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Paid Sick Leave for Federal Contractors Is Mandated by Labor Department

Thursday, September 29, 2016

By Noam Scheiber

The Obama administration, in its latest effort to update workplace policies it says have lagged far behind the realities of Americans’ lives, will require federal government contractors to provide paid sick leave to their workers.

The rule, which was issued on Thursday and which the Labor Department estimates will directly impact more than 1.1 million people once fully in effect, enables workers to accrue up to seven days of paid sick leave a year.

“This is really part of a broader conversation across America about what a 21st-century social compact should look like,” Thomas E. Perez, the labor secretary, said in an interview. “Back in the day, when Beaver Cleaver got sick and June Cleaver was home, who takes off to stay with the Beav was a nonissue. In today’s world of dual-career couples in the work force, our public policy has not caught up.”

In recent years, more than 20 cities and states around the country have passed laws mandating paid sick leave, which voters generally support,polls show. New York City passed its own such law in 2013 and expanded it the next year. Republican-leaning Arizona appears on the verge of enacting such a measure by a ballot initiative this fall.

But legislation that would mandate paid sick leave nationwide, notably the so-called Healthy Families Act, has stalled in Congress for years, prompting the administration to seek alternative ways of achieving the policy’s goals. Mr. Perez acknowledged that the Healthy Families Act was the model for the new Labor Department rule, which does not need additional approval.

The rule requires that workers in assignments related to many federal contracts receive one hour of paid sick leave for every 30 hours they work, for up to 56 hours of leave a year. Workers will be able to use the days to receive medical attention, care for a relative or deal with complications arising from domestic violence or sexual assault. Unused leave time can carry over to the next year if the worker remains with the same employer on a contract-related assignment. The rule affects only contracts solicited by the government beginning on Jan. 1, 2017.

Recent estimates suggest that more than 35 percent of private-sector workers do not have access to paid sick leave.

President Obama first signed an executive order requiring federal contractors to provide paid sick leave last September, and the Labor Department unveiled a draft of the rule in February, after which it solicited public comments.

Proponents argue that the benefit can have large social consequences.

“It seems such a minor, sideline type of measure, but it does strike at the core of whether a job is workable within the context of family life,” said Lisa Guide, associate director of the Rockefeller Family Fund, which has financed research and advocacy on this subject. At issue, she said, is “whether a person will be able to take care of their kids and also hold down a job at the same time and pay their bills.”

Others have argued that the impact of paid sick leave extends well beyond the direct beneficiaries by limiting the spread of disease. There is evidence, for example, that a substantial number of the private-sector workers who became ill during the H1N1 pandemic in 2009 were infected by co-workers.

Opponents of the new rule argue that paid sick leave is often a desirable policy in principle, but that the cost of the mandate will be a hardship for many employers, particularly smaller businesses. Among those who will be affected by the rule are franchisees and concessionaires selling food on federal property.

“There are franchise operations in a wide array of locations,” said Marc D. Freedman, executive director of labor law policy at the U.S. Chamber of Commerce. “If someone isn’t providing this benefit, there’s a reason. It isn’t because they’re bad people, evil employers. It’s that you’re imposing a burden on them.”

Studies of the economic impact of existing laws sponsored by groups across the ideological spectrum have found that while the costs to employers of paid sick leave mandates tend to be low on average, they tend to be more significant in certain industries, like food services, where paid sick leave is less common and workers typically are younger.

Critics have questioned the costs of administering the rule even for larger employers. In a comment letter responding to the proposed rule, the Chamber of Commerce and the International Franchise Association called it a “compliance nightmare.”

The letter raised the possibility that a federal contractor in San Francisco would have to make its policies conform to three separate sick leave rules — one for the city, one for the state of California and one for the federal government.

The administration is including language in the final rule to make clear how a contractor’s current sick leave policy can comport with the mandate.

The administration, nodding to critics who said it was undercounting the workers affected by the rule because of faulty methodology, also increased its estimate of the number of workers who will receive some increase in paid sick leave by nearly 300,000.

Some critics say the administration’s true intent is to affect substantially more workers than even the higher estimate. Many companies that win federal contracts, they say, are likely to enact the new paid sick leave policy across their entire work force rather than maintain separate policies, one for workers involved in federal contracts and a less generous one for everyone else.

“In a cynical way, they’re banking on the idea that employers are going to throw up their hands and put everyone under the new plan,” Mr. Freedman said.

Mr. Perez, the labor secretary, essentially responded that he was guilty as charged. “If that’s one of the benefits, the effects of this rule, I will be thrilled,” he said.