Obama’s Sick Leave Order Survives Under Trump, for Now

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By Ben Penn

An Obama executive order mandating sick leave for federal contractor employees, once considered primed for reversal by the Trump administration, may be here to stay.

The order requiring federal contractors to provide paid sick leave went into effect more than three months ago. The new conventional wisdom is that the paid leave mandate may no longer be a priority target for repeal and just might endure even after top Labor Department personnel are confirmed.

That the president’s daughter champions paid parental leave has further complicated the situation.

“With all of the things the new administration is trying to accomplish, these regulations may be the equivalent of eating dessert after a big meal: it may come much later or one’s plate may be too full to have the appetite to get it at all,” Eric Crusius, who represents government contractors as a senior counsel at Holland & Knight in Washington, told Bloomberg BNA.

The DOL’s 2016 rule implementing the executive order mandated that companies bidding on service and construction contracts must offer employees at least 56 hours of paid leave per year for a personal illness or to care for a family member.

Trump administration officials discussed revising or repealing the paid sick leave order and the DOL’s implementing rules during earlier stages of the transition, sources familiar with the talks told Bloomberg BNA. But in recent weeks, the regulation has taken a back seat, as employer advocates and GOP lawmakers turned their attention to repealing the controversial overtime, fiduciary and “blacklisting” rules.

Administration: ‘Look at What We’ve Done Already’

Ever since the election, one leading contracting advocate has continued to alert various administration and congressional leaders about the need to reconsider the paid sick leave order.

Alan Chvotkin, executive vice president and counsel at the Professional Services Council, said his outreach to the DOL, the Office of Management and Budget and Congress has thus far yielded a consistent reply.

“All of them acknowledged that [sick leave] is among the more burdensome procurement rules and labor policy rules that the Obama administration had imposed, but they’ve also acknowledged that, ‘look at what we’ve done already,’” to rollback other workplace rules, Chvotkin told Bloomberg BNA. “So the sort of response is, ‘give us a little time.‘ And I said, ‘got it, but don’t take too much time.’”

Chvotkin recalled discussing the matter with a Labor Department official within the last month, but declined to specify whether it was a career executive or one of the temporary political appointees, or “beachhead” members, in place beginning Jan. 20.

A DOL spokeswoman said it’s premature to discuss the rules without a labor secretary in place. A White House spokesman told Bloomberg BNA there are no updates as of now on the sick leave EO.

Republicans on the House Education and the Workforce Committee opted not to introduce a Congressional Review Act motion of disapproval to block the paid leave order. They instead prioritized the removal of Obama’s Fair Pay and Safe Workplaces—or “blacklisting"—order. President Donald Trump signed a measure to invalidate the regulation requiring contractors to disclose their labor violation history.

“We’ll continue to work with the administration to roll back harmful regulations while advancing positive reforms, including improving workplace flexibility for families,” Bethany Aronhalt, a spokeswoman for the workforce committee’s GOP office, told Bloomberg BNA in an email.

Wage and Hour Prepares Compliance Aid

The Labor Department's Wage and Hour Division, which is responsible for enforcing the sick leave regulation, hasn't publicized technical assistance since the inauguration.

In another indication that the rule is more likely to remain in place under the new administration, the WHD told Bloomberg BNA that the agency is in the midst of responding to employer questions.

“Because it is so soon after January 1, 2017, few contracts have been awarded that are covered by the EO,” Edwin Nieves, a DOL spokesman, told Bloomberg BNA via email. “WHD has received a number of questions regarding interpretation of certain provisions and implementation of the Final Rule. WHD is preparing responses to those questions, and is also updating training materials to provide further clarification. We anticipate that those materials will be available online later this summer.”

Thomas Perez, Obama’s labor secretary, hailed the sick leave regulation as the administration’s latest use of procurement authority to advance critical worker protections that aren’t moving in Congress. Some 600,000 workers without paid leave last year were projected to become eligible for the new benefits.

“We were glad to see that it’s still in place, and we would hope that if and when Acosta is confirmed he will continue to maintain and enforce the executive order and won’t advocate for rescission,” Vicki Shabo, vice president of the National Partnership for Women and Families, told Bloomberg BNA.

The Partnership was perhaps the most vocal group calling for the executive order. Shabo said she plans on urging Alexander Acosta to enforce it at a meeting after his confirmation, which is expected as soon as late April. The nominee did not discuss the regulation—nor was he asked about it—at his March 22 Senate hearing.

Compliance Begins

Amid the uncertainty, employers wishing to do business with the government are plodding forward.

“Inauguration day came and no changes materialized. In the interim, new contracts have gotten awarded covered by the sick leave obligations,” James Murphy, a former labor and employment counsel for federal contracting heavy-hitters General Dynamics Corp. and Northrop Grumman Corp., told Bloomberg BNA. “We’ve had total radio silence on the issue from the White House and Alex Acosta isn’t yet confirmed, so we’ve had no policy direction from the Department of Labor.”

Murphy now represents government contractor clients for Ogletree Deakins in Washington.

Many companies incorporating a new sick leave clause into contract solicitations previously provided some form of leave benefits but have still been challenged to comply with the EO’s recordkeeping requirements, said Michael Eastman, who advises contractors as a managing counsel at NT Lakis in Washington.

“We have companies with very generous leave policies, some of whom even have unlimited sick leave, who will now need to create processes to track accrual of leave,” Eastman said.

Large, multistate contractors are also wrestling with the scenario in which only a segment of their workforce is covered by the rule.

“The unspoken subtext here with the regulation is that it becomes so difficult to overlay onto existing policies, or to apply precisely, that many contractors throw up their hands and do more than technically they need to,” Murphy said.

Advocacy Continues

As more contracts begin to get awarded with the new requirements in place, the number of employers who would find relief from any presidential repeal will dwindle. But that won’t stop Chvotkin and the PSC from asking for revisions.

“We’re continuing to talk to government officials,” Chvotkin said. “As more officials are designated and take office, the higher I think this will rise” as a priority.

One obstacle Chvotkin and other business groups may face is the need to convince the administration that the sick leave order is unique from the paid family leave plan pushed by influential White House adviser, and President Trump’s daughter, Ivanka Trump.

As weeks of silence on the matter continue inside the government, the realization is settling in among some contractors that the paid sick leave requirements will become entrenched.

Ivanka Trump’s advocacy on the issue “I think is one strong indicator that this is not going to get pulled while other executive orders may get pulled,” Murphy said. “I would have to look at this one very differently from how you looked at contractor blacklisting.”

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

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

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