New Davis Bacon Paid Sick Leave Rules

Fact Sheet: Final Rule to Implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors

Accrual

Under the Final Rule, employees accrue 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. As to employees for whom contractors are not already required to keep records of hours worked pursuant to the DBA, SCA, or FLSA (such as employees who are employed in a bona fide executive, administrative, or professional capacity under FLSA regulations), contractors can use the assumption that the employees are working on or in connection with covered contracts for 40 hours each week. Contractors are also permitted to use an estimate of time their employees work in connection with (rather than on) a covered contract as long as the estimate is reasonable and based on verifiable information.

Maximum Accrual, Carryover, Reinstatement, and Payment for Unused Leave

The Final Rule provides that contractors may limit the amount of paid sick leave employees may accrue to 56 hours each year and must permit employees to carry over accrued, unused paid sick leave from one year to the next. The Final Rule also allows contractors to limit the amount of paid sick leave employees have accrued to 56 hours at any point in time. Furthermore, contractors are required to reinstate employees’ accrued, unused paid sick leave if the employees are rehired by the same contractor within 12 months after a job separation unless contractors provide payment to employees for accrued, unused paid sick leave upon separation. Contractors are not required to pay employees for accrued, unused paid sick leave at the time of a job separation (“cash-out”); however, if they do provide cash-out, they will not be required to reinstate unused leave.