President Signs Executive Order Mandating Paid Sick Leave for Federal Contractors, says DOL Final Rule on Contractor Pay Transparency is Imminent

The latest in a string of presidential actions targeting employers that do business with the federal government is a new Executive Order (EO) that will require federal contractors to provide their employees with paid sick leave. Signed on Labor Day 2015 and effective in 2017, the EO will permit employees working on federal contracts to earn at least one hour of paid sick leave for every 30 hours worked. According to a White House fact sheet, the paid leave mandate will affect approximately 300,000 workers. The White House also announced that the Department of Labor (DOL) will issue a final rule this week to implement Executive Order 13665, which adds pay transparency requirements to existing federal contractor obligations. Specifically, this EO, signed into law on April 8, 2014, adds new prohibitions on discrimination based on the inquiry, discussion, or disclosure of pay.

Paid Leave

Along with calls to increase the minimum wage, the provision of paid time off has been a rallying cry for proponents of the White House's "middle-class economics" agenda. States and localities have been steadily enacting paid sick measures over the last couple of years. The President announced the details of the new EO in Massachusetts, whose paid sick leave law took effect on July 1, 2015.  The DOL has even created a paid leave resource page, noting that "[c]hange has yet to come to Washington, but momentum is growing in the states." The White House stated the DOL will soon release a report, "The Cost of Doing Nothing," that will discuss the "costs to workers, families, businesses, and the nation of not taking action to expand paid family and medical leave . . ." 

As the DOL page emphasizes, efforts to enact a country-wide paid sick leave bill at the federal level have predictably faltered. In a letter dated August 10, 2015, encouraging the President to issue the latest EO, Senator Patty Murray (D-WA) and Reps. Bobby Scott (D-VA) and Rosa DeLauro (D-CT) call for passage of their sponsored bill, the Healthy Families Act, which appears to be the model for the new EO. The Healthy Families Act would require private-sector employers with more than 15 employees to permit each employee to accrue an hour of paid sick time for every 30 hours worked, up to 56 hours per year. The new EO, like the Healthy Families Act, would also permit workers to use their earned paid leave to "care for themselves, a family member, such as a child, parent, spouse, or domestic partner, or another loved one, as well as for absences resulting from domestic violence, sexual assault, or stalking."

The lawmakers acknowledged, however, that "enactment is unlikely to occur" before the end of the President's term. The issuance of the EO, therefore, is a way to achieve the same end—albeit for a more limited group of employees—without congressional approval.

Pay Transparency

The April 8, 2014 Executive Order prohibits federal contractors from retaliating against employees who choose to discuss their compensation. The DOL's Office of Federal Contract Compliance Programs (OFCCP) issued a proposed rule to implement this EO last September. The White House fact sheet claims the OFCCP's final rule on this EO will be released this week. As with the new EO on paid leave, the OFCCP's final rule will apply only to employers that do business with the federal government. Nonetheless, over the past year a number of "pay transparency" bills similarly prohibiting retaliation based on wage discussion or disclosure have been signed into law at the state level. This is yet another example of how states and localities have moved forward with employment initiatives that have failed to gain traction at the federal level.

Overall, the President's use of Executive Orders and Memorandums has caused much consternation in the federal contracting community. In a letter dated August 3, 2015, to White House Chief of Staff Denis McDonough and Senior Adviser Valerie Jarrett, four industry groups took issue with the dozen executive orders President Obama has signed affecting government contractors. According to the industry groups:

Since taking office, President Obama has issued 12 Executive Orders pertaining to government contracting, resulting in 16 new regulations. While we have openly expressed our support for some, suggested changes to others with which we agree on the intent, and raised major concerns about yet others, the net effect has been to significantly increase the costs of doing business with the government. . . . some estimate that nearly thirty cents of every contract dollar goes toward compliance with unique government regulations.

Meanwhile, the federal contracting community is bracing itself for final regulations to implement the Fair Pay and Safe Workplaces Executive Order. The comment period on the so-called "blacklisting" proposed rule recently closed.

Because of congressional gridlock and the looming 2016 elections, it is very unlikely that employment-related legislation will be enacted at the federal level. Therefore, the President is expected to make the most of the remainder of his term and take actions that do not involve Congress to advance his agenda. Federal contractors, therefore, will bear the brunt of these efforts.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.