Comments Show Sharp Divide on Contractor Paid Sick Leave Rule

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By Ben Penn

April 15 — The business community urged the Labor Department to scale back and clarify a proposal to provide paid sick leave for federal contractor employees, while progressive groups have chimed in with support but also called for language tweaks.

Trade associations representing companies that bid on government contracts, especially in the construction and manufacturing industries, called the DOL's February proposal unduly burdensome, inefficient and ambiguous, according to a Bloomberg BNA analysis of public comments posted on Regulations.gov. Some asked for the rule's outright withdrawal.

Many employer groups, along with management attorneys, wrote to recommend revisions they said would make the final regulation less of a hassle, for instance by exempting employers from the record-keeping provisions if they already offer paid leave.

Unions and worker advocacy organizations that focus on work-family balance hailed the DOL for expanding paid sick leave protections. They said the rule will reduce workplace illness, improve employee productivity and boost efficiency by lowering turnover.

The Department of Defense, echoing a few of the industry concerns over excessive compliance costs, submitted a letter asking the DOL to revise language to address a few technical concerns. The DoD did not outright oppose the regulation.

The DOL's Wage and Hour Division, acting on an executive order from President Barack Obama (173 DLR AA-1, 9/8/15), proposed in February that federal contractors be required to provide workers with up to seven days of paid sick leave per year (36 DLR AA-1, 2/24/16). The proposed rule (RIN 1235-AA13) was published in the Federal Register Feb. 25, and the public comment period ran through April 12.

The regulation would apply to new or renewed contracts starting in 2017. The executive order gives the WHD until Sept. 30 to address the comments and finalize the rule.

Benefits to Government Debated

The National Partnership for Women and Families sought to galvanize public support for the proposal, collecting and submitting to the WHD comments from more than 9,000 individuals across the country. Those comments accounted for nearly one in three of the more than 30,000 overall public comments appearing on Regulations.gov.

The Partnership has advocated for the enactment of paid sick leave policies at the federal, state and local levels. The organization's comments praised the DOL for providing this essential form of “economic security” to an estimated 437,000 new workers on government contracts who currently have no access to paid sick leave.

The proposal carries out the executive order's stated twin goals of efficiency and economy “by extending coverage to the broadest possible set of employees,” the Partnership said.

But efficiency was the subject of much debate, with trade associations arguing that the added compliance costs and burdens placed on government agencies and contractors will wind up having the reverse effect on the procurement process.

The administration's claims of cost savings and productivity improvements “lack evidentiary support,” Amanda Wood, director of labor and employment policy at the National Association of Manufacturers, said in her comments.

Exemptions Sought for CBAs

Unions and business groups shared a concern about the proposal's interaction with existing paid sick leave provisions in collective bargaining agreements, but they differed as to how the DOL should amend its proposed rule.

The AFL-CIO said it “strongly supports” the rulemaking and the department's expansive coverage of employees. The labor federation urged the DOL “to provide flexibility to employers and employees covered by existing collective bargaining agreements in place January 1, 2017, that lack paid sick leave policies that meet or exceed the proposed rule.”

For those contractors that offer paid sick leave through a CBA that falls short of the proposal's terms, the AFL-CIO recommended that the final rule not apply until the CBA expires.

The U.S. Chamber of Commerce and the International Franchise Association in a lengthy, joint letter sought more permanent relief in such scenarios. They asked that DOL carve out contractors from the rule's coverage if their employees are already subject to a labor contract that “provides a sufficient amount of sick or PTO [paid time off] leave.”

Regardless of whether a union contract applies, contractors with existing paid sick leave policies that meet the new requirements should be exempted from further record-keeping mandates, said Michael Eastman, vice president of public policy at the Equal Employment Advisory Council.

LGBT Community Praises Family Definition

The proposed rule allows employees to use their paid time off to care for themselves or a family member, which is defined to include a child, parent, spouse, domestic partner “or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.”

A number of advocates for lesbian, gay, bisexual and transgender rights applauded the agency for its broad definition of family. For instance, the National LGBTQ Task Force in their comments praised the definition for recognizing “that families often transcend biological and legal relationships.”

However, the Chamber and the IFA called this definition “far too extensive and unwieldy for employers.”

DoD Concerned With Successor Terms

Business groups complained that the proposed rule lets employers cash out unused accrued leave when an employee departs a job, but still requires that those hours be reinstated by a successor contractor if the worker is rehired within 12 months.

The DoD said this provision could lead to the government being billed twice for the same leave hours. The DoD recommended that the final rule “consider accrued unused sick leave, for which an employee has received a financial payment, in the same manner as used sick leave.”

Further, the DoD commented that the proposed rule places an “undue burden on contracting officers” who are tasked with ensuring compliance by tracking unused leave hours for successor contractor reinstatement.

Frontloading Leave

The comments also reflected a widespread concern about the proposed rule's language about employer accrual policies.

The WHD said contractors could provide one hour of paid sick leave for every 30 hours worked, or instead frontload at least 56 hours at the start of each year.

Management groups, including the HR Policy Association, took exception to the proposed requirement that unused hours be carried over to the next year even if the employee is eligible for 56 or more hours at the start of every year.

This “carryover requirement is inconsistent with the executive order,” Mark Wilson, vice president of health and employment policy at the HR Policy Association, said in his comments. The carryover is “unnecessary as the employee receives a full bank of hours at the start of each year,” he said.

Worker Groups Seek Broader Coverage

Several of the labor and worker advocacy organizations, while appreciative of the DOL's broad coverage of employees, asked that the final rule extend paid leave access to workers on more types of federal contracts.

The National Women's Law Center wrote that the proposal unnecessarily carves out exemptions for contractors providing services not covered by the Service Contract Act.

“This narrower interpretation is not necessary, and the proposed rule could—and should—apply to procurement contracts for services beyond the scope of the SCA,” the NWLC said.

The proposal's exemptions include Fair Labor Standards Act-exempt employees, certain public utilities contracts, certain contracts for carriage by common carriers, and certain contracts with the U.S. Postal Service.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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