Executive Order – Establishing Paid Sick Leave for Federal Contractors which becomes effective January 1, 2017.I know, 2017 sounds like it is a long ways away. And yet it’s only 10 months away! Federal contractors adapted to many new compliance requirements in the last two years and it’s not over.

2017 promises to bring more novelties, unless the political landscape changes with the outcome of the presidential elections next November.

However, most experts in the federal contracting world don’t think these issues are going to go away. That’s why federal contractors can’t afford to ignore the implementation of paid sick days, Equal Pay reporting, and the possible reporting on their own workplace violations in large contracts.

Paid sick days

This one is a sure thing. Starting in Janary1, 2017 employees working on federal contracts and subcontracts must receive a minimum of one hour of paid sick leave for every 30 hours worked, up to 56 hours / 7 days per year.

The rule allows workers to use paid sick leave to care for themselves or for a family member, such as a child, parent, spouse or domestic partner, as well as for absences resulting from domestic violence.

Paid sick leave is an accrual policy which means that unused sick leave will roll over from year to year. In addition, the accrued leave will be reinstated for employees who quit or are separated and then rehired within 12 months.

What does this mean for federal contractors?

  1. Update your employee handbook’s leave policies to include unpaid leave;
  2. Plan the 2017 budgets and bids to include the impact of 7 days of paid sick leave for every employee;
  3. Invest in a reliable (and scalable) Human Resource Information System (HRIS) to track hours worked on federal contracts, sick day entitlements and re-hire entitlements. Check with your payroll provider as most offer HRIS capabilities. Check that it can accommodate the new rules on paid sick leave.

Equal Pay Report

The Obama administration is focused on the “wage gap” and pay discrimination. In late January, the Equal Employment Opportunity Commission (EEOC) announced that it will seek pay data from employers with at least 100 staff. The EEO-1 reports are filled by all private sector employers and will of course impact federal contractors of similar size.

This expanded EEO-1 report will include aggregate data on pay ranges and hours worked to the information already collected on race, gender and job categories. The EEOC and the OFCCP will use the data to target enforcement where the largest discrepancies appear.

This proposed rule is open for comments by employers before final implementation expected in 2017.

What does this mean for federal contractors with at least 100 employees?

  1. Conduct a self-analysis to assess risk. Use the proposed reporting tool to identify potential problem spots. Now is a great time to identify and address areas of unexplained pay disparities before the feds ask difficult questions!
  2. Contact your HRIS and payroll vendors. These new obligations will require new programs or updates to systems and software to minimize the administrative burden to collect and compile data.

Self-reporting of workplace violations (akaFair Pay and Safe Workplaces”)

Larger federal contractors with contracts of $500,000 or more will be required to report any violations of in federal labor and employment laws (and their state law equivalent) that occurred in the 3 years before bidding.  The reporting requirement would continue every six months once a contractor has been awarded a contract. 

Contractors will have to report violations regarding wage and hour laws, health and safety, collective bargaining, Family and Medical Leave (FMLA), and discrimination against protected categories. These reports could be used by federal contracting agencies when determining contract awards and more.

No doubt, the Fair Pay and Safe Workplaces regulations would impose an onerous compliance requirement on larger federal contractors. No implementation date has been announced for this one. The outcome of the presidential election might determine its fate.


As for now, federal contractors of all sizes will be well-served to investigate (and maybe invest in) an HR information system through a third party provider or their payroll provider to get ready for paid sick days.