On September 30, 2016, The Department of Labor (DOL) published the final rule for Executive Order (EO) 13706 – Establishing Paid Sick Leave for Federal Contractors. The DOL has estimated that an estimated 1.15 million employees will be provided paid sick leave under the final rule. According to the DOL an estimated 594,000 of those employees currently receive no paid sick leave benefits.

President Obama signed the executive order on September 7, 2015; the order requires certain employers to provide employees under federal contracts to earn up to 7 days or more of paid sick leave annually; beginning in 2017.

The final rule provides the roadmap of how EO 13706 will be implemented. The Paid Sick Leave rule applies to those employers who are entering into new contracts on or after January 1, 2017; this rule allows for coordination for those under collective bargaining agreements. Employers are permitted to integrate existing paid time off policies and is not obligated to provide additional paid leave, if current policies provide equivalent or more generous benefits.

The final rule allows for covered employees to:

• Accrue 1 hour of pick sick leave for every 30 hours worked that is either on or in connection with a federal contract up to a maximum of 56 hours in a year.
• Use paid sick leave for:

o Personal illness or health care needs; such as doctor visits
o Care of a family member for illness or health care needs
o Domestic violence victim– purposes resulting from such acts for self or loved ones

• Carry over up to 56 hours of unused paid sick leave year to year when working for the same contractor on covered contracts. May also get the unused paid sick leave back upon returning to work on a covered contract within that same year. Contractors are not required to provide cash-out payments of unused sick pay.


Under the final rule, covered employers are also required to provide accrual balance notifications; as well as display a poster notification to notify employees of the paid sick leave requirements. The DOL has created a printable poster that employers may use, which can be viewed here.


Federal Contractors must familiarize themselves with the new Federal Paid Sick Leave requirements now in preparation for the implementation of these new requirements. Employers should review current policies and update them accordingly. For additional details and links to resources, click here.


Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager. Please click here to view the final rule.


This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.