How Obama’s Executive Orders affect federal contractors

bruce sarchet
Bruce Sarchet

Many Central Valley employers provide goods and services directly to the federal government. Working with the government can provide a steady stream of reliable revenue. Indeed, it is anticipated that more businesses in the Central Valley will become government contractors in the coming years with the opportunities presented by construction of California’s high-speed rail project.  

While the government can be a good customer, it can also use its massive buying power to effect change in the workplace.  

Two examples of this will go into effect in the coming months and will impact the workplaces of federal contractors. As always, this column provides only an overview of the law, and does not substitute for the advice of counsel.

Paid sick leave

On Labor Day, President Obama signed a new Executive Order (EO) that will require federal contractors to provide their employees with paid sick leave. The new EO becomes effective in 2017.  

Federal legislation previously had been introduced to provide for federally mandated sick leave (the “Healthy Families Act”), but it has stalled. The issuance of the EO is a way to achieve the same end — albeit for a more limited group of employees — without Congressional approval.

The new EO mirrors, in many respects, California’s recently enacted Healthy Workplaces, Healthy Families Act, California Labor Code section 245-249.  

For example, under both the California law and the new EO, employees earn at least one hour of paid sick leave for every 30 hours worked. In addition, paid sick leave carries over from one year to the next and must be reinstated for employees rehired within 12 months after a job separation. Further, the use of paid sick leave cannot be made contingent on the requesting employee finding a replacement to cover any missed work time.

The new EO, like the California law, would permit workers to use their earned paid leave to “care for themselves, a family member, such as a child, parent, spouse, or domestic partner, or another loved one, as well as for absences resulting from domestic violence, sexual assault, or stalking.”  

As with the California law, employees of contractors may use paid sick leave “upon the oral or written request of an employee…”

There are at least two significant differences between the new EO and the California law. First, under the new EO, employees are eligible to accrue up to 56 hours of paid sick leave per year (seven days).  Under the California law, the basic accrual level is set at 24 hours, or three days.  

The new EO also addresses a topic upon which the California law is silent: obtaining a doctors’ note to verify illness. This is a common practice in many Central Valley workplaces, yet the new California law is silent on this point. The new California law merely states that paid sick leave should be granted “upon the request of the employee.”  

In contrast, the new EO provides that a contractor may require certification issued by a health care provider for paid sick leave for absences of three or more consecutive workdays. The EO also provides that such documentation must include only the minimum necessary information establishing a need for the employee to be absent from work.

Pay transparency

In 2014 an Executive Order was issued prohibiting federal contractors from retaliating against employees who choose to discuss their compensation. The Office of Federal Contract Compliance Programs (OFCCP) is scheduled to issue a final rule on this EO in the immediate future.  As with the new EO on paid leave, the OFCCP’s final rule will apply only to employers that do business with the federal government.

Also similar to the new EO on sick leave, over the past years a number of “pay transparency” bills prohibiting retaliation based on wage discussion or disclosure have been signed into law at the state level. Efforts to enact similar federal legislation have failed to gain traction.  Application of these provisions to federal contractors is a way to impact workplace policy without actually passing legislation.


While the Executive Order on sick leave does not become effective until 2017, federal contractors should become familiar with its requirements and prepare an implementation plan.  In addition, because of Congressional gridlock and the looming 2016 elections, it is possible that further actions will be taken to regulate and impact the community of federal contractors here in the Central Valley.  Stay tuned!  


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