WAGE AND HOUR DIVISION

UNITED STATES DEPARTMENT OF LABOR

Fact Sheet #84: Paid Sick Leave for Federal Contractors

January 2025

Executive Order 13706 (E.O. 13706), Establishing Paid Sick Leave for Federal Contractors, issued on September 7, 2015, requires certain employers that contract with the Federal Government to provide employees with up to seven days of paid sick leave annually, including for family care and absences resulting from domestic violence, sexual assault, and stalking. WHD enforces E.O. 13706 and the regulations implementing E.O. 13706 located at 29 CFR 13.

What contracts are covered by Executive Order 13706?

E.O. 13706 applies to new contracts and replacements for expiring contracts with the Federal Government that result from solicitations issued on or after January 1, 2017 (or that are awarded outside the solicitation process on or after January 1, 2017).

E.O. 13706 applies to four major categories of contractual agreements:

1. Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
2. Service contracts covered by the McNamara-O'Hara Service Contract Act (SCA);
3. Concessions contracts, including any concessions contracts excluded from the SCA by the Department of Labor's regulations at 29 CFR 4.133(b); and
4. Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.

Subcontracts in one or more of these four categories are also subject to the paid sick leave requirements.

Are any contracts with the Federal government excluded from the requirements of E.O. 13706?

E.O. 13706 does not apply to contracts with the Federal Government to the extent they are performed in whole or in part outside the 50 states and the District of Columbia.

In addition, the E.O. does not apply to the following:

1. Grants, as defined in the Federal Grant and Cooperative Agreement Act, as amended.
2. Contracts, agreements, and grants involving Indian Tribes under the Indian Self-Determination and Education Assistance Act, as amended.
3. Contracts for construction that are not subject to the Davis-Bacon Act (i.e., contracts under $2,000) and contracts that are subject only to a Davis-Bacon Related Act, which involve Federal agencies offering financial and other assistance to construction projects via grants, loans, guarantees, insurance, and other methods.
4. Contracts for services that are exempted from coverage under the Service Contract Act or its implementing regulations, except for concession contracts and contracts in connection with Federal property or lands (described above).
5. Contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the Federal Government that are subject to the Walsh-Healey Public Contracts Act.

Which employees are covered by E.O. 13706?

The paid sick leave requirements of E.O. 13706 apply to employees performing work on or in connection with a covered contract and whose wages under such contract are governed by the SCA, DBA, or Fair Labor Standards Act (FLSA), including employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions. An employee performs work "on" a covered contract if the employee directly performs the specific services called for by the contract. An employee performs "in connection with" a contract if the employee's work activities are necessary to the performance of a contract but are not the specific services called for by the contract. Examples include a security guard patrolling or monitoring a construction worksite where DBA-covered work is in progress or a clerk handling payroll processing for SCA contracts.

Are any employees who work on or in connection with covered contracts excluded from the paid sick leave requirements?

The paid sick leave requirements do not apply to employees performing work "in connection with" covered contracts (as opposed to "on" covered contracts), if they spend less than 20 percent of their total work hours in a specific workweek performing in connection with such contracts and do not perform any work on the covered contract during the workweek

What are the rules for accrual, usage, carryover, and certification of paid sick leave under E.O. 13706?

Accrual

Under E.O. 13706, employees accrue one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. For employees for whom contractors are not already required to keep records under the DBA, SCA, or FLSA, contractors can assume that the employees are working on or in connection with covered contracts for 40 hours each week. Contractors may estimate time for employees working "in connection with" (but not "on") a covered contract, provided the estimate is reasonable and verifiable.

Contractors may also provide a minimum of 56 hours of paid sick leave at the start of each accrual year, rather than allowing the employee to accrue leave based on hours worked.

Accrual is calculated, and employees must be notified in writing of the amount of paid sick leave they have available at the end of each pay period or monthly, whichever interval is shorter.

Maximum Accrual, Carryover, Reinstatement, and Payment for Unused Paid Sick Leave

Contractors are permitted to cap the amount of paid sick leave employees may accrue each year at 56 hours. But contractors must allow employees to carryover the unused accrued leave from one year to the next. Contractors also have the option to limit an employee's accrued paid sick leave to 56 hours at any given time.

Additionally, contractors must reinstate accrued, unused paid sick leave for employees rehired within 12 months after a job separation, unless the contractors provide payment for such leave upon separation. While there is no obligation for contractors to provide a "cash-out" for accrued, unused paid sick leave at the time of job separation, those who choose to do so are exempt from the requirement to reinstate unused leave.

Use of Paid Sick Leave

Under E.O. 13706, employees may use paid sick leave for time they would otherwise be working on or in connection with covered contracts if they are absent because of:

1. A physical or mental illness, injury, or medical condition.
2. Obtaining diagnosis, care, or preventive care from a health care provider.
3. Caring for 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 who has any of the conditions or needs for diagnosis, care, or preventive care described in (1) or (2) or is otherwise in need of care.
4. Domestic violence, sexual assault, or stalking, if the time absent from work is for the purposes described in (1) or (2) or to obtain additional counseling, seek relocation, seek assistance from a victim services organization, take related legal action, including preparation for or participation in any related civil or criminal legal proceeding, or assist an individual related to the employee as described in (3) in engaging in any of these activities.

Contractors must allow employees to use paid sick leave in increments as small as one hour, except for very limited cases where the nature of the job makes it physically impossible to leave or return during a shift. An employee may use as much paid sick leave as they have available at the time of the need. When employees use paid sick leave, contractors must ensure employees receive the same regular pay and benefits they would have obtained if they had not taken the leave, except that employees need not accrue additional paid sick leave during the period they are on leave.

Request for Leave

Employees can request paid sick leave by any oral or written method, including in person, by phone, via email, or with a note that is reasonably calculated to provide notice of the employee's intent to take leave. For foreseeable leave, employees must provide notice at least 7 days in advance; otherwise, they must do so as soon as practicable. Contractors must communicate any denial in writing, with an explanation for the denial—which cannot be based on whether the employee has found a replacement worker or on the contractor's operational needs.

Certification or Documentation for leave of 3 or more consecutive full workdays.

A contractor may request certification only for absences lasting three or more consecutive full days. Notice of this requirement must be given to the employee before their return to work. If paid sick leave is used for the reasons described in (1), (2), and (3) listed above, any required certification must be from a health care provider. For leave related to domestic violence, sexual assault, or stalking, the contractor must accept documentation from various sources, including self-certification. Medical records must be kept confidential, and contractors are prohibited from disclosing verification information without employee consent except when disclosure is required by law.

How does the E.O. 13706 interact with other laws and Paid Time Off (PTO) Policies?

Nothing in the E.O. 13706 excuses noncompliance with or supersedes any applicable Federal or State law, any applicable law or municipal ordinance, or a collective bargaining agreement requiring greater paid sick leave or leave rights than those established under the Order.

State or Local Laws

Compliance with state or local laws does not exempt contractors from E.O. 13706, but they can meet obligations by offering accrued paid sick time that also complies with State or local laws, provided the sick time is accrued and may be used in a manner meeting or exceeding E.O. 13706 requirements.

Interaction with SCA and DBA

Paid sick leave required by E.O. 13706 is in addition to a contractor's obligations under the SCA and DBA. A contractor may not receive credit toward its prevailing wage or fringe benefit obligations under those Acts for any paid sick leave provided in satisfaction of the requirements of the Order. However, if a contractor chooses to provide more paid sick time than is required by E.O. 13706, the additional paid sick time could be credited toward SCA or DBA obligations if it is approved by the Department.

SCA Health and Welfare Benefit Rate Adjustment

When the WHD updates the nationwide SCA health and welfare benefit rate, it also announces a lower rate for hours worked on SCA-covered contracts to which E.O. 13706 also applies. This lower rate is intended to account for the costs of employers providing paid sick leave mandated by E.O. 13706, in addition to SCA health and welfare benefits. Contractors not obligated to provide paid sick leave are not entitled to an SCA health and welfare rate reduction.

Interaction with the Family and Medical Leave Act (FMLA)

E.O. 13706 does not affect an employer's obligations under the FMLA. Paid sick leave can run concurrently with unpaid FMLA leave, where the reason for the leave also qualifies as FMLA leave. When an employer designates that E.O. 13706 leave is covered by the FMLA, all notices and certifications meeting FMLA regulatory standards suffice for both FMLA and the leave and certification requirements of E.O. 13706.

Interaction with Existing PTO Policies

Contractors' current PTO policies (provided in addition to SCA and DBA obligations) can meet E.O. 13706 requirements if they offer at least 56 hours of paid leave with same rights and benefits required under E.O. 13706. If a contractor provides 56 hours of PTO meeting the criteria in E.O. 13706 and the implementing regulations, even if the PTO may also be used for non-sick leave purposes, separate paid sick leave is not necessary. For PTO exceeding 56 hours, contractors can either allow all such leave to be used for E.O. 13706 purposes or track and record the amount of paid time off used up to 56 hours annually and provide the full protections required by the Order and the implementing regulations for that time.

Multiemployer Plans

A contractor can meet its obligations under E.O. 13706 by contributing to a multiemployer plan (established under one or more CBAs) to provide employees with access to paid sick leave in compliance with E.O. 13706.

What are the responsibilities of contracting agencies in complying with E.O. 13706 and the implementing regulations?

Contracting agencies must ensure that the applicable paid sick leave contract clause is inserted into covered contracts and solicitations for such contracts. Contracting agencies must also assist the Department of Labor in enforcing the obligations of contractors, such as by withholding funds from contractors that violate E.O. 13706's requirements.

What are the responsibilities of contractors in complying with E.O. 13706 and the implemented regulation?

Contractors with covered contracts must comply with paid sick leave rules and include the E.O. 13706 contract clause in lower-tier subcontracts to ensure that lower-tier subcontractors are aware of its requirements. Record-keeping obligations include maintaining records of accrued sick leave, denials of requests for use of leave, usage dates and amounts, and other accrual and use tracking records. See 29 CFR 13.25(1)-(15).

Contractors must keep confidential any medical records, as well as records related to domestic violence, sexual assault, and stalking.

Additionally, contractors must inform employees about paid sick leave requirements by posting a Department of Labor- provided notice in a prominent and accessible place. Electronic posting is allowed for contractors using electronic notices.

How may complaints be made to the Department?

Any employee, contractor, labor organization, trade organization, contracting agency, or other person or entity that believes a violation of E.O. 13706 has occurred may file a complaint with any office of WHD. No particular form of complaint is required. A complaint may be filed orally or in writing. If the complainant is unable to file the complaint in English, WHD will accept the complaint in any language.

What constitutes a violation of E.O. 13706 or the implementing regulations?

A contractor may not in any manner interfere with an employee's accrual or use of paid sick leave. Interference includes, but is not limited to, miscalculating the amount of paid sick leave an employee has accrued, denying or unreasonably delaying a response to a proper request to use paid sick leave, discouraging an employee from using paid sick leave, reducing an employee's accrued paid sick leave by more than the amount of such leave used, transferring the employee to work on non-covered contracts to prevent the accrual or use of paid sick leave, disclosing confidential information contained in certification or other documentation provided to verify the need to use paid sick leave, or making the use of paid sick leave contingent on the employee's finding a replacement worker or the fulfillment of the contractor's operational needs.

In addition, a contractor may not discharge or in any other manner discriminate against an employee using, or attempting to use, paid sick leave. A contractor may also not discriminate against an employee for filing any complaint, initiating any proceeding, or otherwise asserting any right or claim or cooperating in any investigation or testifying in any proceeding under the Executive Order or the implementing regulations. Nor may a contractor discriminate against an employee for informing any other person about their right to paid sick leave.

If WHD determines that a contractor has interfered with an employee's accrual or use of paid sick leave, discriminated against an employee, or failed to comply with recordkeeping requirements in violation of E.O. 13706 or the implementing regulations, WHD will request that the contractor remedy the violation or provide any appropriate relief to the affected employee(s), such as employment, reinstatement, promotion, restoration of leave, or lost pay and/or benefits. WHD may also direct the payment of liquidated damages. WHD may also direct the contracting agency to withhold payments due to the contractor to provide any appropriate monetary relief. In addition, contractors found to be in violation of the Executive Order may be subject to debarment from future contracts for a period up to three years.