[Federal Register Volume 83, Number 163 (Wednesday, August 22, 2018)]
[Rules and Regulations]
[Pages 42569-42570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17824]





48 CFR Parts 1, 11, 22, and 52

[FAC 2005-100; FAR Case 2017-001, Item I; Docket No. 2017-0001; 
Sequence No. 1]
RIN 9000-AN27

Federal Acquisition Regulation; Paid Sick Leave for Federal 

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.


SUMMARY: DoD, GSA, and NASA are adopting as final, without change, an 
interim rule amending the Federal Acquisition Regulation (FAR) to 
implement the Executive Order (E.O.), Establishing Paid Sick Leave for 
Federal Contractors. The interim rule also implemented a final rule 
issued by the Department of Labor.

DATES: Effective: August 22, 2018.

FOR FURTHER INFORMATION CONTACT: Ms. Zenaida Delgado, Procurement 
Analyst, at 202-969-7207 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat Division at 202-501-4755. Please cite FAC 2005-100, FAR 
Case 2017-001.


I. Background

    DoD, GSA, and NASA published an interim rule in the Federal 
Register at 81 FR 91627 on December 16, 2016, to implement E.O. 13706, 
Establishing Paid Sick Leave for Federal Contractors. The E.O. was 
signed September 7, 2015, and was published in the Federal Register at 
80 FR 54697 on September 10, 2015. The E.O. seeks to increase 
efficiency and cost savings in the work performed by parties who 
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 sick leave for family care. The interim FAR 
rule also implemented the final rule issued by the Wage and Hour 
Division of the Department of Labor (DOL) to implement E.O. 13706. The 
DOL final rule, entitled ``Establishing Paid Sick Leave for Federal 
Contractors'', was published in the Federal Register at 81 FR 67598 on 
September 30, 2016. Seven respondents submitted comments on the interim 
FAR rule.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the comments in the 
development of the final rule. A discussion of the comments is provided 
as follows:

A. Summary of Significant Changes

    There are no changes to the interim rule.

B. Analysis of Public Comments

    Comment: Six respondents strongly supported the interim FAR rule. 
The respondents stated that the interim rule is necessary to guarantee 
more workers the job and economic security that paid sick days provide, 
reduce workplace contagion, and increase productivity and retention. 
The respondents also presented rationale as to why the interim rule 
will benefit businesses, individual workers, taxpayers, and the 
    Response: Noted.
    Comment: One respondent provided a scenario and asked whether in 
that instance the contract was subject to the requirements of this FAR 
rule. The respondent described a contract action extending the term of 
the contract by exercising an option adjusting the price for 
escalations in labor rates.
    Response: According to DOL (see Notice of Proposed Rulemaking, 81 
FR 9592, published February 25, 2016), unilateral exercise of a 
contract option that has pre-negotiated prices that are subject to 
adjustment due to escalation in labor rates is not a new contract 
covered by E.O. 13706, as implemented in the DOL rule and FAR rule, as 
long as no bilateral negotiations occur (other than any necessary to 
determine and effectuate those pricing adjustments).

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563, Improving Regulation and Regulatory Review, emphasizes the 
importance of quantifying both costs and benefits, of reducing costs, 
of harmonizing rules, and of promoting flexibility. This is not a 
significant regulatory action and, therefore, was not subject to review 
under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated 
September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

IV. Executive Order 13771

    This rule is not subject to E.O. 13771, Reducing Regulation and 
Controlling Regulatory Costs, because this rule is not a significant 
regulatory action under E.O. 12866.

V. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq. The FRFA is summarized as follows:

    DoD, GSA, and NASA are converting to a final rule, without 
change, an interim rule that amended the Federal Acquisition 
Regulation (FAR) to implement Executive Order (E.O.) 13706, 
Establishing Paid Sick Leave for Federal Contractors, dated 
September 7, 2015, and associated Department of Labor (DOL) 
regulatory requirements at 29 CFR part 13. DOL published a final 
regulatory flexibility analysis in their final rule (81 FR 67598 at 
    The FAR rule established requirements for contractors under 
contracts containing the clauses at FAR 52.222-6, Construction Wage 
Rate Requirements, or FAR 52.222-41, Service Contract Labor 
Standards, i.e., ``covered contracts,'' to allow employees to accrue 
and use paid sick leave in accordance with E.O. 13706 and 29 CFR 
part 13. Contractors must also include a paid sick leave contract 
clause in covered subcontracts and require covered subcontractors to 
include the substance of the clause in covered lower-tier contracts.
    No public comments were received in response to the initial 
regulatory flexibility analysis.
    This rule applies to contracts and subcontracts at all tiers 
covered by the Service Contract Labor Standards statute, or the Wage 
Rate Requirements (Construction) statute, which require performance 
in whole or in part within the United States. For procurement 
contracts where employees' wages are governed by the Fair Labor

[[Page 42570]]

Standards Act, this rule applies when the contract exceeds the 
micro-purchase threshold, as defined in FAR 2.101. When performance 
is in part within and in part outside the United States, the rule 
applies to the part of the contract or subcontract performed within 
the United States. Data available through the Federal Procurement 
Data System (FPDS) for Fiscal Year 2015, reveals contracts were 
awarded to 18,874 unique small business vendors for services, which 
contained the FAR clause at 52.222-41, Service Contract Labor 
Standards. Additionally, contracts were awarded to 6,753 unique 
small business vendors for construction, which contained the FAR 
clause at 52.222-6, Construction Wage Rate Requirements, for a total 
of 25,627 unique small businesses.
    The DOL final rule identifies records to be kept by all firms, 
including small entities (29 CFR 13.25). Some records are already 
required under the Fair Labor Standards Act, Service Contract Labor 
Standards statute, the Wage Rate Requirements (Construction) 
statute, and their governing regulations. DOL noted in their final 
rule (81 FR 67598 at 67669) that OMB assigned control number 1235-
0029 for the recordkeeping requirements related to paid sick leave. 
The information collection requirement under 1235-0029 includes 
recordkeeping and regulatory familiarization.
    Regarding initial implementation, DOL assumed firms that need to 
create a sick leave policy will each spend 10 hours of time 
developing this policy, regardless of the number of employees, and 
firms with a program in place will spend one hour, regardless of the 
number of employees. DOL also stated in its final rule that 
``Transfers from small contractors and costs to small contractors in 
Year 1 are less than 0.02 percent of revenues on average and are no 
more than 0.17 percent in any industry''. Therefore, according to 
DOL its final rule would not have a significant impact on small 
businesses. This FAR rule finalizes the interim rule without change 
and neither increases nor decreases the cost of the interim rule (81 
FR 91627), which has been in effect since January 1, 2017.
    There are no known significant alternatives to the rule that 
would accomplish the stated objectives of the E.O. and DOL 
regulation. In its final rule, DOL introduced several changes and 
clarifications that may ease the compliance burden. For instance, 
DOL provided greater detail and clarity about how companies with 
paid time off policies can use those policies to satisfy their 
obligations under the E.O. In addition, if a collective bargaining 
agreement (CBA) ratified before September 30, 2016, applies to an 
employee's work performed on or in connection with a covered 
contract and provides at least 56 hours of paid sick time each year, 
the employee will be exempted from the requirements of the E.O. and 
29 CFR part 13 until CBA termination or January 1, 2020, whichever 
is earlier.
    The rule was also modified to allow employers to meet the 
requirements of this rule through multiemployer plans or other 
funds, plans, or programs. This may ease the burden for those 
employers in industries with transitory or mobile workforces.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
the Small Business Administration.

VI. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies. 
However, the information collection requirements to the paperwork 
burden were previously approved for the DOL regulations under OMB 
Control Numbers 1235-0018, Records to be kept by Employers--Fair Labor 
Standards Act, 1235-0021, Employment Information Form, and 1235-0029, 
Government Contractor Paid Sick Leave.

List of Subjects in 48 CFR Parts 1, 11, 22, and 52

    Government procurement.

    Dated: July 31, 2018.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR parts 1, 11, 22, and 52 
which was published in the Federal Register at 81 FR 91627 on December 
16, 2016, is adopted as a final rule without change.

[FR Doc. 2018-17824 Filed 8-21-18; 8:45 am]