
exclusion is inapplicable to employees performing on covered contracts,
i.e., those employees directly engaged in performing the specific work
called for by the contract, at any point during the workweek. This
exclusion is also inapplicable to employees performing in connection
with covered contracts with respect to any workweek in which the
employees spend 20 percent or more of their hours worked performing in
connection with a covered contract.
Sec. 13.5 Paid sick leave for Federal contractors and subcontractors.
(a) Accrual. (1) A contractor shall permit an employee to accrue
not less than 1 hour of paid sick leave for every 30 hours worked on or
in connection with a covered contract. A contractor shall aggregate an
employee's hours worked on or in connection with all covered contracts
for that contractor for purposes of paid sick leave accrual.
(i) For purposes of Executive Order 13706 and this part, hours
worked includes all time for which an employee is or should be paid,
meaning time an employee spends working or in paid time off status,
including time when the employee is using paid sick leave or any other
paid time off provided by the contractor. To properly exclude time
spent on non-covered work from an employee's hours worked that count
toward the accrual of paid sick leave, a contractor must accurately
identify in its records the employee's covered and non-covered hours
worked.
(ii) A contractor shall calculate an employee's accrual of paid
sick leave no less frequently than at the conclusion of each workweek.
A contractor need not allow an employee to accrue paid sick leave in
increments smaller than 1 hour for completion of any fraction of 30
hours worked. Any such fraction of hours worked shall be added to hours
worked for the same contractor in subsequent workweeks to reach the
next 30 hours worked provided that the next workweek in which the
employee performs on or in connection with a covered contract occurs
within the same accrual year.
(iii) If a contractor is not obligated by the Service Contract Act,
Davis-Bacon Act, or Fair Labor Standards Act to keep records of an
employee's hours worked, such as because the employee is employed in a
bona fide executive, administrative, or professional capacity as those
terms are defined in 29 CFR part 541, the contractor may, as to that
employee, calculate paid sick leave accrual by tracking the employee's
actual hours worked or by using the assumption that the employee works
40 hours on or in connection with a covered contract in each workweek.
If such an employee regularly works fewer than 40 hours per week on or
in connection with covered contracts, whether because the employee
splits time between covered and non-covered contracts or because the
employee is part-time, the contractor may allow the employee to accrue
paid sick leave based on the employee's typical number of hours worked
on covered contracts per workweek.
(2) A contractor shall inform an employee, in writing, of the
amount of paid sick leave that the employee has accrued but not used:
(i) No less than monthly;
(ii) At any time when the employee makes a request to use paid sick
leave;
(iii) Upon the employee's request for such information, but no more
often than once a week;
(iv) Upon a separation from employment; and
[[Page 9662]]
(v) Upon reinstatement of paid sick leave pursuant to paragraph
(b)(3) of this section.
(3) A contractor may choose to provide an employee with at least 56
hours of paid sick leave at the beginning of each accrual year rather
than allowing the employee to accrue such leave based on hours worked
over time. In such circumstances, the contractor need not comply with
the accrual requirements described in paragraph (a)(1) of this section.
The contractor must, however, allow carryover of paid sick leave as
required by paragraph (b)(2) of this section, and although the
contractor may limit the amount of paid sick leave an employee may
carry over to no less than 56 hours, the contractor may not limit the
amount of paid sick leave an employee has available for use at any
point as is otherwise permitted by paragraph (b)(3) of this section.
(b) Maximum accrual, carryover, reinstatement, and payment for
unused leave. (1) A contractor may limit the amount of paid sick leave
an employee is permitted to accrue to not less than 56 hours in each
accrual year. An accrual year is a 12-month period beginning on the
date an employee's work on or in connection with a covered contract
began or any other fixed date chosen by the contractor, such as the
date a covered contract began, the date the contractor's fiscal year
begins, a date relevant under State law, or the date a contractor uses
for determining employees' leave entitlements under the FMLA pursuant
to 29 CFR 825.200. A contractor may choose its accrual year but must
use a consistent option for all employees and may not select or change
its accrual year in order to avoid the paid sick leave requirements of
Executive Order 13706 and this part.
(2) Paid sick leave shall carry over from one accrual year to the
next. Paid sick leave carried over from the previous accrual year shall
not count toward any limit the contractor sets on annual accrual.
(3) A contractor may limit the amount of paid sick leave an
employee is permitted to have available for use at any point to not
less than 56 hours. Accordingly, even if an employee has accrued fewer
than 56 hours of paid sick leave since the beginning of the accrual
year, the employee need only be permitted to accrue additional paid
sick leave if the employee has fewer than 56 hours available for use.
(4) Paid sick leave shall be reinstated for employees rehired by
the same contractor or a successor contractor within 12 months after a
job separation. This reinstatement requirement applies whether the
employee leaves and returns to a job on or in connection with a single
covered contract or works for a single contractor on or in connection
with more than one covered contract, regardless of whether the employee
remains employed by the contractor in between periods of working on
covered contracts. It also applies if an employee takes a job on or in
connection with a covered successor contract after working for a
different contractor on or in connection with the predecessor contract,
including when an employee is entitled to a right of first refusal of
employment from the successor contractor under Executive Order 13495.
(5) Nothing in Executive Order 13706 or this part shall require a
contractor to make a financial payment to an employee for accrued paid
sick leave that has not been used upon a separation from employment. If
a contractor nevertheless makes such a payment, whether voluntarily or
pursuant to a collective bargaining agreement, that payment shall have
no effect on the contractor's, or a successor contractor's, obligation
to reinstate an employee's accrued paid sick leave upon rehiring the
employee within 12 months of the separation pursuant to paragraph
(b)(4) of this section.
(c) Use. (1) Subject to the conditions described in paragraphs (d)
and (e) of this section and the amount of paid sick leave the employee
has available for use, a contractor must permit an employee to use paid
sick leave to be absent from work for that contractor on or in
connection with a covered contract because of:
(i) Physical or mental illness, injury, or medical condition of the
employee;
(ii) Obtaining diagnosis, care, or preventive care from a health
care provider by the employee;
(iii) Caring for the employee's child, parent, spouse, domestic
partner, or any other individual related by blood or affinity whose
close association with the employee is the equivalent of a family
relationship who has any of the conditions or needs for diagnosis,
care, or preventive care described in paragraphs (c)(1)(i) or (ii) of
this section or is otherwise in need of care; or
(iv) Domestic violence, sexual assault, or stalking, if the time
absent from work is for the purposes otherwise described in paragraphs
(c)(1)(i) or (ii) of this section or to obtain additional counseling,
seek relocation, seek assistance from a victim services organization,
take related legal action, including preparation for or participation
in any related civil or criminal legal proceeding, or assist an
individual related to the employee as described in paragraph
(c)(1)(iii) of this section in engaging in any of these activities.
(2) A contractor shall account for an employee's use of paid sick
leave in increments of no greater than 1 hour.
(i) A contractor may not reduce an employee's accrued paid sick
leave by more than the amount of leave the employee actually takes, and
a contractor may not require an employee to take more leave than is
necessary to address the circumstances that precipitated the need for
the leave, provided that the leave is counted using an increment of no
greater than 1 hour.
(ii) The amount of paid sick leave used may not exceed the hours an
employee would have worked if the need for leave had not arisen.
(3) A contractor shall provide to an employee using paid sick leave
the same pay and benefits the employee would have received had the
employee not used paid sick leave.
(4) A contractor may not limit the amount of paid sick leave an
employee may use per year or at once.
(5) A contractor may not make an employee's use of paid sick leave
contingent on the employee's finding a replacement worker to cover any
work time to be missed or on the fulfillment of the contractor's
operational needs.
(d) Request for leave. (1) A contractor shall permit an employee to
use any or all of the employee's available paid sick leave upon the
oral or written request of an employee that includes information
sufficient to inform the contractor that the employee is seeking to be
absent from work for a purpose described in paragraph (c)(1) of this
section and, to the extent reasonably feasible, the anticipated
duration of the leave. The employee's request shall be directed to the
appropriate personnel pursuant to a contractor's policy or, in the
absence of a formal policy, any personnel who typically receive
requests for other types of leave or otherwise address scheduling
issues on behalf of the contractor.
(2) If the need for leave is foreseeable, the employee's request
shall be made at least 7 calendar days in advance. If the employee is
unable to request leave at least 7 calendar days in advance, the
request shall be made as soon as is practicable. When an employee
becomes aware of a need to take paid sick leave less than 7 calendar
days in advance, it should typically be practicable for the employee to
make a request for leave either the day the employee becomes aware of
the need to take paid sick leave or the next business day. In all
cases, however, the determination of when an employee could practicably
make a
[[Page 9663]]
request must take into account the individual facts and circumstances.
(3)(i) A contractor may communicate its grant of a request to use
paid sick leave either orally or in writing provided that the
contractor also complies with the requirement in paragraph (a)(2) of
this section to inform the employee in writing of the amount of paid
sick leave the employee has available for use.
(ii) A contractor shall communicate any denial of a request to use
paid sick leave in writing, with an explanation for the denial. Denial
is appropriate if, for example, the employee did not provide sufficient
information about the need for paid sick leave; the reason given is not
consistent with the uses of paid sick leave described in paragraph
(c)(1) of this section; the employee did not indicate when the need
would arise; the employee has not accrued, and will not have accrued by
the date of leave anticipated in the request, a sufficient amount of
paid sick leave to cover the request (in which case, if the employee
will have any paid sick leave available for use, only a partial denial
is appropriate); or the request is to use paid sick leave during time
the employee is scheduled to be performing non-covered work. If the
denial is based on insufficient information provided in the request,
such as if the employee did not state the time of an appointment with a
health care provider, the contractor must permit the employee to submit
a new, corrected request. If the denial is based on an employee's
request to use paid sick leave during time she is scheduled to be
performing non-covered work, the denial must be supported by records
adequately segregating the employee's time spent on covered and non-
covered contracts.
(iii) A contractor shall respond to any request to use paid sick
leave as soon as is practicable after the request is made. Although the
determination of when it is practicable for a contractor to provide a
response will take into account the individual facts and circumstances,
it should in many circumstances be practicable for the contractor to
respond to a request immediately or within a few hours. In some
instances, however, such as if it is unclear at the time of the request
whether the employee will be working on or in connection with a covered
or non-covered contract at the time for which paid sick leave is
requested, as soon as practicable could mean within a day or no longer
than within a few days.
(e) Certification or documentation for leave of 3 or more
consecutive full workdays. (1)(i) A contractor may require
certification issued by a health care provider to verify the need for
paid sick leave used for the purposes described in paragraphs
(c)(1)(i), (ii), or (iii) of this section only if the employee is
absent for 3 or more consecutive full workdays. The contractor shall
protect the confidentiality of any certification as required by Sec.
13.25(d).
(ii) A contractor may only require documentation from an
appropriate individual or organization to verify the need for paid sick
leave used for the purposes described in paragraph (c)(1)(iv) of this
section only if the employee is absent for 3 or more consecutive full
workdays. The contractor may only require that such documentation
contain the minimum necessary information establishing a need for the
employee to be absent from work. The contractor shall not disclose any
verification information and shall maintain confidentiality about the
domestic abuse, sexual assault, or stalking, as required by Sec.
13.25(d).
(2) If certification or documentation is to verify the illness,
injury, or condition, need for diagnosis, care, or preventive care, or
activity related to domestic violence, sexual assault, or stalking of
an individual related to the employee as described in paragraph
(c)(1)(iii) of this section, a contractor may also require the employee
to provide reasonable documentation or a statement of the family or
family-like relationship. This documentation may take the form of a
simple written statement from the employee or could be a legal or other
document proving the relationship, such as a birth certificate or court
order.
(3)(i) A contractor may only require certification or documentation
if the contractor informs an employee before the employee returns to
work that certification or documentation will be required to verify the
use of paid sick leave if the employee is absent for 3 or more
consecutive full workdays.
(ii) A contractor may require the employee to provide certification
or documentation within 30 days of the first day of the 3 or more
consecutive full workdays of paid sick leave but may not set a shorter
deadline for its submission.
(iii) While a contractor is waiting for or reviewing certification
or documentation, it must treat the employee's otherwise proper request
for 3 or more consecutive full workdays of paid sick leave as valid. If
the contractor ultimately does not receive certification or
documentation, or if the certification or documentation the employee
provides is insufficient to verify the employee's need for paid sick
leave, the contractor may, within 10 calendar days of the deadline for
receiving the certification or documentation or within 10 calendar days
of the receipt of the insufficient certification or documentation,
whichever occurs first, retroactively deny the employee's request to
use paid sick leave. In such circumstances, the contractor may recover
the value of the pay and benefits the employee received but to which
the employee was not entitled, including through deduction from any
sums due to the employee (e.g., unpaid wages, vacation pay, profit
sharing, etc.), provided such deductions do not otherwise violate
applicable Federal or State wage payment or other laws.
(4) A contractor may contact the health care provider or other
individual who created or signed the certification or documentation
only for purposes of authenticating the document or clarifying its
contents. The contractor may not request additional details about the
medical or other condition referenced, seek a second opinion, or
otherwise question the substance of the certification. To make such
contact, the contractor must use a human resources professional, a
leave administrator, or a management official. The employee's direct
supervisor may not contact the employee's health care provider unless
there is no other appropriate individual who can do so. The
requirements of the Health Insurance Portability and Accountability Act
(HIPAA) Privacy Rule, set forth at 45 CFR parts 160 and 164, must be
satisfied when individually identifiable health information of an
employee is shared with a contractor by a HIPAA-covered health care
provider.
(f) Interaction with other laws and paid time off policies. (1)
General. Nothing in Executive Order 13706 or this part shall excuse
noncompliance with or supersede any applicable Federal or State law,
any applicable law or municipal ordinance, or a collective bargaining
agreement requiring greater paid sick leave or leave rights than those
established under the Executive Order and this part.
(2) SCA and DBA requirements. (i) Paid sick leave required by
Executive Order 13706 and this part is in addition to a contractor's
obligations under the Service Contract Act and Davis-Bacon Act. A
contractor may not receive credit toward its prevailing wage or fringe
benefit obligations under those Acts for any paid sick leave provided
in satisfaction of the requirements of Executive Order 13706 and this
part.
(ii) A contractor may count the value of any paid sick time
provided in excess of the requirements of Executive Order 13706 and
this part (and any other law) toward its obligations under the Service
[[Page 9664]]
Contract Act or Davis-Bacon Act in keeping with the requirements of
those Acts.
(3) FMLA. A contractor's obligations under the Executive Order and
this part have no effect on its obligations to comply with, or ability
to act pursuant to, the Family and Medical Leave Act. Paid sick leave
may be substituted for (that is, may run concurrently with) unpaid FMLA
leave under the same conditions as other paid time off pursuant to 29
CFR 825.207. As to time off that is designated as FMLA leave and for
which an employee uses paid sick leave, all notices and certifications
that satisfy the FMLA requirements set forth at 29 CFR 825.300 through
300.308 will satisfy the request for leave and certification
requirements of paragraphs (d) and (e) of this section.
(4) State and local paid sick time laws. A contractor's compliance
with a State or local law requiring that employees be provided with
paid sick time does not excuse the contractor from compliance with its
obligations under the Executive Order 13706 or this part. A contractor
may, however, satisfy its obligations under the Order and this part by
providing paid sick time that fulfills the requirements of a State or
local law provided that the paid sick time is accrued and may be used
in a manner that meets or exceeds the requirements of the Order and
this part.
(5) Other paid time off policies. The paid sick leave requirements
of Executive Order 13706 and this part need not have any effect on a
contractor's voluntary paid time off policy, whether provided pursuant
to a collective bargaining agreement or otherwise. A contractor's
existing paid time off policy (if provided in addition to the
fulfillment of Service Contract Act or Davis-Bacon Act obligations, if
applicable) will satisfy the requirements of the Executive Order and
this part if the paid time off is made available to all employees
described in Sec. 13.3(a)(2) (other than those excluded by Sec.
13.4(e)); may be used for at least all of the purposes described in
paragraph (c)(1) of this section; is provided in a manner and an amount
sufficient to comply with the rules and restrictions regarding the
accrual of paid sick leave set forth in paragraph (a) of this section
and regarding maximum accrual, carryover, reinstatement, and payment
for unused leave set forth in paragraph (b) of this section; is
provided pursuant to policies sufficient to comply with the rules and
restrictions regarding use of paid sick leave set forth in paragraph
(c) of this section, regarding requests for leave set forth in
paragraph (d) of this section, and regarding certification and
documentation set forth in paragraph (e) of this section, at least with
respect to any paid time off used for the purposes described in
paragraph (c)(1) of this section; and is protected by the prohibitions
against interference, discrimination, and recordkeeping violations
described in Sec. 13.6 and the prohibition against waiver of rights
described in Sec. 13.7, at least with respect to any paid time off
used for the purposes described in paragraph (c)(1) of this section.
Sec. 13.6 Prohibited acts.
(a) Interference. (1) A contractor may not in any manner interfere
with an employee's accrual or use of paid sick leave as required by
Executive Order 13706 or this part.
(2) Interference includes, but is not limited to, miscalculating
the amount of paid sick leave an employee has accrued, denying or
unreasonably delaying a response to a proper request to use paid sick
leave, discouraging an employee from using paid sick leave, reducing an
employee's accrued paid sick leave by more than the amount of such
leave used, transferring the employee to work on non-covered contracts
to prevent the accrual or use of paid sick leave, disclosing
confidential information provided in certification or other
documentation provided to verify the need to use paid sick leave, or
making the use of paid sick leave contingent on the employee's finding
a replacement worker or the fulfillment of the contractor's operational
needs.
(b) Discrimination. (1) A contractor may not discharge or in any
other manner discriminate against any employee for:
(i) Using, or attempting to use, paid sick leave as provided for
under Executive Order 13706 and this part;
(ii) Filing any complaint, initiating any proceeding, or otherwise
asserting any right or claim under Executive Order 13706 or this part;
(iii) Cooperating in any investigation or testifying in any
proceeding under Executive Order 13706 or this part; or
(iv) Informing any other person about his or her rights under
Executive Order 13706 or this part.
(2) Discrimination includes, but is not limited to, a contractor's
considering any of the actions described in paragraph (b)(1) of this
section as a negative factor in employment actions, such as hiring,
promotions, or disciplinary actions, or a contractor's counting paid
sick leave under a no fault attendance policy.
(c) Recordkeeping. A contractor's failure to make and maintain or
to make available to authorized representatives of the Wage and Hour
Division records for inspection, copying, and transcription as required
by Sec. 13.25, or any other failure to comply with the requirements of
Sec. 13.25, constitutes a violation of Executive Order 13706, this
part, and the underlying contract.
Sec. 13.7 Waiver of rights.
Employees cannot waive, nor may contractors induce employees to
waive, their rights under Executive Order 13706 or this part.
Subpart B--Federal Government Requirements
Sec. 13.11 Contracting agency requirements.
(a) Contract clause. The contracting agency shall include the
Executive Order paid sick leave contract clause set forth in appendix A
of this part in all covered contracts and solicitations for such
contracts, as described in Sec. 13.3, except for procurement contracts
subject to the Federal Acquisition Regulations (FAR) in title 48 of the
Code of Federal Regulations. The required contract clause directs, as a
condition of payment, that all employees performing work on or in
connection with covered contracts shall be permitted to accrue and use
paid sick leave as required by Executive Order 13706 and this part. For
procurement contracts subject to the FAR, contracting agencies must use
the clause set forth in the FAR developed to implement part 13. Such
clause will accomplish the same purposes as the clause set forth in
appendix A and be consistent with the requirements set forth in part
13.
(b) Failure to include the contract clause. Where the Department of
Labor or the contracting agency discovers or determines, whether before
or subsequent to a contract award, that a contracting agency made an
erroneous determination that Executive Order 13706 and this part did
not apply to a particular contract and/or failed to include the
applicable contract clause in a contract to which the Executive Order
and this part apply, the contracting agency, on its own initiative or
within 15 calendar days of notification by an authorized representative
of the Department of Labor, shall incorporate the contract clause in
the contract retroactive to commencement of performance under the
contract through the exercise of any and all authority that may be
needed (including, where necessary, its authority to negotiate or
amend, its authority to pay any necessary additional costs, and its
authority under any contract provision
[[Page 9665]]
authorizing changes, cancellation, and termination).
(c) Withholding. A contracting officer shall, upon his or her own
action or upon written request of the Administrator, withhold or cause
to be withheld from the prime contractor under the covered contract or
any other Federal contract with the same prime contractor, so much of
the accrued payments or advances as may be considered necessary to pay
employees the full amount owed to compensate for any violation of
Executive Order 13706 or this part. In the event of any such violation,
the agency may, after authorization or by direction of the
Administrator and written notification to the contractor, take action
to cause suspension of any further payment or advance of funds until
such violations have ceased. Additionally, any failure to comply with
the requirements of Executive Order 13706 or this part may be grounds
for termination of the right to proceed with the contract work. In such
event, the contracting agency may enter into other contracts or
arrangements for completion of the work, charging the contractor in
default with any additional cost.
(d) Suspending payment. A contracting officer shall, upon his or
her own action or upon the direction of the Administrator and
notification of the contractor, take action to cause suspension of any
further payment or advance of funds to a contractor that has failed to
make available for inspection, copying, and transcription any of the
records identified in Sec. 13.25.
(e) Actions on complaints. (1) Reporting time frame. The
contracting agency shall forward all information listed in paragraph
(e)(2) of this section to the Office of Government Contracts
Enforcement, Wage and Hour Division, U.S. Department of Labor, 200
Constitution Avenue NW., Washington, DC 20210 within 14 calendar days
of receipt of a complaint alleging contractor noncompliance with
Executive Order 13706 or this part or within 14 calendar days of being
contacted by the Wage and Hour Division regarding any such complaint.
(2) Report contents. The contracting agency shall forward to the
Office of Government Contracts Enforcement, Wage and Hour Division,
U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC
20210 any:
(i) Complaint of contractor noncompliance with Executive Order
13706 or this part;
(ii) Available statements by the worker, contractor, or any other
person regarding the alleged violation;
(iii) Evidence that the Executive Order paid sick leave contract
clause was included in the contract;
(iv) Information concerning known settlement negotiations between
the parties, if applicable; and
(v) Any other relevant facts known to the contracting agency or
other information requested by the Wage and Hour Division.
(f) Certified list of employees' accrued paid sick leave. The
contracting officer shall provide to a successor contractor any
predecessor contractor's certified list, provided to the contracting
officer pursuant to Sec. 13.26, of the amounts of unused paid sick
leave that employees have accrued.
Sec. 13.12 Department of Labor requirements.
(a) Notice--(1) Wage Determinations OnLine Web site. The
Administrator will publish and maintain on Wage Determinations OnLine
(WDOL), http://www.wdol.gov, or any successor site, a notice that
Executive Order 13706 creates a requirement to allow employees
performing work on or in connection with contracts covered by Executive
Order 13706 and this part to accrue and use paid sick leave, as well as
an indication of where to find more complete information about that
requirement.
(2) Wage determinations. The Administrator will publish on all wage
determinations issued under the Davis-Bacon Act and the Service
Contract Act a notice that Executive Order 13706 creates a requirement
to allow employees performing work on or in connection with contracts
covered by Executive Order 13706 and this part to accrue and use paid
sick leave, as well as an indication of where to find more complete
information about that requirement.
(b) Notification to a contractor of the withholding of funds. If
the Administrator requests that a contracting agency withhold funds
from a contractor pursuant to Sec. 13.11(c), or suspend payment or
advance of funds pursuant to Sec. 13.11(d), the Administrator and/or
contracting agency shall notify the affected prime contractor of the
Administrator's request to the contracting agency.
Subpart C--Contractor Requirements
Sec. 13.21 Contract clause.
(a) The contractor, as a condition of payment, shall abide by the
terms of the applicable Executive Order paid sick leave contract clause
referred to in Sec. 13.11(a).
(b) The contractor shall include in any covered subcontracts the
applicable Executive Order paid sick leave contract clause referred to
in Sec. 13.11(a) and shall require, as a condition of payment, that
the subcontractor include the contract clause in any lower-tier
subcontracts. The prime contractor and any upper-tier contractor shall
be responsible for the compliance by any subcontractor or lower-tier
subcontractor with the requirements of Executive Order 13706 and this
part, whether or not the contract clause was included in the
subcontract.
Sec. 13.22 Paid sick leave.
The contractor shall allow all employees performing work on or in
connection with a covered contract to accrue and use paid sick leave as
required by Executive Order 13706 and this part.
Sec. 13.23 Deductions.
The contractor may make deductions from the pay and benefits of an
employee who is using paid sick leave only if such deduction qualifies
as a:
(a) Deduction required by Federal, State, or local law, such as
Federal or State withholding of income taxes;
(b) Deduction for payments made to third parties pursuant to court
order;
(c) Deduction directed by a voluntary assignment of the employee or
his or her authorized representative; or
(d) Deduction for the reasonable cost or fair value, as determined
by the Administrator, of furnishing such employee with ``board,
lodging, or other facilities,'' as defined in 29 U.S.C. 203(m) and part
531 of this title.
Sec. 13.24 Anti-kickback.
All paid sick leave used by employees performing on or in
connection with covered contracts must be paid free and clear and
without subsequent deduction (except as set forth in Sec. 13.23),
rebate, or kickback on any account. Kickbacks directly or indirectly to
the contractor or to another person for the contractor's benefit for
the whole or part of the paid sick leave are prohibited.
Sec. 13.25 Records to be kept by contractors.
(a) The contractor and each subcontractor performing work subject
to Executive Order 13706 and this part shall make and maintain during
the course of the covered contract, and preserve for no less than three
years thereafter, records containing the information specified in
paragraphs (a)(1) through (15) of this section for each employee and
shall make them available for inspection, copying, and transcription by
authorized representatives of the Wage and Hour Division of the U.S.
Department of Labor:
[[Page 9666]]
(1) Name, address, and Social Security number of each employee;
(2) The employee's occupation(s) or classification(s);
(3) The rate or rates of wages paid;
(4) The number of daily and weekly hours worked;
(5) Any deductions made;
(6) The total wages paid each pay period;
(7) A copy of notifications to employees of the amount of paid sick
leave the employees have accrued as required under Sec. 13.5(a)(2);
(8) A copy of employees' requests to use paid sick leave, if in
writing, or, if not in writing, any other records reflecting such
employee requests;
(9) Dates and amounts of paid sick leave used by employees (unless
a contractor's paid time off policy satisfies the requirements of
Executive Order 13706 and part 13 as described in Sec. 13.5(f)(5),
leave must be designated in records as paid sick leave pursuant to
Executive Order 13706);
(10) A copy of any written denials of employees' requests to use
paid sick leave, including explanations for such denials, as required
under Sec. 13.5(d)(3);
(11) Any records relating to the certification and documentation a
contractor may require an employee to provide under Sec. 13.5(e),
including copies of any certification or documentation provided by an
employee;
(12) Any other records showing any tracking of or calculations
related to an employee's accrual and/or use of paid sick leave;
(13) A copy of any certified list of employees' unused paid sick
leave provided to a contracting officer in compliance with Sec. 13.26;
(14) Any certified list of employees' unused paid sick leave
received from the contracting agency in compliance with Sec. 13.11(f);
and
(15) The relevant covered contract.
(b) If a contractor wishes to distinguish between an employee's
covered and non-covered work (such as time spent performing work on or
in connection with a covered contract versus time spent performing work
on or in connection with non-covered contracts or time spent performing
work on or in connection with a covered contract in the United States
versus time spent performing work outside the United States, or to
establish that time spent performing solely in connection with covered
contracts constituted less than 20 percent of an employee's hours
worked during a particular workweek), the contractor must keep records
or other proof reflecting such distinctions. Only if the contractor
adequately segregates the employee's time will time spent on non-
covered contracts be excluded from hours worked counted toward the
accrual of paid sick leave. Similarly, only if that contractor
adequately segregates the employee's time may a contractor properly
deny an employee's request to take leave under Sec. 13.5(d) on the
ground that the employee was scheduled to perform non-covered work
during the time she asked to use paid sick leave.
(c) If a contractor is not obligated by the Service Contract Act,
Davis-Bacon Act, or Fair Labor Standards Act to keep records of an
employee's hours worked, such as because the employee is employed in a
bona fide executive, administrative, or professional capacity as those
terms are defined in 29 CFR part 541, and the contractor chooses to use
the assumption permitted by Sec. 13.5(a)(1)(iii), the contractor is
excused from the requirement in paragraph (a)(4) of this section to
keep records of the employee's number of daily and weekly hours worked.
(d)(1) Records relating to medical histories or domestic violence,
sexual assault, or stalking, created by or provided to a contractor for
purposes of Executive Order 13706, whether of an employee or an
employee's child, parent, spouse, domestic partner, or other individual
related by blood or affinity whose close association with the employee
is the equivalent of a family relationship, shall be maintained as
confidential records in separate files/records from the usual personnel
files.
(2) If the confidentiality requirements of the Genetic Information
Nondiscrimination Act of 2008 (GINA) and/or the Americans with
Disabilities Act (ADA) apply to records or documents created to comply
with the recordkeeping requirements in this part, the records and
documents must also be maintained in compliance with the
confidentiality requirements of the GINA and/or ADA as described in 29
CFR 1635.9 and 29 CFR 1630.14(c)(1), respectively.
(3) The contractor shall not disclose any documentation used to
verify the need to use 3 or more consecutive days of paid sick leave
for the purposes listed in Sec. 13.5(c)(1)(iv) (as described in Sec.
13.5(d)(2)) and shall maintain confidentiality about any domestic
abuse, sexual assault, or stalking, unless the employee consents or
when disclosure is required by law.
(e) The contractor shall permit authorized representatives of the
Wage and Hour Division to conduct interviews with employees at the
worksite during normal working hours.
(f) Nothing in this part limits or otherwise modifies the
contractor's recordkeeping obligations, if any, under the Davis-Bacon
Act, the Service Contract Act, the Fair Labor Standards Act, the Family
and Medical Leave Act, Executive Order 13658, their implementing
regulations, or other applicable law.
Sec. 13.26 Certified list of employees' accrued paid sick leave.
Upon completion of a covered contract, a predecessor prime
contractor shall provide to the contracting officer a certified list of
the names of all employees entitled to paid sick leave under Executive
Order 13706 and this part who worked on or in connection with the
covered contract or any covered subcontract(s) at any point during the
12 months preceding the date of completion of the contract, the date
each such employee separated from the contract or covered
subcontract(s) if prior to the date of the completion of the contract,
and the amount of paid sick leave each such employee had available for
use as of the date of completion of the contract or the date each such
employee separated from the contract or subcontract.
Sec. 13.27 Notice.
(a) The contractor must notify all employees performing work on or
in connection with a covered contract of the paid sick leave
requirements of Executive Order 13706 and this part by posting a notice
provided by the Department of Labor in a prominent and accessible place
at the worksite so it may be readily seen by employees.
(b) Contractors that customarily post notices to employees
electronically may post the notice electronically, provided such
electronic posting is displayed prominently on any Web site that is
maintained by the contractor, whether external or internal, and
customarily used for notices to employees about terms and conditions of
employment.
Sec. 13.28 Timing of pay.
The contractor shall compensate an employee for time during which
the employee used paid sick leave no later than one pay period
following the end of the regular pay period in which the paid sick
leave was used.
Subpart D--Enforcement
Sec. 13.41 Complaints.
(a) Any employee, contractor, labor organization, trade
organization, contracting agency, or other person or entity that
believes a violation of the Executive Order or this part has occurred
may file a complaint with any
[[Page 9667]]
office of the Wage and Hour Division. No particular form of complaint
is required. A complaint may be filed orally or in writing. If the
complainant is unable to file the complaint in English, the Wage and
Hour Division will accept the complaint in any language.
(b) It is the policy of the Department of Labor to protect the
identity of its confidential sources and to prevent an unwarranted
invasion of personal privacy. Accordingly, the identity of any
individual who makes a written or oral statement as a complaint or in
the course of an investigation, as well as portions of the statement
which would reveal the individual's identity, shall not be disclosed in
any manner to anyone other than Federal officials without the prior
consent of the individual. Disclosure of such statements shall be
governed by the provisions of the Freedom of Information Act (5 U.S.C.
552, see 29 CFR part 70) and the Privacy Act of 1974 (5 U.S.C. 552a).
Sec. 13.42 Wage and Hour Division conciliation.
After receipt of a complaint, the Administrator may seek to resolve
the matter through conciliation.
Sec. 13.43 Wage and Hour Division investigation.
The Administrator may investigate possible violations of the
Executive Order or this part either as the result of a complaint or at
any time on his or her own initiative. As part of the investigation,
the Administrator may conduct interviews with the relevant contractor,
as well as the contractor's employees at the worksite during normal
work hours; inspect the relevant contractor's records (including
contract documents and payrolls, if applicable); make copies and
transcriptions of such records; and require the production of any
documentary or other evidence the Administrator deems necessary to
determine whether a violation, including conduct warranting imposition
of debarment, has occurred. Federal agencies and contractors shall
cooperate with any authorized representative of the Department of Labor
in the inspection of records, in interviews with employees, and in all
aspects of investigations.
Sec. 13.44 Remedies and sanctions.
(a) Interference. When the Administrator determines that a
contractor has interfered with an employee's accrual or use of paid
sick leave in violation of Sec. 13.6(a), the Administrator will notify
the contractor and the relevant contracting agency of the interference
and request that the contractor remedy the violation. If the contractor
does not remedy the violation, the Administrator shall direct the
contractor to provide any appropriate relief to the affected
employee(s) in the investigative findings letter issued pursuant to
Sec. 13.51. Such relief may include the any pay and/or benefits denied
or lost by reason of the violation; other actual monetary losses
sustained as a direct result of the violation; or appropriate equitable
or other relief. Payment of liquidated damages in an amount equaling
any monetary relief may also be directed unless such amount is reduced
by the Administrator because the violation was in good faith and the
contractor had reasonable grounds for believing it had not violated the
Order or this part. The Administrator may additionally direct that
payments due on the contract or any other contract between the
contractor and the Federal Government be withheld as may be necessary
to provide any appropriate monetary relief. Upon the final order of the
Secretary that monetary relief is due, the Administrator may direct the
relevant contracting agency to transfer the withheld funds to the
Department of Labor for disbursement.
(b) Discrimination. When the Administrator determines that a
contractor has discriminated against an employee in violation of Sec.
13.6(b), the Administrator will notify the contractor and the relevant
contracting agency of the discrimination and request that the
contractor remedy the violation. If the contractor does not remedy the
violation, the Administrator shall direct the contractor to provide
appropriate relief to the affected employee(s) in the investigative
findings letter issued pursuant to Sec. 13.51. Such relief may
include, but is not limited to, employment, reinstatement, promotion,
restoration of leave, or lost pay and/or benefits. Payment of
liquidated damages in an amount equaling any monetary relief may also
be directed unless such amount is reduced by the Administrator because
the violation was in good faith and the contractor had reasonable
grounds for believing the contractor had not violated the Order or this
part. The Administrator may additionally direct that payments due on
the contract or any other contract between the contractor and the
Federal Government be withheld as may be necessary to provide any
appropriate monetary relief. Upon the final order of the Secretary that
monetary relief is due, the Administrator may direct the relevant
contracting agency to transfer the withheld funds to the Department of
Labor for disbursement.
(c) Recordkeeping. When a contractor fails to comply with the
requirements of Sec. 13.25 in violation of Sec. 13.6(c), the
Administrator will request that the contractor remedy the violation. If
the contractor fails to produce required records upon request, the
contracting officer, upon direction of an authorized representative of
the Department of Labor, or under its own action, shall take such
action as may be necessary to cause suspension of any further payment
or advance of funds on the contract until such time as the violations
are discontinued.
(d) Debarment. Whenever a contractor is found by the Secretary to
have disregarded its obligations under the Executive Order or this
part, such contractor and its responsible officers, and any firm,
corporation, partnership, or association in which the contractor or
responsible officers have an interest, shall be ineligible to be
awarded any contract or subcontract subject to the Executive Order for
a period of up to three years from the date of publication of the name
of the contractor or responsible officer on the excluded parties list
currently maintained on the System for Award Management Web site,
http://www.SAM.gov. Neither an order of debarment of any contractor or
its responsible officers from further Government contracts nor the
inclusion of a contractor or its responsible officers on a published
list of noncomplying contractors under this section shall be carried
out without affording the contractor or responsible officers an
opportunity for a hearing before an Administrative Law Judge.
(e) Civil actions to recover greater underpayments than those
withheld. If the payments withheld under Sec. 13.11(c) are
insufficient to reimburse all monetary relief due, or if there are no
payments to withhold, the Department of Labor, following a final order
of the Secretary, may bring an action against the contractor in any
court of competent jurisdiction to recover the remaining amount. The
Department of Labor shall, to the extent possible, pay any sums it
recovers in this manner directly to the employees who suffered the
violation(s) of Sec. 13.6(a) or (b). Any sum not paid to an employee
because of inability to do so within three years shall be transferred
into the Treasury of the United States as miscellaneous receipts.
(f) Retroactive inclusion of contract clause. If a contracting
agency fails to include the applicable contract clause in a contract to
which the Executive Order applies, the contracting agency, on its
[[Page 9668]]
own initiative or within 15 calendar days of notification by an
authorized representative of the Department of Labor, shall incorporate
the contract clause in the contract retroactive to commencement of
performance under the contract through the exercise of any and all
authority that may be needed (including, where necessary, its authority
to negotiate or amend, its authority to pay any necessary additional
costs, and its authority under any contract provision authorizing
changes, cancellation, and termination).
Subpart E--Administrative Proceedings
Sec. 13.51 Disputes concerning contractor compliance.
(a) This section sets forth the procedures for resolution of
disputes of fact or law concerning a contractor's compliance with this
part. The procedures in this section may be initiated upon the
Administrator's own motion or upon request of the contractor.
(b)(1) In the event of a dispute described in paragraph (a) of this
section in which it appears that relevant facts are at issue, the
Administrator will notify the affected contractor(s) and the prime
contractor (if different) of the investigative findings by certified
mail to the last known address.
(2) A contractor desiring a hearing concerning the Administrator's
investigative findings letter shall request such a hearing by letter
postmarked within 30 calendar days of the date of the Administrator's
letter. The request shall set forth those findings that are in dispute
with respect to the violations and/or debarment, as appropriate,
explain how the findings are in dispute including by making reference
to any affirmative defenses.
(3) Upon receipt of a timely request for a hearing, the
Administrator shall refer the case to the Chief Administrative Law
Judge by Order of Reference, to which shall be attached a copy of the
investigative findings letter from the Administrator and response
thereto, for designation to an Administrative Law Judge to conduct such
hearings as may be necessary to resolve the disputed matters. The
hearing shall be conducted in accordance with the procedures set forth
in 29 CFR part 6.
(c)(1) In the event of a dispute described in paragraph (a) of this
section in which it appears that there are no relevant facts at issue,
and where there is not at that time reasonable cause to institute
debarment proceedings under Sec. 13.52, the Administrator shall notify
the contractor(s) of the investigative findings by certified mail to
the last known address, and shall issue a ruling in the investigative
findings letter on any issues of law known to be in dispute.
(2)(i) If the contractor disagrees with the factual findings of the
Administrator or believes that there are relevant facts in dispute, the
contractor shall so advise the Administrator by letter postmarked
within 30 calendar days of the date of the Administrator's letter. In
the response, the contractor shall explain in detail the facts alleged
to be in dispute and attach any supporting documentation.
(ii) Upon receipt of a timely response under paragraph (c)(2)(i) of
this section alleging the existence of a factual dispute, the
Administrator shall examine the information submitted. If the
Administrator determines that there is a relevant issue of fact, the
Administrator shall refer the case to the Chief Administrative Law
Judge in accordance with paragraph (b)(3) of this section. If the
Administrator determines that there is no relevant issue of fact, the
Administrator shall so rule and advise the contractor accordingly.
(3) If the contractor desires review of the ruling issued by the
Administrator under paragraph (c)(1) or the final sentence of
(c)(2)(ii) of this section, the contractor shall file a petition for
review thereof with the Administrative Review Board postmarked within
30 calendar days of the date of the ruling, with a copy thereof to the
Administrator. The petition for review shall be filed in accordance
with the procedures set forth in 29 CFR part 7.
(d) If a timely response to the Administrator's investigative
findings letter is not made or a timely petition for review is not
filed, the Administrator's investigative findings letter shall become
the final order of the Secretary. If a timely response or petition for
review is filed, the Administrator's letter shall be inoperative unless
and until the decision is upheld by an Administrative Law Judge or the
Administrative Review Board or otherwise becomes a final order of the
Secretary.
Sec. 13.52 Debarment proceedings.
(a) Whenever any contractor is found by the Secretary of Labor to
have disregarded its obligations to employees or subcontractors under
Executive Order 13706 or this part, such contractor and its responsible
officers, and any firm, corporation, partnership, or association in
which such contractor or responsible officers have an interest, shall
be ineligible for a period up to three years to receive any contracts
or subcontracts subject to Executive Order 13706 from the date of
publication of the name or names of the contractor or persons on the
excluded parties list currently maintained on the System for Award
Management Web site, http://www.SAM.gov.
(b)(1) Whenever the Administrator finds reasonable cause to believe
that a contractor has committed a violation of Executive Order 13706 or
this part which constitutes a disregard of its obligations to employees
or subcontractors, the Administrator shall notify by certified mail to
the last known address or by personal delivery, the contractor and its
responsible officers (and any firms, corporations, partnerships, or
associations in which the contractor or responsible officers are known
to have an interest), of the finding. The Administrator shall afford
such contractor and any other parties notified an opportunity for a
hearing as to whether debarment action should be taken under Executive
Order 13706 or this part. The Administrator shall furnish to those
notified a summary of the investigative findings. If the contractor or
any other parties notified wish to request a hearing as to whether
debarment action should be taken, such a request shall be made by
letter to the Administrator postmarked within 30 calendar days of the
date of the investigative findings letter from the Administrator, and
shall set forth any findings which are in dispute and the reasons
therefor, including any affirmative defenses to be raised. Upon receipt
of such timely request for a hearing, the Administrator shall refer the
case to the Chief Administrative Law Judge by Order of Reference, to
which shall be attached a copy of the investigative findings letter
from the Administrator and the response thereto, for designation of an
Administrative Law Judge to conduct such hearings as may be necessary
to determine the matters in dispute.
(2) Hearings under this section shall be conducted in accordance
with the procedures set forth in 29 CFR part 6. If no hearing is
requested within 30 calendar days of the letter from the Administrator,
the Administrator's findings shall become the final order of the
Secretary.
Sec. 13.53 Referral to Chief Administrative Law Judge; amendment of
pleadings.
(a) Upon receipt of a timely request for a hearing under Sec.
13.51 (where the Administrator has determined that relevant facts are
in dispute) or Sec. 13.52 (debarment), the Administrator shall refer
the case to the Chief
[[Page 9669]]
Administrative Law Judge by Order of Reference, to which shall be
attached a copy of the investigative findings letter from the
Administrator and response thereto, for designation of an
Administrative Law Judge to conduct such hearings as may be necessary
to decide the disputed matters. A copy of the Order of Reference and
attachments thereto shall be served upon the respondent. The
investigative findings letter from the Administrator and response
thereto shall be given the effect of a complaint and answer,
respectively, for purposes of the administrative proceedings.
(b) At any time prior to the closing of the hearing record, the
complaint (investigative findings letter) or answer (response) may be
amended with the permission of the Administrative Law Judge and upon
such terms as the Administrative Law Judge may approve. For proceedings
pursuant to Sec. 13.51, such an amendment may include a statement that
debarment action is warranted under Sec. 13.52. Such amendments shall
be allowed when justice and the presentation of the merits are served
thereby, provided there is no prejudice to the objecting party's
presentation on the merits. When issues not raised by the pleadings are
reasonably within the scope of the original complaint and are tried by
express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings, and such
amendments may be made as necessary to make them conform to the
evidence. The presiding Administrative Law Judge may, upon reasonable
notice and upon such terms as are just, permit supplemental pleadings
setting forth transactions, occurrences, or events that have happened
since the date of the pleadings and that are relevant to any of the
issues involved. A continuance in the hearing may be granted or the
record left open to enable the new allegations to be addressed.
Sec. 13.54 Consent findings and order.
(a) At any time prior to the receipt of evidence or, at the
Administrative Law Judge's discretion prior to the issuance of the
Administrative Law Judge's decision, the parties may enter into consent
findings and an order disposing of the proceeding in whole or in part.
(b) Any agreement containing consent findings and an order
disposing of a proceeding in whole or in part shall also provide:
(1) That the order shall have the same force and effect as an order
made after full hearing;
(2) That the entire record on which any order may be based shall
consist solely of the Administrator's findings letter and the
agreement;
(3) A waiver of any further procedural steps before the
Administrative Law Judge and the Administrative Review Board regarding
those matters which are the subject of the agreement; and
(4) A waiver of any right to challenge or contest the validity of
the findings and order entered into in accordance with the agreement.
(c) Within 30 calendar days after receipt of an agreement
containing consent findings and an order disposing of the disputed
matter in whole, the Administrative Law Judge shall, if satisfied with
its form and substance, accept such agreement by issuing a decision
based upon the agreed findings and order. If such agreement disposes of
only a part of the disputed matter, a hearing shall be conducted on the
matters remaining in dispute.
Sec. 13.55 Administrative Law Judge proceedings.
(a) Jurisdiction. The Office of Administrative Law Judges has
jurisdiction to hear and decide appeals concerning questions of law and
fact from the Administrator's investigative findings letters issued
under Sec. Sec. 13.51 and 13.52.
(b) Proposed findings of fact, conclusions, and order. Within 20
calendar days of filing of the transcript of the testimony or such
additional time as the Administrative Law Judge may allow, each party
may file with the Administrative Law Judge proposed findings of fact,
conclusions of law, and a proposed order, together with a supporting
brief expressing the reasons for such proposals. Each party shall serve
such proposals and brief on all other parties.
(c) Decision. (1) Within a reasonable period of time after the time
allowed for filing of proposed findings of fact, conclusions of law,
and order, or within 30 calendar days of receipt of an agreement
containing consent findings and order disposing of the disputed matter
in whole, the Administrative Law Judge shall issue a decision. The
decision shall contain appropriate findings, conclusions, and an order,
and be served upon all parties to the proceeding.
(2) If the respondent is found to have violated Executive Order
13706 or this part, and if the Administrator requested debarment, the
Administrative Law Judge shall issue an order as to whether the
respondent is to be subject to the excluded parties list, including
findings that the contractor disregarded its obligations to employees
or subcontractors under the Executive Order or this part.
(d) Limit on scope of review. The Equal Access to Justice Act, as
amended, does not apply to proceedings under this part. Accordingly,
Administrative Law Judges shall have no authority to award attorney's
fees and/or other litigation expenses pursuant to the provisions of the
Equal Access to Justice Act for any proceeding under this part.
(e) Orders. If the Administrative Law Judge concludes a violation
occurred, the final order shall mandate action to remedy the violation,
including any monetary or equitable relief described in Sec. 13.44.
Where the Administrator has sought imposition of debarment, the
Administrative Law Judge shall determine whether an order imposing
debarment is appropriate.
(f) Finality. The Administrative Law Judge's decision shall become
the final order of the Secretary, unless a timely petition for review
is filed with the Administrative Review Board.
Sec. 13.56 Petition for review.
(a) Filing. Within 30 calendar days after the date of the decision
of the Administrative Law Judge (or such additional time as is granted
by the Administrative Review Board), any party aggrieved thereby who
desires review thereof shall file a petition for review of the decision
with supporting reasons. Such party shall transmit the petition in
writing to the Administrative Review Board with a copy thereof to the
Chief Administrative Law Judge. The petition shall refer to the
specific findings of fact, conclusions of law, or order at issue. A
petition concerning the decision on debarment shall also state the
disregard of obligations to employees and/or subcontractors, or lack
thereof, as appropriate. A party must serve the petition for review,
and all briefs, on all parties and the Chief Administrative Law Judge.
It must also timely serve copies of the petition and all briefs on the
Administrator, Wage and Hour Division, and on the Associate Solicitor,
Division of Fair Labor Standards, Office of the Solicitor, U.S.
Department of Labor, Washington, DC 20210.
(b) Effect of filing. If a party files a timely petition for
review, the Administrative Law Judge's decision shall be inoperative
unless and until the Administrative Review Board issues an order
affirming the decision, or the decision otherwise becomes a final order
of the Secretary. If a petition for review concerns only the imposition
of debarment, however, the remainder of
[[Page 9670]]
the decision shall be effective immediately. No judicial review shall
be available unless a timely petition for review to the Administrative
Review Board is first filed.
Sec. 13.57 Administrative Review Board proceedings.
(a) Authority. (1) General. The Administrative Review Board has
jurisdiction to hear and decide in its discretion appeals concerning
questions of law and fact from investigative findings letters of the
Administrator issued under Sec. 13.51(c)(1) or the final sentence of
Sec. 13.51(c)(2)(ii), Administrator's rulings issued under Sec.
13.58, and decisions of Administrative Law Judges issued under Sec.
13.55. In considering the matters within the scope of its jurisdiction,
the Administrative Review Board shall act as the authorized
representative of the Secretary and shall act fully and finally on
behalf of the Secretary concerning such matters.
(2) Limit on scope of review. (i) The Administrative Review Board
shall not have jurisdiction to pass on the validity of any provision of
this part. The Administrative Review Board is an appellate body and
shall decide cases properly before it on the basis of substantial
evidence contained in the entire record before it. The Administrative
Review Board shall not receive new evidence into the record.
(ii) The Equal Access to Justice Act, as amended, does not apply to
proceedings under this part. Accordingly, the Administrative Review
Board shall have no authority to award attorney's fees and/or other
litigation expenses pursuant to the provisions of the Equal Access to
Justice Act for any proceeding under this part.
(b) Decisions. The Administrative Review Board's final decision
shall be issued within a reasonable period of time following receipt of
the petition for review and shall be served upon all parties by mail to
the last known address and on the Chief Administrative Law Judge (in
cases involving an appeal from an Administrative Law Judge's decision).
(c) Orders. If the Administrative Review Board concludes a
violation occurred, the final order shall mandate action to remedy the
violation, including, but not limited to, any monetary or equitable
relief described in Sec. 13.44. Where the Administrator has sought
imposition of debarment, the Administrative Review Board shall
determine whether an order imposing debarment is appropriate.
(d) Finality. The decision of the Administrative Review Board shall
become the final order of the Secretary.
Sec. 13.58 Administrator ruling.
(a) Questions regarding the application and interpretation of the
rules contained in this part may be referred to the Administrator, who
shall issue an appropriate ruling. Requests for such rulings should be
addressed to the Administrator, Wage and Hour Division, U.S. Department
of Labor, Washington, DC 20210.
(b) Any interested party may appeal to the Administrative Review
Board for review of a final ruling of the Administrator issued under
paragraph (a) of this section. The petition for review shall be filed
with the Administrative Review Board within 30 calendar days of the
date of the ruling.
Appendix A to Part 13--Contract Clause
The following clause shall be included by the contracting agency
in every contract, contract-like instrument, and solicitation to
which Executive Order 13706 applies, except for procurement
contracts subject to the Federal Acquisition Regulation (FAR):
(a) Executive Order 13706. This contract is subject to Executive
Order 13706, the regulations issued by the Secretary of Labor in 29
CFR part 13 pursuant to the Executive Order, and the following
provisions.
(b) Paid Sick Leave. (1) The contractor shall permit each
employee (as defined in 29 CFR 13.2) engaged in the performance of
this contract by the prime contractor or any subcontractor,
regardless of any contractual relationship which may be alleged to
exist between the contractor and employee, to earn not less than 1
hour of paid sick leave for every 30 hours worked. The contractor
shall additionally allow accrual and use of paid sick leave as
required by Executive Order 13706 and 29 CFR part 13. The contractor
shall in particular comply with the accrual, use, and other
requirements set forth in 29 CFR 13.5 and 13.6, which are
incorporated by reference in this contract.
(2) The contractor shall provide paid sick leave to all
employees when due free and clear and without subsequent deduction
(except as otherwise provided by 29 CFR 13.24), rebate, or kickback
on any account. The contractor shall provide pay and benefits for
paid sick leave used no later than one pay period following the end
of the regular pay period in which the paid sick leave was taken.
(3) The prime contractor and any upper-tier subcontractor shall
be responsible for the compliance by any subcontractor or lower-tier
subcontractor with the requirements of Executive Order 13706, 29 CFR
part 13, and this clause.
(c) Withholding. The contracting officer shall upon its own
action or upon written request of an authorized representative of
the Department of Labor withhold or cause to be withheld from the
prime contractor under this or any other Federal contract with the
same prime contractor, so much of the accrued payments or advances
as may be considered necessary to pay employees the full amount owed
to compensate for any violation of the requirements of Executive
Order 13706, 29 CFR part 13, or this clause, including any pay and/
or benefits denied or lost by reason of the violation; other actual
monetary losses sustained as a direct result of the violation, and
liquidated damages.
(d) Contract Suspension/Contract Termination/Contractor
Debarment. In the event of a failure to comply with Executive Order
13706, 29 CFR part 13, or this clause, the contracting agency may on
its own action or after authorization or by direction of the
Department of Labor and written notification to the contractor, take
action to cause suspension of any further payment, advance or
guarantee of funds until such violations have ceased. Additionally,
any failure to comply with the requirements of this clause may be
grounds for termination of the right to proceed with the contract
work. In such event, the Government may enter into other contracts
or arrangements for completion of the work, charging the contractor
in default with any additional cost. A breach of the contract clause
may be grounds for debarment as a contractor and subcontractor as
provided in 29 CFR 13.52.
(e) The paid sick leave required by Executive Order 13706, 29
CFR part 13, and this clause is in addition to a contractor's
obligations under the Service Contract Act and Davis-Bacon Act, and
a contractor may not receive credit toward its prevailing wage or
fringe benefit obligations under those Acts for any paid sick leave
provided in satisfaction of the requirements of Executive Order
13706 and 29 CFR part 13.
(f) Nothing in Executive Order 13706 or 29 CFR part 13 shall
excuse noncompliance with or supersede any applicable Federal or
State law, any applicable law or municipal ordinance, or a
collective bargaining agreement requiring greater paid sick leave or
leave rights than those established under Executive Order 13706 and
29 CFR part 13.
(g) Recordkeeping. (1) Any contractor performing work subject to
Executive Order 13706 and 29 CFR part 13 must make and maintain, for
no less than three years from the completion of the work on the
contract, records containing the information specified in paragraphs
(i) through (xv) of this section for each employee and shall make
them available for inspection, copying, and transcription by
authorized representatives of the Wage and Hour Division of the U.S.
Department of Labor:
(i) Name, address, and Social Security number of each employee;
(ii) The employee's occupation(s) or classification(s);
(iii) The rate or rates of wages paid;
(iv) The number of daily and weekly hours worked;
(v) Any deductions made;
(vi) The total wages paid each pay period;
(vii) A copy of notifications to employees of the amount of paid
sick leave the employee has accrued, as required under 29 CFR
13.5(a)(4);
(viii) A copy of employees' requests to use paid sick leave, if
in writing, or, if not in writing, any other records reflecting such
employee requests;
[[Page 9671]]
(ix) Dates and amounts of paid sick leave taken by employees
(unless a contractor's paid time off policy satisfies the
requirements of Executive Order 13706 and part 13 as described in
Sec. 13.5(f)(5), leave must be designated in records as paid sick
leave pursuant to Executive Order 13706);
(x) A copy of any written denials of employees' requests to use
paid sick leave, including explanations for such denials, as
required under 29 CFR 13.5(d)(3);
(xi) Any records reflecting the certification and documentation
a contractor may require an employee to provide under 29 CFR
13.5(e), including copies of any certification or documentation
provided by an employee;
(xii) Any other records showing any tracking of or calculations
related to an employee's accrual or use of paid sick leave;
(xiii) A copy of any certified list of employees' accrued,
unused paid sick leave provided to a contracting officer in
compliance with 29 CFR 13.26;
(xiv) Any certified list of employees' accrued, unused paid sick
leave received from the contracting agency in compliance with 29 CFR
13.11(f); and
(xv) A copy of the relevant covered contract.
(2) If a contractor wishes to distinguish between an employee's
covered and non-covered work, the contractor must keep records or
other proof reflecting such distinctions. Only if the contractor
adequately segregates the employee's time will time spent on non-
covered contracts be excluded from hours worked counted toward the
accrual of paid sick leave. Similarly, only if that contractor
adequately segregates the employee's time may a contractor properly
refuse an employee's request to use paid sick leave on the ground
that the employee was scheduled to perform non-covered work during
the time she asked to use paid sick leave.
(3) In the event a contractor is not obligated by the Service
Contract Act, the Davis-Bacon Act, or the Fair Labor Standards Act
to keep records of an employee's hours worked, such as because the
employee is exempt from the FLSA's minimum wage and overtime
requirements, and the contractor chooses to use the assumption
permitted by 29 CFR 13.5(a)(1)(iii), the contractor is excused from
the requirement in paragraph (1)(d) of this section to keep records
of the employee's number of daily and weekly hours worked.
(4)(i) Records relating to medical histories or domestic
violence, sexual assault, or stalking, created for purposes of
Executive Order 13706, whether of an employee or an employee's
child, parent, spouse, domestic partner, or other individual related
by blood or affinity whose close association with the employee is
the equivalent of a family relationship, shall be maintained as
confidential records in separate files/records from the usual
personnel files.
(ii) If the confidentiality requirements of the Genetic
Information Nondiscrimination Act of 2008 (GINA) and/or the
Americans with Disabilities Act (ADA) apply to records or documents
created to comply with the recordkeeping requirements in this
contract clause, the records and documents must also be maintained
in compliance with the confidentiality requirements of the GINA and/
or ADA as described in 29 CFR 1635.9 and 29 CFR 1630.14(c)(1),
respectively.
(iii) The contractor shall not disclose any documentation used
to verify the need to use 3 or more consecutive days of paid sick
leave for the purposes listed in 29 CFR 13.5(c)(1)(iv) (as described
in 29 CFR 13.5(e)(1)(ii)) and shall maintain confidentiality about
any domestic abuse, sexual assault, or stalking, unless the employee
consents or when disclosure is required by law.
(5) The contractor shall permit authorized representatives of
the Wage and Hour Division to conduct interviews with employees at
the worksite during normal working hours.
(6) Nothing in this contract clause limits or otherwise modifies
the contractor's recordkeeping obligations, if any, under the Davis-
Bacon Act, the Service Contract Act, the Fair Labor Standards Act,
the Family and Medical Leave Act, Executive Order 13658, their
respective implementing regulations, or any other applicable law.
(h) The contractor (as defined in 29 CFR 13.2) shall insert this
clause in all of its covered subcontracts and shall require its
subcontractors to include this clause in any covered lower-tier
subcontracts.
(i) Certification of Eligibility. (1) By entering into this
contract, the contractor (and officials thereof) certifies that
neither it (nor he or she) nor any person or firm who has an
interest in the contractor's firm is a person or firm ineligible to
be awarded Government contracts by virtue of the sanctions imposed
pursuant to section 5 of the Service Contract Act, section 3(a) of
the Davis-Bacon Act, or 29 CFR 5.12(a)(1).
(2) No part of this contract shall be subcontracted to any
person or firm whose name appears on the list of persons or firms
ineligible to receive Federal contracts currently maintained on the
System for Award Management Web site, http://www.SAM.gov.
(3) The penalty for making false statements is prescribed in the
U.S. Criminal Code, 18 U.S.C. 1001.
(j) Interference/Discrimination. (1) A contractor may not in any
manner interfere with an employee's accrual or use of paid sick
leave as required by Executive Order 13706 or 29 CFR part 13.
Interference includes, but is not limited to, miscalculating the
amount of paid sick leave an employee has accrued, denying or
unreasonably delaying a response to a proper request to use paid
sick leave, discouraging an employee from using paid sick leave,
reducing an employee's accrued paid sick leave by more than the
amount of such leave used, disclosing confidential information
provided in certification or other documentation provided to verify
the need to use paid sick leave, or making the use of paid sick
leave contingent on the employee's finding a replacement worker or
fulfilling the contractor's operational needs.
(2) A contractor may not discharge or in any other manner
discriminate against any employee for:
(i) Using, or attempting to use, paid sick leave as provided for
under Executive Order 13706 and 29 CFR part 13;
(ii) Filing any complaint, initiating any proceeding, or
otherwise asserting any right or claim under Executive Order 13706
or 29 CFR part 13;
(iii) Cooperating in any investigation or testifying in any
proceeding under Executive Order 13706 or 29 CFR part 13; or
(iv) Informing any other person about his or her rights under
Executive Order 13706 or 29 CFR part 13.
(k) Waiver. Employees cannot waive, nor may contractors induce
employees to waive, their rights under Executive Order 13706, 29 CFR
part 13, or this clause.
(l) Notice. The contractor must notify all employees performing
work on or in connection with a covered contract of the paid sick
leave requirements of Executive Order 13706, 29 CFR part 13, and
this clause by posting a notice provided by the Department of Labor
in a prominent and accessible place at the worksite so it may be
readily seen by employees. Contractors that customarily post notices
to employees electronically may post the notice electronically,
provided such electronic posting is displayed prominently on any Web
site that is maintained by the contractor, whether external or
internal, and customarily used for notices to employees about terms
and conditions of employment.
(m) Disputes concerning labor standards. Disputes related to the
application of Executive Order 13706 to this contract shall not be
subject to the general disputes clause of the contract. Such
disputes shall be resolved in accordance with the procedures of the
Department of Labor set forth in 29 CFR part 13. Disputes within the
meaning of this contract clause include disputes between the
contractor (or any of its subcontractors) and the contracting
agency, the U.S. Department of Labor, or the employees or their
representatives.
[FR Doc. 2016-03722 Filed 2-24-16; 8:45 am]
BILLING CODE 4510-27-P