The U.S. Department of Labor (DOL) announced a final rule Thursday requiring federal contractors to provide paid sick leave to employees who work on or in connection with certain federal contracts. The final rule implements an executive order issued by President Obama in September 2015 and requires federal contractors to provide up to seven days of paid sick leave per year to their employees. The DOL anticipates that the final rule will directly affect more than 1 million people once it takes effect.

The rule applies to federal contracts entered into on or after January 1, 2017. While the rule applies to most federal contracts, there are certain narrow exclusions including grants, contracts and agreements with Native American tribes, certain procurement contracts for construction, and service contracts that are exempted from coverage under the McNamara-O'Hara Service Contract Act.

Pursuant to the final rule, employees of covered contractors must accrue paid sick leave at a rate of one hour for every 30 hours worked. Contractors may not set a limit on the total accrual of paid sick leave per year at less than 56 hours (or seven days). The DOL noted that the leave requirement sets a floor and does not supersede any local, state, or federal law—or collective bargaining agreement—that offers greater leave rights. Additionally, contractors are free to offer more generous amounts of paid sick leave at their discretion.

Contractors are required to carry over an employee's unused sick leave from one year to the next and accrued paid sick leave must be reinstated for employees rehired by a covered contractor within 12 months. However, an employer will not be required to pay an employee for unused leave after job separation.

The final rule also explains that a contractor's existing paid leave policy can satisfy the requirements as long as it provides employees with at least the same rights and benefits as the final rule.

An employee may use accrued paid sick leave for:

• An employee’s own physical or mental illness, injury, or medical condition; 

• Obtaining diagnosis, care, or preventative care from a health care provider; 

• Caring for a child, a parent, a spouse, a partner, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship who has a qualifying condition or need for care; or

• Absence necessary due to domestic violence, sexual assault, or stalking, where the absence is due to the employee’s own medical condition or the need to obtain counseling, to seek relocation, to seek assistance from a victim services organization, to take related legal action, or to assist a covered relative in doing so.

Under the final rule, an employee's request to use paid sick leave may be made orally or in writing. A leave request must be made at least seven calendar days in advance where the need to the leave is foreseeable, and in other cases as soon as is practical. Contractors are required to explain any denial of a request to use paid sick leave to an employee in writing. Significantly, a contractor's denial cannot be based on whether the employee has found a replacement worker or on the contractor's business needs.

The final rule also provides that covered contractors may only require certification by a health care provider—or documentation from an appropriate individual or organization in the event the leave is used for the purpose of domestic violence, sexual assault, or stalking—for employee absences of three or more consecutive workdays.

The final rule has no effect on a contractor's obligations to comply with the Family Medical Leave Act (FMLA). Paid sick leave may run concurrently with unpaid FMLA leave and all notices and certifications that satisfy FMLA requirements will satisfy the request for leave under the final rule.

Contractors are prohibited from interfering with or in any other manner discriminating against an employee for taking, or attempting to take, paid sick leave as provided for under the final rule or in any manner asserting, or assisting any other employee in asserting, any right or claim related to the final rule.

In recent years, more than 20 cities and states around the country have passed laws mandating paid sick leave. Employers in jurisdictions that already mandate paid leave will face the daunting task of creating paid leave policies that meet potentially conflicting leave mandates and/or attempting to integrate the new leave mandates into existing policies.