Sonja J. McGill authored the Law360 article titled, “Contractor Sick Leave Creates Two-Tier System,” exploring the Obama administration’s recent sick leave mandate for government contractors and how the move may cause discord at companies where the expansion will not be universal, rather applying only to those servicing the government contract. In particular, McGill explores the impact of the mandate on small businesses, those with 50 or fewer employees, and also speculates as to the future of the regulation (writing from a pre-U.S. presidential election perspective).
Full text of the article is available below and can be accessed (subscription required) on Law360 by clicking here.
Contractor Sick Leave Creates Two-Tier System
The U.S. Department of Labor recently finalized a regulation, effective Dec. 1, 2017, requiring companies who provide, for instance, construction, consulting services such as IT or data processing, concession or child care services, to provide one hour of paid sick leave for every 30 hours of work, or 56 hours (or seven days) per year of paid sick leave for employees who front-load their leave pools with each new calendar year.[1]
The U.S. remains one of the few industrialized nations without a national standard or provision for all employees to receive paid sick leave. Essentially since the Family and Medical Leave Act’s passage in 1993, paid sick leave has been contemplated by lawmakers in a number of contexts. It has only been since several state and local jurisdictions have mandated paid sick leave for their citizens that the groundswell for national paid sick leave has captured any serious attention. California, Washington, D.C., and four other states now require paid sick leave along with cities including Chicago, New York, San Francisco, Minneapolis and Seattle.[2]
Both the Davis Bacon Act and the Service Contract Act establish the wage rates for a host of positions utilized by federal contractors, and set the level of benefits for those workers. Companies who have workers who directly perform the specific services called for by the contract, or their work is necessary to perform the contract but they are not themselves directly performing the services articulated within the statement of work, must be paid the salaries and benefits dictated by those regulations.[3] For larger employers, absorbing a basic level of benefits across the board that satisfies the threshold required by the government for those working on its agreements is an easy proposition.
The same may not, and unsurprisingly likely would not be true, for a small- or medium-sized workforce. Imagine, for instance, a small janitorial service that has “won” as a contract to clean one or two government buildings. The service maintains a regular staff of 50 employees, and it has dedicated 10 of those individuals to cover both federal buildings. Putting aside for this thought exercise the applicability of the Affordable Care Act, is it realistic that the company will get away with (or justify) giving those 10 workers enhanced benefits now mandated by this new regulation? Surely not.
Since the National Labor Relations Board permits any employee to discuss the terms and conditions of his or her employment, how can that company get away with providing enhanced benefits to 10 of its 50-person workforce and not cause a mutiny within? Moreover, what happens if/when one of the 10 staff members falls sick for a couple of weeks, and the company is forced to reassign someone else in his/her place. So, then the company is granting paid sick leave to someone who is fill-in, and then when that person goes back to the nongovernment job site, earns no paid sick leave. How does that work? It likely results in the company losing the fill-in to another janitorial service who can guarantee the fill-in work at another federal job site.
Thomas Perez, the U.S. labor secretary, has openly admitted the ultimate goal of this new regulation is to force a small- or medium-sized company, like the janitorial service, to extend the paid sick leave to all of its 50 employees, irrespective of whether they work on the federal job site.[4] But, how does this regulation make it economically feasible for the janitorial service to give those benefits without crippling predictability amongst its 50 employees?
It is often not so easy for a 50-employee sized employer to absorb or negotiate staff absences as a contractor staffed by 200 employees. There are real-time practical considerations concerning the impact of this new rule for small and medium-sized companies for which there is no easy work-around, no matter the noble goal envisioned by the Obama administration.
Democratic presidential candidate Hillary Clinton’s proposals for Paid Family and Medical Leave from her website seek to achieve the full realization of expanding the FMLA’s coverage that advocates have been unable to do for decades. Thus, it is unlikely the new rule is revoked if she is elected as our 45th president.[5]
Although Republican presidential candidate Donald Trump has proposed new child care proposals, that proposal revolves primarily around tax credits for the costs of child care and eldercare.[6] There is a provision, however, for six weeks of paid leave for new mothers before returning to work.[7] Trump has promised to cut 70 to 80 percent of federal regulations if he wins the White House.[8] It does seem likely this new rule might be an easy target for his pen since it only becomes effective 19 days before a new president is inaugurated.
Originally published on Law360, Nov. 8, 2016. Posted with permission
[1] Establishing Paid Leave for Federal Contractors, 81 FR 67598 (Sept. 30, 2016). Specifically, companies that perform construction and related services under the Davis Bacon Act and service contracts under the Service Contract Act are now subject to this new regulation, along with concessionaires in primarily federal buildings, or those contracts involving federal property or services, or federal employees
[2] “Overview of Paid Sick Time in the United States,”A Better Balance, Last updated Oct. 6, 2016.
[3] “Practical Steps for Contractor Sick Leave Compliance,” Law360, Oct. 7, 2016.
[4] “U.S. Will Require its Contractors to Provide Paid Sick Leave,” New York Times, Sept. 29, 2016.
[5] “Paid Family and Medical Leave,” www.hillaryclinton.com, May 23, 2016.
[6] “Child Care Reforms that will Make America Great Again,” www.donaldjtrump.com,
[7] Ibid.
To view our COVID-19 Legal Services Resource Directory, please click here.
