Expansion of Paid Leave Laws May Alter Federal Contractors' Responsibilities

​Federal contractors across the country may have to face a new normal in 2023 when it comes to paid leave obligations. Given that federal paid leave proposals proved unsuccessful over the past two years, many state and local lawmakers are moving toward enacting family and medical leave policies of their own.

Michigan's and Minnesota's legislatures appear to be at the forefront of this initiative, but they are by no means the only states that will see movement in this area in 2023, given the political composition of other state legislatures. This means that federal contractors subject to Executive Order 13706 may need a refresher not only on their existing paid leave obligations, but on the interplay with state and local leave laws that may alter or expand their responsibilities. Here's what federal contractors need to know as we head into this new era.

What Types of Contracts are Impacted?

Not all federal contractors are implicated by Executive Order 13706. Generally, if the contractor is also subject to the federal contractor minimum wage regulations -- typically through a Davis Bacon Act (DBA) or Service Contract Act (SCA) qualifying contract -- they will also be covered by the paid leave obligations. That's because the definition of covered contractor has purposely paralleled those regulations for the paid sick leave rules.

Employers should first confirm whether their government contracts or subcontracts are covered by the SCA or DBA. This will allow you to determine whether you must comply with the Executive Order. Federal contractors that determined they were covered by the federal contractor vaccine mandate are likely subject to the Federal Paid Sick Leave (FPSL) requirements.

Using Leave

The Executive Order requires contractors to provide workers on the qualifying contracts with at least 56 hours of FPSL per year. Contractors have the option to frontload the leave by providing workers with 56 hours of leave at the beginning of each accrual year, or to track accrual by providing workers with one hour of paid sick leave for every 30 hours worked until the 56-hour threshold is met.

Workers may use paid sick leave for a wide variety of purposes: for their own illness or other health care needs, including preventive care; and for the care of a family member or loved one who is ill or needs health care, including preventive care. Paid sick leave expands the definition of family to encompass persons who have a familial-like relationship with the employee, such as a long-time neighbor or close friend.

FPSL goes further than the Family Medical Leave Act (FMLA) by permitting paid leave for issues related to domestic violence, sexual assault, or stalking where the employee or a family member or loved one is a victim. The time off can be used for obtaining counseling, seeking relocation, receiving assistance from a victim services organization, or taking legal action.

The standard for whether an illness, injury, or life event is covered under this rule is very broad. The rule specifically states that it could include a wide variety of situations, such as the common cold, an upset stomach, a headache, a sprained ankle, and similar maladies that go well beyond FMLA-covered serious health conditions.

A contractor's obligations under the Executive Order have no effect on its obligations to comply with the FMLA.

A contractor's compliance with a state or local law requiring that workers be provided with paid sick time does not excuse the contractor from compliance with any of its obligations under the Executive Order. A contractor may, however, satisfy its obligations under the Executive Order 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 all of the requirements of the Executive Order. Where the requirements of an applicable state or local law and the Executive Order differ, satisfying both will require a contractor to comply with the requirement that is more generous to employees.

Similarly, where the requirements of an applicable state or local law and the federal FMLA differ, satisfying both will require a contactor to comply with the requirement that is more generous to employees.

What Should Contractors Do Now?

If you have existing leave policies in place, you should carefully review them for an understanding of how your workers are provided paid sick time and family and medical leave. You will want to determine whether you have federal contractors working in states where state and/or local laws have been or may be enacted that provide more generous family and medical leave than your existing policies.

For example, Colorado, Oregon, and New York have all made changes that have gone into effect at the beginning of 2023 or will go into effect sometime in 2024. We anticipate that states such as Minnesota and Michigan, where Democrats are taking control of the legislatures, will take strides to expand state paid family and medical leave as soon as practicable.

California, Connecticut, Hawaii, New Jersey, Rhode Island, and Washington have updated paid family and medical leave premium rates annually. Although the 2023 rates have not yet been announced for these states, employers with employees in these states should keep an eye out for the updated 2023 rates and adjust as necessary.

Given that contractors must comply with the requirement that is more generous to employees, the failure to provide workers with the proper amount of leave may result in penalties and fines under the Executive Order, state laws or local laws. For this reason, it is imperative that contractors have safeguards in place to monitor worker locations, policy language, and state and local law developments.

Cheryl L. Behymer and Andreas Mosby are attorneys with Fisher Phillips in Columbia, S.C. © 2023. All rights reserved. Reprinted with permission.