Recent legislation significantly expanded many workers’ entitlement to paid sick leave and paid family leave. These new benefits take effect on April 1st. Our employment and benefits experts have described those requirements in a series of posts, including overviews here and here, and New York-specific considerations here. Federal government contractors should pay particular attention to these new benefits and the way they interact with other paid sick leave requirements.
For several years, companies with contracts covered by the McNamara-O’Hara Service Contract Act (“SCA”) and the Davis-Bacon Act have been required to provide 56 hours of paid sick leave to their workers. Those requirements stem from Executive Order 13706, and covered employees may use the associated sick leave hours for a wide range of circumstances. The implementing regulations contain detailed procedural rights and protections for employees, and some defined rights for employers to guard against fraud and abuse of the benefits.
The Families First Coronavirus Response Act (“FFCRA”), as amended by the CARES Act, requires nearly all companies with 50 to 499 employees to provide 80 hours of paid sick leave. Although the number of hours is generous, these benefits are limited in time and scope: they expire at the end of December 2020; and can be used only for specific purposes related to Covid-19. In addition, contractors may be reimbursed for associated costs through refundable tax credits. Because of short deadlines in the FFCRA, the Labor Department’s Wage & Hour Division has been issuing helpful guidance in the form of Q&A on its website.
Federal service contractors raised several questions after FFCRA passed, including whether they could apply any portion of the existing 56 hours to satisfy the FFCRA and CARES Act requirements. The answer from the Wage & Hour Division is a clear “no.” The website lists the following hypothetical and response:
- Q: If I take paid sick leave under the [FFCRA], does that count against other types of paid sick leave to which I am entitled under State or local law, or my employer’s policy?
- A: No. Paid sick leave under the [FFCRA] is in addition to other leave provided under Federal, State, or local law; an applicable collective bargaining agreement; or your employer’s existing company policy.
That phrase – “in addition to” – appeared in an earlier version of the FFCRA, but was removed in the final version of the bill. That change led some observers to surmise that the deletion signaled an intent to give some credit for existing paid sick leave. At the same time, the bill retained other language explaining that the new paid sick leave would not “in any way diminish the rights or benefits that an employee is entitled to under any other Federal, State, or local law; collective bargaining agreement; or existing employer policy.”
The Labor Department’s position resolved any doubt about its interpretation of the FFCRA: the 80 hours must come on top of the 56 hours required by Executive Order 13706.
This situation continues to be dynamic, but federal contractors can take prudent steps to review their procedures and ensure the well-being of their workforce:
- Monitor Wage & Hour Division guidance. Until more formal regulations are issued, these bulletins and online resources will be the most authoritative source of the government’s views.
- Track FFCRA paid sick leave carefully. Ensure that human resources departments accurately account for different types of paid sick leave, and do not inadvertently “diminish the rights or benefits” of an employee covered by Executive Order 13706. Pay particular attention to the procedural rules that apply to “standard” paid sick leave, and consider how they may apply to FFCRA paid sick leave.
- Maintain guardrails around bona fide fringe benefits. The Service Contract Act requires covered contractors to offer bona fide fringe benefits, but prohibits them from claiming credit for benefits that are required by other laws. When Executive Order 13706 was issued, the Department recognized the complexity of disentangling the value of existing bona fide paid sick leave benefits, and eventually published new, lower wage determination rates for contractors impacted by both the SCA and the Executive Order. We have not seen a similar initiative for FFCRA paid sick leave.
- Update employment handbooks and policy manuals. Consider publishing an addendum to existing policies to explain these (temporary) rules to covered employees. The update could also be an opportunity to distribute the new required poster that explains these benefits.
- Stay tuned for legislative updates… and potential expansions. While the CARES Act was in progress, the Democratic-led House released a competing bill that would have significantly expanded the scope of paid sick leave benefits. Influential Democratic Senators made similar efforts in their own chamber’s debate. We expect to see these initiatives continue when Congress considers the next tranche of Covid-19 legislation.
As always, we hope our readers and their families are safe and healthy. For additional resources to help respond to Covid-19, please visit our Toolkit.
This post appears concurrently on other Covington blogs, including Inside Government Contracts.