New Rules for Federal Contractors, New Challenges for HR

Executive Orders Mean New Rules for Federal Contractors

Authored By: HR Performance on 3/4/2016

A series of new executive orders from President Obama present some new HR law compliance challenges for federal contractors.

In a September 7, 2015 fact sheet, the White House estimated that 40 percent of employees in the private-sector workforce do not have paid sick leave.  Thus, the President targeted federal contractors in this effort by issuing an Executive Order on Paid Sick Leave for Federal Contractors.  The Executive Order (EO) becomes effective on January 1, 2017 and will be applicable to specific federal contracts beginning after this date. However, the Department of Labor is required to publish final rules by September 30, 2016 and federal procurement regulations are due immediately thereafter.  

This EO contains detailed instructions as to how organizations with certain federal contracts are to provide paid sick leave to their employees and their subcontractors’ employees.  Employees on covered government contracts are to receive at least 1 hour of paid sick leave for every 30 hours worked and up to 7 days of paid sick leave annually, which can be used for personal and/or family care.  There is no limit on the amount of accrued paid sick leave that can be carried over from year to year.

If you do not have a qualifying sick leave policy, begin now to prepare. Make sure your HR department begins the documentation of not only which covered employees will be affected but also ensures that your federal procurement procedures flow down the requirements to all covered subcontractors. Once documentation begins, the HR department will need to review the final rules to be sure the tracking and reporting procedures comply.

The President also signed an order requiring that federal contractors not discriminate based on sexual orientation or gender identity. About half the states already prohibit such discrimination in one form or another. Another order mandates such contractors pay a minimum wage of $10.10 per hour. Both rules will take effect after implementing regulations are adopted and finalized later in 2015.

Yet another order requires that certain contractors (those with contracts over $500,000) disclose state and federal labor law violations from the past three years and also gather similar information from their subcontractors. Such violations include problems under the Fair Labor Standards Act, the National Labor Relations Act, the Family and Medical Leave Act, and the anti-discrimination laws. Repeat offenders may not receive federal contracts. The latest executive order also will prohibit companies holding new contracts of more than $1 million from requiring that their employees arbitrate alleged discrimination and harassment claims. These recent executive orders were implemented on new contracts beginning in 2016.

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