ABC Says Mandatory Paid Sick Leave Will Add Regulatory Burden, Cost

Proposed executive order requires paid sick-leave option for all employees working on contracts subject to Davis-Bacon and Service Contract Acts

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At a Labor Day rally before union members in Boston on Sept. 7, President Obama unveiled a new executive order requiring federal contractors to offer employees up to seven days of paid sick leave

The proposal covers all employees working on contracts subject to the Davis-Bacon Act and the Service Contract Act. While the details and practical impact of the proposal on the construction industry and taxpayers will not be known until finalized and implemented, Associated Builders and Contractors Inc. (ABC) will participate in the forthcoming regulatory process. 

“The president has long treated the federal contracting marketplace as a testing ground to implement sweeping changes that he cannot pass through Congress,” said ABC Vice President of Government Affairs Geoff Burr. “By circumventing Congressional authority, the Obama administration has increased regulatory burdens that drive up costs on taxpayer-funded projects and discourage small businesses from pursuing federal contracts.

“The president’s latest proposal is of particular concern to the construction industry because it contradicts the U.S. Department of Labor’s long-established policy of crediting sick leave as a fringe benefit for employees performing work on contracts subject to the Davis-Bacon Act,” said Burr. “This will result in additional compliance burdens for contractors who contract with the federal government.”

The U.S. Department of Labor (DOL) has until September 30, 2016, to issue final regulations and the Federal Acquisition Regulatory (FAR) Council will incorporate the rule into federal regulations within 60 days of the final regulation. The new provision will be included in any new contract from January 1, 2017, going forward.

This proposal is the latest in a series of executive orders targeting federal contractors that the federal contracting community expects will disrupt federal contracting, increase costs and raise a number of compliance concerns.