Pay Transparency and Paid Sick Leave Obligations May Apply to 2017 Federal Contracts

Contractors and subcontractors, including those contractors paid with federal grant money, need to be aware of new federal regulations regarding paycheck transparency and paid sick leave obligations, as of January 1, 2017. Russel Bruch, associate in Morgan Lewis’ Labor and Employment Practice, and Stephen Ruscus, partner in Morgan Lewis’ FDA and Healthcare Practice, teamed up to author an article for The National Law Review, detailing the changes effected by two executive orders, and the legal cases that resulted from their enactments: Executive Order 13673—Fair Pay and Safe Workplaces and Executive Order 13706—Establishing Paid Sick Leave for Federal Contractors.

Per the Fair Pay and Safe Workplaces executive order, federal contractors must provide a wage statement to all workers performing work under the contract; the statement must include:

  1. Total hours worked that pay period
  2. Total hours worked that were overtime hours that pay period, broken down on a workweek basis
  3. Rate of pay for hours worked
  4. Gross pay for the pay period
  5. Itemized list of deductions or additions from gross pay

The authors note a partial exemption for employees who are exempt from overtime pay under the Fair Labor Standards Act (FLSA). Independent sub-contractors need to be given pay stubs, but the regulation requires that they be given notice of their status as independent contractors before they begin work.

Though the Department of Labor (DOL) has not set a concrete threshold, they specify that if a “significant portion” of a contractor’s workers are not fluent in English, then the wage statements and independent contractor notifications must be provided to them in a relevant language.

The executive order Establishing Paid Sick Leave for Federal Contractors requires the provision of paid sick leave to covered employees; the requirements apply to solicitations issued or contracts awarded on or after January 1, 2017. The authors go on to detail the options that federal contractors have for tracking employee paid sick leave accrual and coordinating it with existing PTO plans.

Employees covered by EO13706 may use paid sick leave in the following situations, while working on or in connection with a federal contract:

  • Personal illness or other health needs, including preventive care
  • Care of family members or loved ones, including close friends, who are ill or need healthcare, including preventive care
  • Healthcare needs resulting from being the victim of domestic violence, sexual assault, or stalking—or to assist a family member or loved one who is a victim of such acts

The authors’ key takeaway are two-fold:

  1. If they intend to enter into federal contracts in 2017, employers need to be aware of the additional costs and administrative burdens associated with these two executive orders
  2. Due to the change in administration, contractors should plan to comply with the requirements of these executive orders, but also remain aware of the possibility of changes by President Trump.

To read the article in full, please visit The National Law Review.