Section 3610 of the CARES Act provides broad authority to agencies to reimburse government contractors for paid leave and sick leave expended to keep their employees on staff and ready to perform during the COVID-19 pandemic. The section provides that agencies may modify a contract or other agreement “without consideration” to reimburse contractors for any paid leave, including sick leave, “to keep its employees or subcontractors in a ready state” through September 30, 2020. The reimbursement is limited to the “minimum applicable contract billing rates not to exceed an average of 40 hours per week,” but it appears the authority can be used broadly to ensure contractors are fully prepared to resume performance when the crisis subsides. While the provision references the use of this authority “to protect the life and safety of government and contractor personnel,” it does not limit the use of the authority to that situation, instead referencing that as but one example of the situations in which the authority may be used.

The authority does, however, have limitations. It only applies to a contractor whose employees or subcontractors cannot perform work on a site that has been approved by the federal government, including a federally-owned or leased facility or site, due to facility closures or other restrictions. Further, this provision is restricted to employees who cannot telework because their job duties cannot be performed remotely during the public health emergency. Finally, the maximum reimbursement authorized by Section 3610 will be reduced by the amount of credit a contractor is allowed per the payroll tax credit provisions of the Families First Coronavirus Relief Act and any applicable credits a contractor is allowed under the CARES Act (for further information on the tax benefits under the CARES Act please refer to Business Tax Benefits.