Establishing Paid Sick Leave for Federal Contractors

DEPARTMENT OF LABOR

Office of the Secretary

29 CFR Part 13

RIN 1235-AA13

Establishing Paid Sick Leave for Federal Contractors

AGENCY:

Wage and Hour Division, Department of Labor

ACTION:

Notice of proposed rulemaking.

SUMMARY:

This document proposes regulations to implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, signed by President Barack Obama on September 7, 2015, which requires certain parties that contract with the Federal Government to provide their employees with up to 7 days of paid sick leave annually, including paid leave allowing for family care. Executive Order 13706 explains that providing access to paid sick leave will improve the health and performance of employees of Federal contractors and bring their benefits packages in line with model employers, ensuring that Federal contractors remain competitive employers and generating savings and quality improvements that will lead to improved economy and efficiency in Government procurement. The Executive Order directs the Secretary of Labor (Secretary) to issue regulations by September 30, 2016, to implement the Order's requirements. This proposed rule therefore defines terms used in the regulatory text, describes the categories of contracts and employees the Order covers and excludes from coverage, sets forth requirements and restrictions governing the accrual and use of paid sick leave, and prohibits interference with or discrimination for the exercise of rights under the Executive Order. It also describes the obligations of contracting agencies, the Department of Labor, and contractors under the Executive Order, and it establishes the standards and procedures for complaints, investigations, remedies, and administrative enforcement proceedings related to alleged violations of the Order. As required by the Order and to the extent practicable, the proposed rule incorporates existing definitions, procedures, remedies, and enforcement processes under the Fair Labor Standards Act, the Service Contract Act, the Davis-Bacon Act, the Family and Medical Leave Act, the Violence Against Women Act, and Executive Order 13658, Establishing a Minimum Wage for Contractors.

DATES:

Comments must be received on or before March 28, 2016.

ADDRESSES:

You may submit comments, identified by Regulatory Information Number (RIN) 1235-AA13, by either of the following methods:

Electronic Comments:

Submit comments through the Federal e-Rulemaking Portal

http://www.regulations.gov.

Follow the instructions for submitting comments.

Mail:

Address written submissions to Robert Waterman, Compliance Specialist, Wage and Hour Division, U.S. Department of Labor, Room S-3510, 200 Constitution Avenue NW., Washington, DC 20210.

Instructions:

Please submit only one copy of your comments by only one method. All submissions must include the agency name and RIN, identified above, for this rulemaking. Please be advised that comments received will become a matter of public record and will be posted without change to

http://www.regulations.gov,

including any personal information provided. Comments that are mailed must be received by the date indicated for consideration in this rulemaking. For additional information on submitting comments and the rulemaking process, see the “Public Participation” heading of the

SUPPLEMENTARY INFORMATION

section of this document. For questions concerning the interpretation and enforcement of labor standards related to government contracts, individuals may contact the Wage and Hour Division (WHD) local district offices (see contact information below).

Docket:

For access to the docket to read background documents or comments, go to the Federal e-Rulemaking Portal at

http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Robert Waterman, Compliance Specialist, Wage and Hour Division, U.S. Department of Labor, Room S-3510, 200 Constitution Avenue NW., Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-free number). Copies of this proposed rule may be obtained in alternative formats (large print, Braille, audio tape or disc), upon request, by calling (202) 693-0675 (this is not a toll-free number). TTY/TDD callers may dial toll-free 1-877-889-5627 to obtain information or request materials in alternative formats.

Questions of interpretation and/or enforcement of the agency's regulations may be directed to the nearest WHD district office. Locate the nearest office by calling the WHD's toll-free help line at (866) 4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time zone, or log onto the WHD's Web site for a nationwide listing of WHD district and area offices at

http://www.dol.gov/whd/america2.htm.

SUPPLEMENTARY INFORMATION:

I. Electronic Access and Filing Comments

Public Participation:

This proposed rule is available through the

Federal Register

and the

http://www.regulations.gov

Web site. You may also access this document via the WHD's Web site at

http://www.dol.gov/whd/.

To comment electronically on Federal rulemakings, go to the Federal e-Rulemaking Portal at

http://www.regulations.gov,

which will allow you to find, review, and submit comments on Federal documents that are open for comment and published in the

Federal Register

. You must identify all comments submitted by including “RIN 1235-AA13” in your submission. Commenters should transmit comments early to ensure timely receipt prior to the close of the comment period (date identified above); comments received after the comment period closes will not be considered. Submit only one copy of your comments by only one method. Please be advised that all comments received will be posted without change to

http://www.regulations.gov,

including any personal information provided.

II. Executive Order 13706 Requirements and Background

On September 7, 2015, President Barack Obama signed Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors (the Executive Order or the Order). 80 FR 54697.

Section 1 of Executive Order 13706 explains that the Order seeks to increase efficiency and cost savings in the work performed by parties that contract with the Federal Government by ensuring that employees on those contracts can earn up to 7 days or more of paid sick leave annually, including paid leave allowing for family care. 80 FR 54697. The Order states that providing access to paid sick leave will improve the health and performance of employees of Federal contractors and bring benefits packages at Federal contractors in line with model employers, ensuring that they remain competitive employers in the search for dedicated and talented employees.

Id.

The Order further states that these savings and quality improvements will lead to improved economy and efficiency in Government procurement.

Id.

Section 2 of the Executive Order establishes paid sick leave for Federal contractors and subcontractors. 80 FR 54697. Section 2(a) provides that

executive departments and agencies (agencies) shall, to the extent permitted by law, ensure that new contracts, contract-like instruments, and solicitations (collectively referred to as “contracts”), as described in section 6 of the Order, include a clause, which the contractor and any subcontractors shall incorporate into lower-tier subcontracts, specifying, as a condition of payment, that all employees, in the performance of the contract or any subcontract thereunder, shall earn not less than 1 hour of paid sick leave for every 30 hours worked.

Id.

Section 2(b) prohibits a contractor from limiting the total accrual of paid sick leave per calendar year, or at any point, at less than 56 hours.

Id.

Section 2(c) explains that paid sick leave earned under the Order may be used by an employee for an absence resulting from: (i) physical or mental illness, injury, or medical condition; (ii) obtaining diagnosis, care, or preventive care from a health care provider; (iii) caring for a child, a parent, a spouse, a 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 (i) or (ii) or is otherwise in need of care; or (iv) domestic violence, sexual assault, or stalking, if the time absent from work is for the purposes described in (i) or (ii), to obtain additional counseling, to seek relocation, to seek assistance from a victim services organization, or take related legal action, including preparation for or participation in any related civil or criminal legal proceeding, or to assist an individual related to the employee as described in (iii) in engaging in any of these activities. 80 FR 54697.

Section 2(d) provides that paid sick leave shall carry over from one year to the next and shall be reinstated for employees rehired by a covered contractor within 12 months after a job separation.

Id.

Under section 2(e), the use of paid sick leave cannot be made contingent on the requesting employee finding a replacement to cover any work time to be missed. 80 FR 54698. Section 2(f) provides that the paid sick leave required by the Order is in addition to a contractor's obligations under the Service Contract Act and Davis-Bacon Act, and contractors may not receive credit toward their prevailing wage or fringe benefit obligations under those Acts for any paid sick leave provided in satisfaction of the Order's requirements.

Id.

Section 2(g) explains that an employer's existing paid sick leave policy provided in addition to the fulfillment of Service Contract Act or Davis-Bacon Act obligations, if applicable, and made available to all covered employees will satisfy the requirements of the Executive Order if the amount of paid leave is sufficient to meet the requirements of section 2 and if it may be used for the same purposes and under the same conditions described in the Executive Order.

Id.

Section 2(h) of the Order establishes that paid sick leave shall be provided upon the oral or written request of an employee that includes the expected duration of the leave, and is made at least 7 calendar days in advance where the need for the leave is foreseeable, and in other cases as soon as is practicable.

Id.

Section 2(i) addresses when a contractor may require employees to provide certification or documentation regarding the use of leave. 80 FR 54698. It provides that a contractor may only require certification issued by a health care provider for paid sick leave used for the purposes listed in sections 2(c)(i), (c)(ii), or (c)(iii) for employee absences of 3 or more consecutive workdays, to be provided no later than 30 days from the first day of the leave.

Id.

It further provides that if 3 or more consecutive days of paid sick leave is used for the purposes listed in section 2(c)(iv), documentation may be required to be provided from an appropriate individual or organization with the minimum necessary information establishing a need for the employee to be absent from work.

Id.

The Executive Order notes that the contractor shall not disclose any verification information and shall maintain confidentiality about domestic abuse, sexual assault, or stalking, unless the employee consents or when disclosure is required by law.

Id.

Section 2(j) states that nothing in the Order shall require a covered contractor to make a financial payment to an employee upon a separation from employment for unused accrued sick leave. 80 FR 54698. Section 2(j) further notes, however, that unused leave is subject to reinstatement as prescribed in section 2(d).

Id.

Section 2(k) prohibits a covered contractor from interfering with or in any other manner discriminating against an employee for taking, or attempting to take, paid sick leave as provided for under the Order, or in any manner asserting, or assisting any other employee in asserting, any right or claim related to the Order.

Id.

Section 2(l) states that nothing in the Order shall excuse noncompliance with or supersede 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.

Id.

Section 3(a) of the Executive Order provides that the Secretary shall issue such regulations by September 30, 2016, as are deemed necessary and appropriate to carry out the Order, to the extent permitted by law and consistent with the requirements of 40 U.S.C. 121, including providing exclusions from the requirements set forth in the Order where appropriate; defining terms used in the Order; and requiring contractors to make, keep, and preserve such employee records as the Secretary deems necessary and appropriate for the enforcement of the provisions of the Order or the regulations thereunder. 80 FR 54698. It also requires that, to the extent permitted by law, within 60 days of the Secretary issuing such regulations, the Federal Acquisition Regulatory Council (FARC) shall issue regulations in the Federal Acquisition Regulation (FAR) to provide for inclusion in Federal procurement solicitations and contracts subject to the Executive Order the contract clause described in section 2(a) of the Order.

Id.

Additionally, section 3(b) states that within 60 days of the Secretary issuing regulations pursuant to the Order, agencies shall take steps, to the extent permitted by law, to exercise any applicable authority to ensure that contracts or contract-like instruments for concessions and contracts entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public, entered into after January 1, 2017, consistent with the effective date of such agency action, comply with the requirements set forth in section 2 of the Order. 80 FR 54699.

Section 3(c) specifies that any regulations issued pursuant to section 3 of the Order should, to the extent practicable and consistent with section 7 of the Order, incorporate existing definitions, procedures, remedies, and enforcement processes under the Fair Labor Standards Act, 29 U.S.C. 201

et seq.

(FLSA); the McNamara-O'Hara Service Contract Act, 41 U.S.C. 6701

et seq.

(SCA); the Davis-Bacon Act, 40 U.S.C. 3141

et seq.

(DBA); the Family and Medical Leave Act, 29 U.S.C. 2601

et seq.

(FMLA); the Violence Against Women Act of 1994, 42 U.S.C. 13925

et seq.

(VAWA); and Executive Order

13658, Establishing a Minimum Wage for Contractors, 79 FR 9851 (Feb. 20, 2014) (Executive Order 13658 or Minimum Wage Executive Order).

Id.

Section 4(a) of the Executive Order grants authority to the Secretary to investigate potential violations of and obtain compliance with the Order, including the prohibitions on interference and discrimination in section 2(k) of the Order. 80 FR 54699. Section 4(b) further explains that the Executive Order creates no rights under the Contract Disputes Act, and disputes regarding whether a contractor has provided employees with paid sick leave prescribed by the Order, to the extent permitted by law, shall be disposed of only as provided by the Secretary in regulations issued pursuant to the Order.

Id.

Section 5 of the Executive Order establishes that if any provision of the Order, or applying such provision to any person or circumstance, is held to be invalid, the remainder of the Order and the application of the provisions of such to any person or circumstances shall not be affected thereby.

Id.

Section 6(a) of the Executive Order provides that nothing in the Order shall be construed to impair or otherwise affect (i) the authority granted by law to an executive department, agency, or the head thereof; or (ii) the functions of the Director of the Office of Management and Budget (OMB) relating to budgetary, administrative, or legislative proposals. 80 FR 54699. Section 6(b) states that the Order is to be implemented consistent with applicable law and subject to the availability of appropriations.

Id.

Section 6(c) explains that the Order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

Id.

Section 6(d) of the Executive Order establishes that the Order shall apply only to a new contract or contract-like instrument, as defined by the Secretary in the regulations issued pursuant to section 3(a) of the Order, if: (i) (A) It is a procurement contract for services or construction; (B) it is a contract or contract-like instrument for services covered by the Service Contract Act; (C) it is a contract or contract-like instrument for concessions, including any concessions contract excluded by Department of Labor (Department) regulations at 29 CFR 4.133(b); or (D) it is a contract or contract-like instrument entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public; and (ii) the wages of employees under such contract or contract-like instrument are governed by the DBA, SCA, or FLSA, including employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions. 80 FR 54699.

Section 6(e) states that, for contracts or contract-like instruments covered by the SCA or DBA, the Order shall apply only to contracts or contract-like instruments at the thresholds specified in those statutes. 80 FR 54699-700. Additionally, Section 6(e) provides that for procurement contracts in which employees' wages are governed by the FLSA, the Order shall apply only to contracts or contract-like instruments that exceed the micro-purchase threshold, as defined in 41 U.S.C. 1902(a), unless expressly made subject to the Order pursuant to regulations or actions taken under section 3 of the Order. 80 FR 54700.

Section 6(f) specifies that the Order shall not apply to grants; contracts and agreements with and grants to Indian Tribes under the Indian Self-Determination and Education Assistance Act (Pub. L. 93-638), as amended; or any contracts or contract-like instruments expressly excluded by the regulations issued pursuant to section 3(a) of the Order.

Id.

Section 6(g) strongly encourages independent agencies to comply with the Order's requirements.

Id.

Section 7(a) of the Executive Order provides that the Order is effective immediately and shall apply to covered contracts where the solicitation for such contract has been issued, or the contract has been awarded outside the solicitation process, on or after: (i) January 1, 2017, consistent with the effective date for the action taken by the FARC pursuant to section 3(a) of the Order; or (ii) January 1, 2017, for contracts where an agency action is taken pursuant to section 3(b) of the Order, consistent with the effective date for such action. 80 FR 54700. Section 7(b) specifies that the Order shall not apply to contracts or contract-like instruments that are awarded, or entered into pursuant to solicitations issued, on or before the effective date for the relevant action taken pursuant to section 3 of the Order.

Id.

III. Discussion of Proposed Rule

A. Legal Authority

The President issued Executive Order 13706 pursuant to his authority under “the Constitution and the laws of the United States of America,” expressly including 40 U.S.C. 121, a provision of the Federal Property and Administrative Services Act (Procurement Act). 80 FR 54697. The Procurement Act authorizes the President to “prescribe policies and directives that [the President] considers necessary to carry out” the statutory purposes of ensuring “economical and efficient” government procurement and administration of government property. 40 U.S.C. 101, 121(a). Executive Order 13706 delegates to the Secretary the authority to issue regulations “deemed necessary and appropriate to carry out this order.” 80 FR 54698. The Secretary has delegated his authority to promulgate these regulations to the Administrator of the WHD. Secretary's Order 01-2014 (Dec. 19, 2014), 79 FR 77527 (published Dec. 24, 2014).

B. Stakeholder Engagement

As part of the development of this proposed rule, the Department has engaged stakeholders who have an interest in the Executive Order to solicit their views regarding implementation of the Order's paid sick leave requirements and important issues to address in this rulemaking. In particular, the Department held listening sessions regarding the Order with worker advocates and business representatives in October and November 2015.

C. Overview of the Proposed Rule

The Department's notice of proposed rulemaking (NPRM), which would amend Title 29 of the Code of Federal Regulations (CFR) by adding part 13, proposes standards and procedures for implementing and enforcing Executive Order 13706. Proposed subpart A of part 13 addresses general matters, including the purpose and scope of the rule, sets forth definitions of terms used in the proposed part, and describes the types of contracts and employees covered by the Order and part 13 and excluded from such coverage. It describes the paid sick leave requirements for contractors established by the Executive Order, including rules and restrictions regarding the accrual and use of such leave. It also prohibits interference with the accrual or use of paid sick leave provided pursuant to the Executive Order or part 13, discrimination for the exercise of rights under the Executive Order or part 13, and failure to comply with the recordkeeping requirements of part 13. Finally, proposed subpart A includes a prohibition against waiver of rights.

Proposed subpart B establishes the obligations of the Federal government (specifically, contracting agencies and the Department) under the Order, and proposed subpart C establishes the

obligations of contractors under the Order, including recordkeeping requirements. Proposed subparts D and E specify standards and procedures related to alleged violations of the Order and part 13, including complaint intake, investigations, remedies, and administrative enforcement proceedings. Proposed appendix A contains a contract clause to implement Executive Order 13706.

The following section-by-section discussion of this proposed rule presents the contents of each section in more detail. The Department invites comments on any issues addressed in this NPRM.

Subpart A—General

Proposed subpart A of part 13 describes the purpose and scope of the proposed rule, and it sets forth definitions of terms used in the proposed rule, descriptions of the types of contracts and employees covered by the Order and part 13 and excluded from such coverage, and rules and restrictions regarding the accrual and use of paid sick leave. Proposed subpart A also prohibits interference with the accrual or use of the paid sick leave required by, and discrimination for the exercise of rights under, the Executive Order or part 13, as well as violations of the recordkeeping requirements of part 13. Finally, proposed subpart A includes a prohibition against waiver of rights.

Section 13.1 Purpose and Scope

Proposed § 13.1(a) explains that the purpose of the proposed rule is to implement Executive Order 13706 and reiterates statements from the Order that the Federal Government's procurement interests in economy and efficiency are promoted when the Federal Government contracts with sources that provide paid sick leave to their employees. It explains that the Order states that providing access to paid sick leave will improve the productivity of employees by improving their health and performance and will bring benefits packages offered by Federal contractors in line with model employers, ensuring they remain competitive in the search for dedicated and talented employees. As stated in proposed § 13.1(a), it is for these reasons that the Executive Order concludes that the provision of paid sick leave under the Order will generate savings and quality improvements in the work performed by parties who contract with the Federal Government, thereby leading to improved economy and efficiency in Government procurement. The Department believes that, by increasing the quality and efficiency of services provided to the Federal Government, the Executive Order will improve the value that taxpayers receive from the Federal Government's investment.

Proposed § 13.1(b) sets forth the general position of the Federal Government that providing access to paid sick leave on Federal contracts will increase efficiency and cost savings for the Federal Government, and it explains the general requirement established in Executive Order 13706 that new contracts with the Federal Government include a clause, which the contractor and any subcontractors shall incorporate into lower-tier subcontracts, requiring, as a condition of payment, that the contractor and any subcontractors provide paid sick leave to employees in the amount of not less than 1 hour of paid sick leave for every 30 hours worked on or in connection with covered contracts. Proposed § 13.1(b) also specifies that nothing in Executive Order 13706 or part 13 shall excuse noncompliance with or supersede 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 or part 13.

Proposed § 13.1(c) outlines the scope of this proposed rule and provides that neither Executive Order 13706 nor part 13 creates any rights under the Contract Disputes Act or creates any private right of action. The Department does not interpret the Executive Order as limiting existing rights under the Contract Disputes Act. This provision also implements the Executive Order's directive that disputes regarding whether a contractor has provided paid sick leave as prescribed by the Order, to the extent permitted by law, shall be disposed of only as provided by the Secretary in regulations issued under the Order. The provision specifies, however, that nothing in the Order or part 13 is intended to limit or preclude a civil action under the False Claims Act, 31 U.S.C. 3730, or criminal prosecution under 18 U.S.C. 1001. Finally, this paragraph specifies that neither the Order nor part 13 would preclude judicial review of final decisions by the Secretary in accordance with the Administrative Procedure Act, 5 U.S.C. 701

et seq.

Section 13.2 Definitions

Proposed § 13.2 defines terms for purposes of part 13. Section 3(c) of the Executive Order instructs that any regulations issued pursuant to the Order should “incorporate existing definitions” under the FLSA, SCA, DBA, FMLA, VAWA, and Executive Order 13658 “to the extent practicable and consistent with section 7 of this order.” 80 FR 54699. Because of the similarities in language, structure, and intent of the Minimum Wage Executive Order and Executive Order 13706, many of the definitions provided in this proposed rule are identical to or based on definitions promulgated in the Minimum Wage Executive Order Final Rule. Pursuant to section 4(c) of the Minimum Wage Executive Order, those definitions were largely based either on the language of the Order itself or the definitions of relevant terms set forth in the statutory text or implementing regulations of the FLSA, SCA, or DBA; in addition, some definitions were based on definitions published by the FARC in section 2.101 of the FAR, 48 CFR 2.101, or definitions set forth in the Department's regulations implementing Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts (Executive Order 13495 or Nondisplacement Executive Order), at 29 CFR 9.2. 79 FR 60637. Definitions relevant because of provisions of Executive Order 13706 that do not appear in Executive Order 13658 are largely based on definitions set forth in the statutory text or implementing regulations of the FMLA or the VAWA, as well as regulations issued by the U.S. Office of Personnel Management (OPM) at 5 CFR part 630, subparts B and D, which govern the accrual and use of sick leave by employees of the Federal government.

The definitions discussed in this proposed rule would govern the implementation and enforcement of Executive Order 13706. Nothing in the rule is intended to alter the meaning of or to be interpreted inconsistently with the definitions set forth in section 2.101 of the FAR for purposes of that regulation.

The Department proposes to define

accrual year

to mean the 12-month period during which a contractor may limit an employee's accrual of paid sick leave to no less than 56 hours.

The Department proposes to define the term

Administrative Review Board

as the Administrative Review Board within the U.S. Department of Labor.

The Department proposes to define the term

Administrator

to mean the Administrator of the Wage and Hour Division. As proposed, the term also includes any official of the Wage and Hour Division authorized to perform any of the functions of the Administrator under part 13.

The Department proposes to define

as soon as is practicable

to mean as soon as both possible and practical, taking

into account all of the facts and circumstances of the individual case. This definition is derived from the definition of “as soon as practicable” in the FMLA regulations. 29 CFR 825.302(b).

The Department proposes to define

certification issued by a health care provider

as any type of written document created or signed by a health care provider (or by a representative of the health care provider) that contains information verifying that the physical or mental illness, injury, medical condition, or need for diagnosis, care, or preventive care or other need for care referred to in proposed § 13.5(c)(1)(i), (ii), or (iii) exists. This definition allows employees to provide as certification a greater range of documents than would suffice to demonstrate that a serious health condition exists for purposes of FMLA.

See

29 CFR 825.305, 825.306. For example, under this proposal, a note from a hospital nurse stating that an employee needed to have surgery and would need at least 3 days to recover before returning to work would meet the definition, as would a note from an employee's parent's doctor stating that the parent is in need of daily caretaking. A contractor may not require that an employee or the individual for whom the employee is caring have seen the health care provider in person in order to accept the certification.

The Department proposes to define

child

to mean (1) a biological, adopted, step, or foster son or daughter of the employee; (2) a person who is a legal ward or was a legal ward of the employee when that individual was a minor or required a legal guardian; (3) a person for whom the employee stands

in loco parentis

or stood

in loco parentis

when that individual was a minor or required someone to stand

in loco parentis;

or (4) a child, as described in paragraphs (1) through (3) of the definition, of an employee's spouse or domestic partner. This definition is adopted from the definition of “son or daughter” in the OPM regulations governing leave for Federal employees. 5 CFR 630.201(b). The Department notes that this proposed definition is deliberately broader than the definition of “son or daughter” in the FMLA, which includes only minor children or adult children “incapable of self-care because of a mental or physical disability.” 29 CFR 825.102. It is intended that employees be permitted to use paid sick leave for a broader range of purposes than those for which they can use FMLA leave, including to care for an employee's child of any age.

The Department proposes a definition of

concessions contract

or

contract for concessions

identical to the definition of those terms in the Minimum Wage Executive Order Final Rule.

See

79 FR 60722 (codified at 29 CFR 10.2). Specifically, the term is proposed to mean a contract under which the Federal Government grants a right to use Federal property, including land or facilities, for furnishing services; examples of such contracts noted in the definition are those the principal purpose of which is to furnish food, lodging, automobile fuel, souvenirs, newspaper stands, and/or recreational equipment. This proposed definition is not limited based on the beneficiary of the services; the proposed definition encompasses contracts regardless of whether they are of direct benefit to the Federal Government, its property, its civilian or military personnel, or the general public.

See

29 CFR 4.133;

see also

79 FR 60638. The proposed definition includes, but is not limited to, all concessions contracts excluded by Departmental regulations under the SCA at 29 CFR 4.133(b).

See

79 FR 60638.

The Department proposes to define

contract

and

contract-like instrument

collectively for purposes of the Executive Order in the same manner as it did in the Minimum Wage Executive Order implementing regulations.

See

79 FR 60722 (codified at 29 CFR 10.2). Specifically, a

contract

or

contract-like instrument

is defined in this proposed rule as an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. This definition includes, but is not limited to, a mutually binding legal relationship obligating one party to furnish services (including construction) and another party to pay for them. The proposed definition of the term

contract

broadly includes all contracts and any subcontracts of any tier thereunder, whether negotiated or advertised, including any procurement actions, lease agreements, cooperative agreements, provider agreements, intergovernmental service agreements, service agreements, licenses, permits, or any other type of agreement, regardless of nomenclature, type, or particular form, and whether entered into verbally or in writing. The proposed definition of the term

contract

would be interpreted broadly to include, but not be limited to, any contract that may be consistent with the definition provided in the FAR or applicable Federal statutes. This definition would include, but would not be limited to, any contract that may be covered under any Federal procurement statute. The Department specifically proposes to note in this definition that contracts may be the result of competitive bidding or awarded to a single source under applicable authority to do so. The proposed definition also explains that, in addition to bilateral instruments, contracts include, but are not limited to, awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. The proposed definition also specifies that the term

contract

includes contracts covered by the SCA, contracts covered by the DBA, concessions contracts not subject to the SCA, and contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public. As explained in the Minimum Wage Executive Order rulemaking, this proposed definition of

contract

was derived from the definition of the term

contract

set forth in Black's Law Dictionary (9th ed. 2009) and § 2.101 of the FAR (48 CFR 2.101), as well as the descriptions of the term

contract

that appear in the SCA's regulations at 29 CFR 4.110-.111 and 4.130.

See

79 FR 60638-41.

The Department notes that it is deliberately adopting a broad definition of this term, but the mere fact that a legal instrument constitutes a

contract

does not mean that such contract is subject to the Executive Order. In order for a contract to be covered by the Executive Order and part 13, the contract must (1) qualify as a

contract

or

contract-like instrument;

(2) fall within one of the specifically enumerated types of contracts set forth in section 6(d)(i) of the Order and proposed § 13.3; and (3) be a “new contract” pursuant to the definition described below. Therefore, for example, although a cooperative agreement is considered a contract pursuant to the Department's proposed definition, a cooperative agreement will not be covered by the Executive Order and part 13 unless it is a “new contract” and is subject to the SCA or DBA, is a concessions contract, or is entered into in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.

The Department proposes to define

contracting officer

using a definition based on that used in the Final Rule issued pursuant to the Minimum Wage Executive Order, which in turn was adopted from the definition in section 2.101 of the FAR.

See

79 FR 60641 (citing 48 CFR 2.101). As proposed, the

term means a representative of an executive department or agency with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings. Furthermore, the term includes certain authorized representatives of the contracting officer acting within the limits of their authority as delegated by the contracting officer.

The Department proposes to define

contractor

to mean any individual or other legal entity that is awarded a Federal Government contract or a subcontract under a Federal Government contract. The term

contractor

refers to both a prime contractor and all of its first or lower-tier subcontractors on a contract with the Federal Government. This definition includes lessors and lessees. The Department notes that the term

employer

is used interchangeably with the terms

contractor

and

subcontractor

in part 13. The proposed definition also explains that the U.S. Government, its agencies, and its instrumentalities are not considered contractors, subcontractors, employers, or joint employers for purposes of compliance with the provisions of Executive Order 13706. This proposed definition, which is derived from the definition adopted in the Minimum Wage Executive Order rulemaking,

see

79 FR 60722 (codified at 29 CFR 10.2), incorporates relevant aspects of the definitions of the term

contractor

in section 9.403 of the FAR,

see

48 CFR 9.403; the SCA's regulations at 29 CFR 4.1a(f); and the Department's regulations implementing the Nondisplacement Executive Order at 29 CFR 9.2. The definition differs from the Minimum Wage Executive Order only in that it does not refer to employers of employees performing on covered Federal contracts whose wages are computed pursuant to special certificates issued under 29 U.S.C. 214(c). Although such employers would be contractors for purposes of Executive Order 13706, such a reference is not called for in this definition because, unlike the Minimum Wage Executive Order, this Order does not contain any explicit reference to employees whose wages are computed pursuant to section 14(c) certificates.

The Department proposes to define the term

Davis-Bacon Act

(DBA) to mean the Davis-Bacon Act of 1931, as amended, 40 U.S.C. 3141

et seq.,

and its implementing regulations.

The Department proposes to define the term

domestic partner

to mean an adult in a committed relationship with another adult. This definition includes both same-sex and opposite-sex relationships. The Department proposes to further explain that a committed relationship is one in which the employee and the domestic partner of the employee are each other's sole domestic partner (and are not married to or domestic partners with anyone else) and share responsibility for a significant measure of each other's common welfare and financial obligations. This includes, but is not limited to, any relationship between two individuals of the same or opposite sex that is granted legal recognition by a State or by the District of Columbia as a marriage or analogous relationship (including, but not limited to, a civil union). This definition is adopted from the definitions of “domestic partner” and “committed relationship” in the OPM regulations regarding the use of sick leave by Federal employees. 5 CFR 630.201(b).

The Department proposes to define

domestic violence

as (1) felony or misdemeanor crimes of violence (including threats or attempts) committed: (i) By a current or former spouse, domestic partner, or intimate partner of the victim; (ii) by a person with whom the victim shares a child in common; (iii) by a person who is cohabitating with or has cohabitated with the victim as a spouse, domestic partner, or intimate partner; (iv) by a person similarly situated to a spouse of the victim under domestic or family violence laws of the jurisdiction in which the victim resides or the events occurred; or (v) by any other adult person against a victim who is protected from that person's acts under the domestic or family violence laws of the jurisdiction in which the victim resides or the events occurred. Under the proposed definition, domestic violence also includes any crime of violence considered to be an act of domestic violence according to State law. This definition is derived from the VAWA, 42 U.S.C. 13925(a)(8), and its implementing regulations, 28 CFR 90.2(a).

The Department proposes to define

employee

similarly to the way the term

worker

was used in the Minimum Wage Executive Order rulemaking,

see

79 FR 60723, but with some differences reflecting the differences in the text of that Executive Order and Executive Order 13706. As proposed, the term would mean any person engaged in performing work on or in connection with a contract covered by the Executive Order, and whose wages under such contract are governed by the SCA, DBA, or FLSA, including employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions, regardless of the contractual relationship alleged to exist between the individual and the employer. Furthermore, the term

employee

includes any person performing work on or in connection with a covered contract and individually registered in a bona fide apprenticeship or training program registered with the U.S. Department of Labor's Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship.

Much of this definition comes directly from section 6(d)(ii) of the Executive Order, and as noted, much of it is identical to the definition of

worker

in the Minimum Wage Executive Order regulations. Most importantly, the term refers to employees whose wages are governed by the DBA, SCA, or FLSA, including employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions, as directed in the Executive Order. 80 FR 54699. Furthermore, the definition emphasizes, as explained in the Minimum Wage Executive Order rulemaking, the well-established principle under the DBA, SCA, and FLSA that employee coverage does not depend upon the existence or form of any contractual relationship that may be alleged to exist between the contractor or subcontractor and such persons.

See

79 FR 60644 (citing 29 U.S.C. 203(d), (e)(1), (g) (FLSA); 41 U.S.C. 6701(3)(B), 29 CFR 4.155 (SCA); 29 CFR 5.5(a)(1)(i) (DBA)). As reflected in the proposed definition, the Executive Order is intended to apply to a wide range of employment relationships. Neither an individual's subjective belief about his or her employment status nor the existence of a contractual relationship is determinative of whether an employee is covered by the Executive Order. In particular, whether a worker is an “employee” or an “independent contractor” as those terms are often used in other contexts is not material to whether that worker is an employee under this proposed definition; even workers who are independent contractors are covered by the SCA and DBA, and that coverage is adopted for purposes of this Order and part 13.

See, e.g.,

29 CFR 4.155 (SCA); 29 CFR 5.5(a)(1)(i) (DBA);

In re Igwe,

ARB Case No. 07-120, 2009 WL 4324725, at *3-4 (Nov. 25, 2009) (rejecting an argument that “the individuals working on the four contracts were not entitled to SCA prevailing wages and fringe benefits because they were independent contractors, not employees” because “the relevant inquiry is whether the persons working on the contract come

within the SCA definition of `service employee' ” and explaining “the irrelevance of `contractual relationship' to that definition”). The definition's inclusion of any person performing work on or in connection with a covered contract and individually registered in a bona fide apprenticeship or training program registered with the Department's Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship, is similarly in keeping with the Minimum Wage Executive Order's adoption of those provisions from the SCA and DBA regulations.

See

79 FR 60644 (citing 29 CFR 4.6(p) (SCA); 29 CFR 5.2(n) (DBA)).

The most significant difference between this definition of

employee

and the Minimum Wage Executive Order rulemaking's definition of

worker

is the inclusion of employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions. Executive Order 13706 explicitly provides that it applies to such employees. 80 FR 54699. The Executive Order's paid sick leave requirements therefore apply, for example, to employees employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in 29 CFR part 541.

Finally, the Department notes that because unlike the Minimum Wage Executive Order, Executive Order 13706 makes no reference to individuals performing work on or in connection with a covered contract whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c), that category of employees is not explicitly mentioned in this proposed definition. However, such individuals would plainly fall within the definition of

employee

for purposes of this rulemaking because their wages are, as described below, governed by the FLSA.

The Department proposes to define

executive departments and agencies

for purposes of this rulemaking by adopting the definition of that term used in the Minimum Wage Executive Order rulemaking, which was derived from the definition of

executive agency

provided in section 2.101 of the FAR, 48 CFR 2.101. 79 FR 60642, 60722 (codified at 29 CFR 10.2). The Department therefore interprets the Executive Order to apply to executive departments within the meaning of 5 U.S.C. 101, military departments within the meaning of 5 U.S.C. 102, independent establishments within the meaning of 5 U.S.C. 104(1), and wholly owned Government corporations within the meaning of 31 U.S.C. 9101. The Department does not interpret this definition as including the District of Columbia or any Territory or possession of the United States.

The Department proposes to define

Executive Order 13495

or

Nondisplacement Executive Order

to mean Executive Order 13495 of January 30, 2009, Nondisplacement of Qualified Workers Under Service Contracts, 74 FR 6103 (Feb. 4, 2009), and its implementing regulations at 29 CFR part 9.

The Department proposes to define

Executive Order 13658

or

Minimum Wage Executive Order

to mean Executive Order 13658 of February 12, 2014, Establishing a Minimum Wage for Contractors, 79 FR 9851 (Feb. 20, 2014), and its implementing regulations at 29 CFR part 10.

The Department proposes to define

Fair Labor Standards Act

(FLSA) as the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. 201

et seq.,

and its implementing regulations.

The Department proposes to define

Family and Medical Leave Act

(FMLA) as the Family and Medical Leave Act of 1993, as amended, 29 U.S.C. 2601

et seq.,

and its implementing regulations.

The Department proposes to define

family violence,

a term used in the definition of

domestic violence,

to mean any act or threatened act of violence, including any forceful detention of an individual that results or threatens to result in physical injury and is committed by a person against another individual (including an elderly individual) to or with whom such person is related by blood, is or was related by marriage or is or was otherwise legally related, or is or was lawfully residing. Because VAWA does not provide a definition of the term, this definition is adopted from the definition of “family violence” in the Family Violence Prevention and Services Act, 42 U.S.C. 10401.

See

42 U.S.C. 10402(4).

Proposed § 13.2 defines

Federal Government

as an agency or instrumentality of the United States that enters into a contract pursuant to authority derived from the Constitution or the laws of the United States. This proposed definition is identical to that used in the regulations implementing the Minimum Wage Executive Order. 79 FR 60722 (codified at 29 CFR 10.2). That definition was based on the definition of

Federal Government

set forth in 29 CFR 9.2, but eliminated the term “procurement” from that definition because Executive Order 13658 applies—as does Executive Order 13706—to both procurement and non-procurement contracts. 79 FR 60642. Consistent with the SCA, the term

Federal Government

includes nonappropriated fund instrumentalities under the jurisdiction of the Armed Forces or of other Federal agencies.

See

29 CFR 4.107(a). For purposes of Executive Order 13706 and part 13, the Department's proposed definition does not include the District of Columbia or any Territory or possession of the United States. As used in the Order and part 13, the term also does not include any independent regulatory agency within the meaning of 44 U.S.C. 3502(5) because such agencies are not required to comply with the Order or part 13.

The Department proposes to define

health care provider

as any practitioner who is licensed or certified under Federal or State law to provide the health-related service in question or any practitioner recognized by an employer or the employer's group health plan. The term includes, but is not limited to, doctors of medicine or osteopathy, podiatrists, dentists, psychologists, optometrists, chiropractors, nurse practitioners, nurse-midwives, clinical social workers, physician assistants, physical therapists, and Christian Science Practitioners listed with the First Church of Christ, Scientist in Boston, Massachusetts. This definition is intended to be broad and inclusive. It is derived from the definitions of health care provider in the FMLA regulations, 29 CFR 825.125, and OPM regulations, 5 CFR 630.201 and 5 CFR 630.1202.

The Department proposes to define the term

independent agencies

as any independent regulatory agency within the meaning of 44 U.S.C. 3502(5). Section 6(g) of the Executive Order states that “[i]ndependent agencies are strongly encouraged to comply with the requirements of this order.” The Department interprets this provision, as it did an identical provision in the Minimum Wage Executive Order, to mean that independent agencies are not required to comply with this Executive Order.

See

79 FR 9853; 79 FR 60643. This proposed definition is therefore based on other Executive Orders that similarly exempt independent regulatory agencies within the meaning of 44 U.S.C. 3502(5) from the definition of

agency

or include language requesting that they comply.

See, e.g.,

Executive Order 13636, 78 FR 11739 (Feb. 12, 2013) (defining

agency

as any executive department, military department, Government corporation, Government-controlled operation, or other establishment in the executive branch of the Government but excluding independent regulatory agencies as defined in 44 U.S.C. 3502(5)); Executive Order 13610, 77 FR 28469 (May 10, 2012) (same); Executive Order 12861, 58 FR 48255 (September 11, 1993) (“Sec. 4

Independent Agencies. All independent regulatory commissions and agencies are requested to comply with the provisions of this order.”); Executive Order 12837, 58 FR 8205 (Feb. 10, 1993) (“Sec. 4. All independent regulatory commissions and agencies are requested to comply with the provisions of this order.”).

The Department proposes to include in § 13.2 a definition of

individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.

As proposed, the term means any person with whom the employee has a significant personal bond that is or is like a family relationship, regardless of biological or legal relationship. Although this term is used in the OPM regulations,

see

5 CFR 630.201 (defining “family member,” for purposes of Federal employees' use of leave, to include the term), OPM has not created a regulatory definition of it; the Department's definition is, however, derived from OPM's discussion of the term in OPM's 2010 Final Rule, Absence and Leave; Definitions of Family Member, Immediate Relative, and Related Terms, 75 FR 33491 (June 14, 2010). In particular, OPM explained that creating an exhaustive list of the relationships that meet the definition is not possible, but that OPM has “broadly interpreted the phrase to include such relationships as grandparent and grandchild, brother- and sister-in-law, fiancé and fiancée, cousin, aunt and uncle, other relatives not specified in [the list naming a spouse, child, parent, brother, or sister], and close friend, to the extent that the connection between the employee and the individual was significant enough to be regarded as having the closeness of a family relationship even though the individuals might not be related by blood or formally in law.” 75 FR 33492.

The Department understands this term to be inclusive of non-nuclear family structures. It could include, for example, an individual who was a foster child in the same home in which the employee was a foster child for several years and with whom the employee has maintained a sibling-like relationship, a friend of the family in whose home the employee lived while she was in high school and whom the employee therefore considers to be like a mother or aunt to her, or an elderly neighbor with whom the employee has regularly shared meals and to whom the employee has provided unpaid caregiving assistance for the past 5 years and whom the employee therefore considers to be like a grandfather to her. The Department seeks comments regarding its proposed definition of this term, in particular regarding whether additional specificity is necessary.

The Department proposes to define

intimate partner,

a term used in the definition of

domestic violence,

to mean a person who is or has been in a social relationship of a romantic or intimate nature with the victim, where the existence of such a relationship shall be determined based on a consideration of the length of the relationship; the type of relationship; and the frequency of interaction between the persons involved in the relationship. This definition is derived from the definition of “dating partner” in the VAWA.

See

42 U.S.C. 13925(a)(9).

The Department proposes that the term

new contract

have the same meaning as in the Minimum Wage Executive Order Final Rule, but with dates altered to reflect the timing contemplated in section 7 of Executive Order 13706.

See

79 FR 60722 (codified at 29 CFR 10.2); 80 FR 54700. Under the proposed definition, a

new contract

is a contract that results from a solicitation issued on or after January 1, 2017, or a contract that is awarded outside the solicitation process on or after January 1, 2017. This term includes both new contracts and replacements for expiring contracts. It does not apply to the unilateral exercise of a pre-negotiated option to renew an existing contract by the Federal Government. For purposes of the Executive Order, a contract that is entered into prior to January 1, 2017 will constitute a

new contract

if, through bilateral negotiation, on or after January 1, 2017: (1) The contract is renewed; (2) the contract is extended, unless the extension is made pursuant to a term in the contract as of December 31, 2016 providing for a short-term limited extension; or (3) the contract is amended pursuant to a modification that is outside the scope of the contract. The Minimum Wage Executive Order rulemaking explained that this definition was derived from section 8 of that Executive Order, 79 FR 9853, is consistent with the convention set forth in section 1.108(d) of the FAR, 48 CFR 1.108(d), and was developed in part in response to comments on the proposed definition of

new contract

that appeared in the Minimum Wage Executive Order NPRM. 79 FR 60643, 60646-49.

For purposes of the Executive Order and part 13, which use the terms in reference to domestic violence, sexual assault, or stalking, the Department proposes to define

obtain additional counseling, seek relocation, seek assistance from a victim services organization, or take related legal action

to mean to spend time arranging, preparing for, or executing acts related to addressing physical injuries or mental or emotional impacts resulting from being a victim of domestic violence, sexual assault, or stalking. Such acts include finding and using services of a counselor or victim services organization, as that term is defined below, intended to assist a victim to respond to or prevent future incidents of domestic violence, sexual assault, or stalking; identifying and moving to a different residence to avoid being a victim of domestic violence, sexual assault, or stalking; or a victim's pursuing any related legal action, as that term is defined below. Counseling can but need not be provided by a health care provider.

The Department proposes to define

obtaining diagnosis, care, or preventive care from a health care provider

to mean receiving services from a health care provider, whether to identify, treat, or otherwise address an existing condition or to prevent potential conditions from arising. The Department interprets this term broadly; examples include, but are not limited to, obtaining a prescription for antibiotics at a health clinic, attending an appointment with a psychologist, having an annual physical or gynecological exam, or receiving a teeth cleaning from a dentist's assistant. The definition further provides that the term includes time spent traveling to and from the location at which such services are provided or recovering from receiving such services.

The Department proposes to define the term

Office of Administrative Law Judges

to mean the Office of Administrative Law Judges, U.S. Department of Labor.

Proposed § 13.2 defines the term

option

by adopting the definition of that term used in the Minimum Wage Executive Order rulemaking, which adopted the definition set forth in section 2.101 of the FAR, 48 CFR 2.101. 79 FR 60643, 60722 (codified at 29 CFR 10.2). Specifically, the term

option

means a unilateral right in a contract by which, for a specified time, the Federal Government may elect to purchase additional supplies or services called for by the contract, or may elect to extend the term of the contract.

The Department proposes to define

paid sick leave

to mean compensated absence from employment that is required by Executive Order 13706 and part 13. Throughout the proposed regulatory text and this discussion of that text, the Department uses “paid sick leave” to refer to the leave required by the Order and part 13 and “paid sick time” to refer more generally to any

compensated absence from work for time used for purposes similar (although not necessarily identical) to the purposes described in the Order, including as required by State and local laws or as provided pursuant to contractors' existing policies or under collective bargaining agreements.

Proposed § 13.2 defines the term

parent

to mean (1) a biological, adoptive, step, or foster parent of the employee, or a person who was a foster parent of the employee when the employee was a minor; (2) a person who is the legal guardian of the employee or was the legal guardian of the employee when the employee was a minor or required a legal guardian; (3) a person who stands

in loco parentis

to the employee or stood

in loco parentis

to the employee when the employee was a minor or required someone to stand

in loco parentis;

or (4) a parent, as described in paragraphs (1) through (3) of the definition, of an employee's spouse or domestic partner. This definition is adopted from the OPM regulations regarding leave for Federal employees. 5 CFR 630.102(b).

The Department proposes to define

physical or mental illness, injury, or medical condition

as any disease, sickness, disorder, or impairment of, or any trauma to, the body or mind. The Department understands the Executive Order to intend for this term to be understood broadly, to include any illness, injury, or medical condition, regardless of whether it requires attention from a health care provider or whether it would be a “serious health condition” that qualifies for use of leave under the Family and Medical Leave Act.

See

29 U.S.C. 2611(11); 29 CFR 825.113. Examples include, but are not limited to, a common cold, ear infection, upset stomach, ulcer, flu, headache, migraine, sprained ankle, broken arm, or depressive episode.

The Department proposes to define

predecessor contract

to mean a contract that precedes a successor contract. The term

successor contract

would be defined as explained below.

The proposed regulatory text defines

procurement contract for construction

as that term was defined for purposes of the Minimum Wage Executive Order Final Rule, that is, to mean a contract for the construction, alteration, or repair (including painting and decorating) of public buildings or public works and which requires or involves the employment of mechanics or laborers, and any subcontract of any tier thereunder. 79 FR 60723 (codified at 29 CFR 10.2). That definition, which is derived from language found at 40 U.S.C. 3142(a) and 29 CFR 5.2(h), includes any contract subject to the DBA.

See

79 FR 60643.

The Department proposes to define the term

procurement contract for services

to mean a contract the principal purpose of which is to furnish services in the United States through the use of service employees, and any subcontract of any tier thereunder, and to state that the term includes any contract subject to the SCA. This proposed definition is derived, as explained in the Minimum Wage Executive Order, from language set forth in 41 U.S.C. 6702(a), 29 CFR 4.1a(e), and 29 CFR 9.2. 79 FR 60643.

For purposes of the Executive Order and part 13, which use the terms in reference to domestic violence, sexual assault, or stalking, the Department proposes to define

related legal action

or

related civil or criminal legal proceeding

to mean any type of legal action, in any forum, that relates to domestic violence, sexual assault, or stalking, including, but not limited to, family, tribal, territorial, immigration, employment, administrative agency, housing matters, campus administrative or protection or stay-away order proceedings, and other similar matters; and criminal justice investigations, prosecutions, and post-trial matters (including sentencing, parole, and probation) that impact the victim's safety and privacy. This definition, which the Department intends to be broad and inclusive, is derived from the definition of “legal assistance” that appears in the VAWA.

See

42 U.S.C. 13925(a)(19). The Department understands this definition to encompass actions in any civil or criminal court, including a juvenile court. It also includes administrative proceedings run by institutions of higher education (college, community college, university, or trade school), such as those related to alleged violations of Title IX of the Education Amendments of 1972, 20 U.S.C. 1681

et seq.

Under proposed § 13.2,

Secretary

means the Secretary of Labor and includes any official of the U.S. Department of Labor authorized to perform any of the functions of the Secretary of Labor under part 13.

The Department proposes to define the term

Service Contract Act

(SCA) to mean the McNamara-O'Hara Service Contract Act of 1965, as amended, 41 U.S.C. 6701

et seq.,

and its implementing regulations.

See

29 CFR 4.1a(a).

The proposed definition of

sexual assault

in § 13.2 is any nonconsensual sexual act proscribed by Federal, tribal, or State law, including when the victim lacks capacity to consent. This definition is adopted from the VAWA.

See

42 U.S.C. 13925(a)(29).

In this NPRM, the term

solicitation

is defined to have the meaning given to it in the Minimum Wage Executive Order Final Rule,

i.e.,

any request to submit offers, bids, or quotations to the Federal Government. 79 FR 60673 (codified at 29 CFR 10.2). As explained in the Minimum Wage Executive Order rulemaking, the definition is based on language from 29 CFR 9.2, and requests for information issued by Federal agencies and informal conversations with federal workers do not fall within the definition.

See

79 FR 60643-44.

The Department proposes to define the term

spouse

as the other person with whom an individual entered into marriage as defined or recognized under State law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State. This definition includes an individual in a common law marriage that was entered into in a State that recognizes such marriages or, if entered into outside of any State, is valid in the place where entered into and could have been entered into in at least one State. This definition is derived from the FMLA regulations.

See

29 CFR 825.122 (as updated by Definition of Spouse Under the Family and Medical Leave Act, 80 FR 9989 (Feb. 25, 2015)). The Department's references to marriage and common law marriage include both same-sex and opposite-sex marriages or common law marriages.

Under proposed § 13.2,

stalking

means engaging in a course of conduct directed at a specific person that would cause a reasonable person to fear for his or her safety or the safety of others or suffer substantial emotional distress. This definition is adopted from the VAWA.

See

42 U.S.C. 13925(a)(30).

The Department proposes to define

successor contract

to mean a contract for the same or similar services as were provided by a different predecessor contractor at the same location.

In proposed § 13.2, the Department defines the term

United States

as it did in the Minimum Wage Executive Order rulemaking, which uses the definitions of that term set forth in 29 CFR 9.2 and 48 CFR 2.101, though it does not adopt any of the exceptions to the definition of the term set forth in the FAR.

See

79 FR 60645. Based on those regulations,

United States

means the United States and all executive departments, independent establishments, administrative agencies, and

instrumentalities of the United States, including corporations of which all or substantially all of the stock is owned by the United States, by the foregoing departments, establishments, agencies, and instrumentalities, including nonappropriated fund instrumentalities. When the term is used in a geographic sense, the

United States

means the 50 States and the District of Columbia.

The Department proposes to define

victim services organization

to mean a nonprofit, nongovernmental, or tribal organization or rape crisis center, including a State or tribal coalition, that assists or advocates for victims of domestic violence, sexual assault, or stalking, including domestic violence shelters, faith-based organizations, and other organizations, with a documented history of effective work concerning domestic violence, sexual assault, or stalking. This definition is based on the definition of “victim service provider” in the VAWA.

See

42 U.S.C. 13925(a)(43). The Department intends this definition to include organizations that provide services to adult, teen, and/or child victims of domestic violence, sexual assault, or stalking.

The Department proposes to define

Violence Against Women Act

(VAWA) as the Violence Against Women Act of 1994, 42 U.S.C. 13925

et seq.,

and its implementing regulations.

The Department proposes to define

Wage and Hour Division

to mean the Wage and Hour Division within the U.S. Department of Labor.

Section 13.3 Coverage

Proposed § 13.3 addresses and implements the coverage provisions of section 6 of Executive Order 13706. 80 FR 54697-54700. Proposed § 13.3(a) would implement the provisions regarding the categories of contracts and employees covered by the Order by stating that part 13 applies to any new contract with the Federal Government, unless excluded by § 13.4, provided that: (1)(i) It is a procurement contract for construction covered by the DBA; (ii) it is a contract for services covered by the SCA; (iii) it is a contract for concessions, including any concessions contract excluded from coverage under the SCA by Department of Labor regulations at 29 CFR 4.133(b); or (iv) it is a contract in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public; and (2) the wages of employees performing on or in connection with such contract are governed by the DBA, SCA, or FLSA, including employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions.

Proposed § 13.3(b) incorporates the monetary value thresholds referred to in section 6(e) of the Executive Order. Specifically, it would provide that for contracts covered by the SCA or the DBA, part 13 applies to prime contracts only at the thresholds specified in those statutes, and for procurement contracts where employees' wages are governed by the FLSA (

i.e.,

procurement contracts not covered by the SCA or DBA), part 13 applies when the prime contract exceeds the micro-purchase threshold, as defined in 41 U.S.C. 1902(a). As proposed, § 13.3(b) further explains that for all other covered prime contracts and for all subcontracts awarded under covered prime contracts, part 13 applies regardless of the value of the contract. In this context, “all other prime contracts” covered by the Order and part 13 refers to non-procurement concessions contracts not covered by the SCA and non-procurement contracts with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public not covered by the SCA.

Proposed § 13.3(c), which is identical to the analogous provision in the Minimum Wage Executive Order Final Rule, 29 CFR 10.3(c), states that part 13 only applies to contracts with the Federal Government requiring performance in whole or in part within the United States; it further explains that if a contract with the Federal Government is to be performed in part within and in part outside the United States and is otherwise covered by the Executive Order and part 13, the requirements of the Order and part 13 would apply with respect to that part of the contract that is performed within the United States.

Proposed § 13.3(d), adopted from the Minimum Wage Executive Order regulations, 29 CFR 10.3(d), explains that part 13 does not apply to contracts subject to the Walsh-Healey Public Contracts Act, 41 U.S.C. 6501

et seq.

The preamble to the Minimum Wage Executive Order Final Rule addressed several issues related to the coverage provisions of that Order in its discussion of the regulatory text that was codified at 29 CFR 10.3; because many of those issues are also relevant to Executive Order 13706, the Department addresses them here. Where the language of § 13.3 is based on text of Executive Order 13706 that is identical to the text of the Minimum Wage Executive Order, the Department interprets the text identically, although the Department is posing one question about a contracts coverage issue, as described below. The Department's interpretations of language from Executive Order 13706 that differs from the text of the Minimum Wage Executive Order are based on and consistent with the language of the Order being implemented here.

Coverage of Executive Agencies and Departments

Executive Order 13706 applies to all “[e]xecutive departments and agencies.” 80 FR 54697. The Department proposes to define

executive departments and agencies

in § 13.2 as explained above.

Executive Order 13706, like the Minimum Wage Executive Order, strongly encourages but does not compel “[i]ndependent agencies” to comply with its requirements. 80 FR 54700;

see also

79 FR 9853. The Department interprets this provision, in light of the Executive Order's broad goal of providing paid sick leave to employees on contracts with the Federal Government, as a narrow exemption from coverage. The proposed rule would define independent agencies as explained in the discussion of § 13.2 above.

Coverage of New Contracts With the Federal Government

Proposed § 13.3(a) provides that the requirements of the Executive Order apply to a “new contract with the Federal Government.” By applying only to “new contracts,” the Executive Order ensures that contracting agencies and contractors will have sufficient notice of any obligations under Executive Order 13706 and can take into account any potential impact of the Order prior to entering into “new contracts” on or after January 1, 2017. As discussed above, the proposed definition of the term

contract

is broadly inclusive, and the proposed definition of

new contract

is modeled on the definition of that term in the Minimum Wage Executive Order Final Rule, 29 CFR 10.2, and incorporates the provisions of section 7 of Executive Order 13706. Therefore, part 13 applies to contracts with the Federal Government, unless excluded by § 13.4, that result from solicitations issued on or after January 1, 2017, or to contracts that are awarded outside the solicitation process on or after January 1, 2017. For example, any covered contracts that are added to the GSA Schedule in response to GSA Schedule solicitations issued on or after January 1, 2017 qualify as “new contracts” subject to the Order; any covered task orders issued pursuant to those contracts also would be deemed to be “new contracts.” This would include

contracts to add new covered services as well as contracts to replace expiring contracts.

As explained in the discussion of proposed § 13.2, the proposed definition of

new contract

also provides that the term includes both new contracts and replacements for expiring contracts. However, consistent with the Minimum Wage Executive Order Final Rule, the proposed definition does not include unilateral exercise of a pre-negotiated option to renew an existing contract by the Federal Government. As discussed above, the Department proposes to define the term

option

to mean a unilateral right in a contract by which, for a specified time, the Federal Government may elect to purchase additional supplies or services called for by the contract, or may elect to extend the term of the contract.

See

48 CFR 2.101.

The proposed definition of

new contract

also provides that for purposes of the Executive Order, a contract that is entered into prior to January 1, 2017 will constitute a

new contract

if, through bilateral negotiation, on or after January 1, 2017: (1) The contract is renewed; (2) the contract is extended, unless the extension is made pursuant to a term in the contract as of December 31, 2016 providing for a short-term limited extension; or (3) the contract is amended pursuant to a modification that is outside the scope of the contract. These statements have the same meaning in part 13 as they did in the Minimum Wage Executive Order rulemaking.

See

79 FR 60646-49. As also noted in the Minimum Wage Executive Order rulemaking, the Department understands that contract extensions may be accomplished through options created by an agency pursuant to FAR clause 52.217-8 (which allows for an extension of time of up to 6 months for a contractor to perform services that were acquired but not provided during the contract period) or FAR clause 52.217-9 (which provides for an extension of the contract term to provide additional services for a limited term specified in the contract at previously agreed upon prices). The contracting agency's exercise of extensions under these clauses would not trigger application of the Order's paid sick leave requirements because the clauses give the contracting agency a discretionary right to unilaterally exercise the option to extend, and unilateral options are excluded from the definition of “new contract.”

Specifically, and particularly in light of these clauses, a bilaterally negotiated extension of an existing contract on or after January 1, 2017 will be viewed as a “new contract” unless the extension is made pursuant to a term in the contract as of December 31, 2016 providing for a short-term limited extension, in which case the extension will not constitute a “new contract” and will not be covered. Therefore, a short-term, bilaterally negotiated extension of contract terms (

e.g.,

an extension of 6 months or less) that was provided for by the pre-negotiated terms of the contract prior to January 1, 2017, such as a bridge to prevent a gap in service, would not constitute a new contract.

See

Interim Final Rule, Federal Acquisition Regulation; Establishing a Minimum Wage for Contractors, 79 FR 74544, 74545 (Dec. 15, 2014) (providing that contacting officers “shall include” the FAR contract clause to implement the Minimum Wage Executive Order when “bilateral modifications extending the contract . . . are individually or cumulatively longer than six months”). In addition, when a contracting agency exercises its unilateral right to extend the term of an existing service contract and simply makes pricing adjustments based on increased labor costs that result from its obligation to include a current SCA wage determination pursuant to 29 CFR 4.4 but no bilateral negotiations occur (other than any necessary to determine and effectuate those pricing adjustments), the Department would not view the exercise of that option as a “new contract” covered by the Executive Order.

An extension that was bilaterally negotiated and not previously authorized by the terms of the existing contract, however, would be a “new contract” subject to the Order's paid sick leave requirements. The Department also notes that a long-term extension of an existing contract will qualify as a “new contract” subject to the Executive Order even if such an extension was provided for by a pre-negotiated term of the contract.

With respect to the coverage of other contract modifications, the Department's approach in this proposal is identical to that in the Minimum Wage Executive Order Final Rule. 79 FR 60646-49. It is meant to reflect that modifications within the scope of the contract do not in fact constitute new contracts. Long-standing contracting principles recognize that an existing contract, especially a larger one, will often require modifications, which may include very modest changes (

e.g.,

a small change to a delivery schedule). Therefore, regulations such as the FAR do not require agencies to create new contracts to support these actions. Accordingly, contract modifications that are within the scope of the contract within the meaning of the FAR,

see

48 CFR 6.001(c) and related case law, are not “new contracts” for purposes of the Executive Order, even when undertaken after January 1, 2017.

However, if the parties bilaterally negotiate a modification that is outside the scope of the contract, the agency will be required to create a new contract, triggering solicitation and/or justification requirements, and thus such a modification after January 1, 2017 will constitute a “new contract” subject to the Executive Order's paid sick leave requirements. For example, if an existing SCA-covered contract for janitorial services at a Federal office building is modified by bilateral negotiation after January 1, 2017 to also provide for security services at that building, such a modification would likely be regarded as outside the scope of the contract and thus qualify as a “new contract” subject to the Executive Order. Similarly, if an existing DBA-covered contract for construction work at Site A was modified by bilateral negotiation after January 1, 2017 to also cover construction work at Site B, such a modification would generally be viewed as outside the scope of the contract and thus trigger coverage of the Executive Order. The Department cautions, however, that whether a modification qualifies as “within the scope” or “outside the scope” of the contract is necessarily a fact-specific determination.

See, e.g., AT&T Communications, Inc.

v.

Wiltel, Inc.,

1 F.3d 1201 (Fed. Cir. 1993).

Although in-scope modifications do not create “new contracts” under part 13, the Department strongly encourages agencies to bilaterally negotiate, as part of any such modification, application of the Executive Order's paid sick leave requirements so that these contracts can take advantage of the benefits of such leave. For example, the FARC should encourage, if not require, contracting officers to modify existing indefinite-delivery, indefinite-quantity contracts in accordance with FAR section 1.108(d)(3) to include the paid sick leave requirements of Executive Order 13706 and part 13, particularly if the remaining ordering period extends at least 6 months and the amount of remaining work or number of orders expected is substantial.

See

79 FR 74545 (providing that contracting officers “are strongly encouraged to include” the FAR contract clause to implement the Minimum Wage Executive Order in “existing indefinite-delivery indefinite-quantity contracts, if the remaining ordering period extends at least six months and the amount of remaining

work or number of orders expected is substantial”).

Coverage of Types of Contractual Arrangements

Proposed § 13.3(a)(1) sets forth the specific types of contractual arrangements with the Federal Government that are covered by the Executive Order. Executive Order 13706 and part 13 are intended to apply to a wide range of contracts with the Federal Government for services or construction, and proposed § 13.3(a)(1) implements the Executive Order by generally extending coverage to procurement contracts for construction covered by the DBA; service contracts covered by the SCA; concessions contracts, including any concessions contract excluded by the Department's regulations at 29 CFR 4.133(b); and contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public. Each of these categories of contractual agreements, which are treated in this proposed rulemaking as they were in the Minimum Wage Executive Order rulemaking, is discussed in greater detail below.

Procurement Contracts for Construction:

Section 6(d)(i)(A) of the Executive Order extends coverage to any “procurement contract for . . . construction.” 80 FR 54699. As explained in the Minimum Wage Executive Order rulemaking, 79 FR 60650, this language indicates that the Executive Order and part 13 apply to contracts subject to the DBA and that they do not apply to contracts subject only to the Davis-Bacon Related Acts, including those set forth at 29 CFR 5.1(a)(2)-(60).

The DBA applies, in relevant part, to contracts to which the Federal Government is a party, for the construction, alteration, or repair, including painting and decorating, of public buildings and public works of the Federal Government and which require or involve the employment of mechanics or laborers. 40 U.S.C. 3142(a). The DBA's regulatory definition of

construction

is expansive and includes all types of work done on a particular building or work by laborers and mechanics employed by a construction contractor or construction subcontractor.

See

29 CFR 5.2(j). For purposes of the DBA and therefore the Executive Order, a contract is “for construction” if “more than an incidental amount of construction-type activity” is involved in its performance.

See, e.g., In the Matter of Crown Point, Indiana Outpatient Clinic,

WAB Case No. 86-33, 1987 WL 247049, at * 2 (June 26, 1987) (citing

In re: Military Housing, Fort Drum, New York,

WAB Case No. 85-16, 1985 WL 167239 (Aug. 23, 1985)),

aff'd sub nom. Building & Construction Trades Dep't, AFL-CIO

v.

Turnage,

705 F. Supp. 5 (D.D.C. 1988); Office of Legal Counsel, U.S. Department of Justice,

Reconsideration of Applicability of the Davis-Bacon Act to the Veterans Administration's Lease of Medical Facilities

(OLC Letter), 18 Op. O.L.C. 109, 1994 WL 810699, at * 5 (May 23, 1994). The term “contract for construction” is not limited to contracts entered into with a construction contractor; rather, a contract for construction “would seem to require only that there be a contract, and that one of the things required by that contract be construction of a public work.” OLC Letter at * 3-4. The term “public building or public work” includes any building or work, the construction, prosecution, completion, or repair of which is carried on directly by authority of or with funds of a Federal agency to serve the interest of the general public.

See

29 CFR 5.2(k).

Proposed § 13.3(b) implements section 6(e) of Executive Order 13706, 80 FR 52699-700, which provides that the Order applies only to DBA-covered prime contracts that exceed the $2,000 value threshold specified in the DBA.

See

40 U.S.C. 3142(a). Consistent with the DBA, there is no value threshold requirement for application of Executive Order 13706 and part 13 to subcontracts awarded under such prime contracts.

Procurement Contracts for Services:

Proposed § 13.3(a)(1)(ii) provides, in language identical to that of 29 CFR 10.3(a)(1)(ii) as promulgated by the Minimum Wage Executive Order Final Rule, 79 FR 60723, that coverage of the Executive Order and part 13 encompasses any “contract for services covered by the Service Contract Act.”

This proposed provision implements section 6(d)(i)(B) of the Executive Order, which states that the Order applies to “a contract or contract-like instrument for services covered by the Service Contract Act.” 80 FR 54699. The SCA applies (subject to the exceptions discussed below) to any contract entered into by the United States that “has as its principal purpose the furnishing of services in the United States through the use of service employees.” 41 U.S.C. 6702(a)(3);

see also

29 CFR 4.110. The SCA is intended to cover a wide variety of service contracts with the Federal Government, so long as the principal purpose of the contract is to provide services using service employees.

See, e.g.,

29 CFR 4.130(a). SCA coverage exists regardless of the direct beneficiary of the services or the source of the funds from which the contractor is paid for the service and irrespective of whether the contractor performs the work in its own establishment, on a Government installation, or elsewhere. 29 CFR 4.133(a).

In addition to the provision in section 6(d)(i)(B) of the Executive Order extending coverage to contracts covered by the SCA, section 6(d)(i)(A) provides that the Order applies to “a procurement contract for services.” 80 FR 54699. In the Minimum Wage Executive Order rulemaking, the Department interpreted these two phrases together to mean that Executive Order 13658 applied to all procurement and non-procurement contracts covered by the SCA. The phrase “a procurement contract for services” could, however, be construed to encompass a category or categories of procurement contracts for services beyond those covered by the SCA.

The SCA does not apply to all procurement contracts with the Federal Government for services. For example, the SCA contains a list of exemptions from its coverage: It does not apply to “a contract for the carriage of freight or personnel by vessel, airplane, bus, truck, express, railway line or oil or gas pipeline where published tariff rates are in effect”; “a contract for the furnishing of services by radio, telephone, telegraph, or cable companies, subject to the Communications Act of 1934”; “a contract for public utility services, including electric light and power, water, steam, and gas”; “an employment contract providing for direct services to a Federal agency by an individual”; and “a contract with the United States Postal Service, the principal purpose of which is the operation of postal contract stations.” 41 U.S.C. 6702(b);

see also

29 CFR 4.115-4.122. Additionally, 29 CFR 4.123(d) and (e) identify certain categories of contracts the Department has exempted, pursuant to authority granted by the SCA,

see

41 U.S.C. 6707(b), from SCA coverage to the extent regulatory criteria for exclusion from coverage are satisfied. For example, 29 CFR 4.123(e)(1)(i)(A) exempts from SCA coverage certain contracts principally for the maintenance, calibration, or repair of automated data processing equipment and office information/word processing systems. Furthermore, the SCA does not apply to contracts for services to be performed exclusively by persons who are not service employees,

i.e.,

persons who qualify as bona fide executive, administrative, or professional employees as defined in the FLSA's regulations at 29 CFR part 541. 29 CFR

4.113(a)(2);

see also

41 U.S.C. 6701(a)(3)(C), 6702(a)(3); WHD Field Operations Handbook (FOH) ¶ 14c07. Similarly, a contract for services “performed essentially by bona fide executive, administrative, or professional employees, with the use of service employees being only a minor factor in contract performance,” is not covered by the SCA. 29 CFR 4.113(a)(3); FOH ¶ 14c07.

The Department seeks comment as to whether it should include within the coverage of Executive Order 13706 a wider set of procurement contracts for services than those contracts for services covered by the SCA. An interpretation treating as covered procurement contracts for services performed exclusively or essentially by employees who qualify as bona fide executive, administrative, or professional employees as defined in the FLSA's regulations at 29 CFR part 541—a type of employee covered by section 6(d)(ii) of the Order because such employees qualify for an exemption from the FLSA's minimum wage and overtime provisions, 80 FR 54700—would, for example, extend the Order's paid sick leave requirements to some such employees who would otherwise not be covered by the Order. An interpretation treating as covered other types of service contracts explicitly exempted from SCA coverage under 41 U.S.C. 6702(b) and 29 CFR 4.123(d) and (e) would also extend the Order's paid sick leave requirements to at least some employees on any such contracts; although those employees' wages would by definition not be covered by the SCA, under such an interpretation, employees performing on or in connection with such contracts whose wages were governed by the FLSA, including employees who qualify for an exemption from its minimum wage and overtime provisions, would be entitled to paid sick leave under the Order and part 13. The Department seeks comments discussing the potential scope and implications of such coverage, including whether employees who work on or in connection with certain categories of non-SCA-covered service contracts currently typically do not have paid sick time or do not have any type of paid time off such that the protections of Executive Order 13706 would be particularly significant to them. (If in the Final Rule, the Department changes the scope of coverage of service contracts, it will make a corresponding change to proposed § 13.4(d), which—as explained below—sets forth an exclusion from the Order's coverage for service contracts not covered by the SCA or proposed § 13.3(a)(1)(iii) or (iv).)

The Department notes that regardless of whether it adopts a broader interpretation of the set of procurement contracts for services covered by the Order and part 13, under proposed § 13.3(a)(1)(iii) and (iv) as well as § 13.3(d), described in more detail below, the Order's paid sick leave requirements will apply to service contracts that are concessions contracts, including all concessions contracts excluded by the SCA regulations at 29 CFR 4.133(b); will apply to service contracts that are in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public; and will not apply to 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, 41 U.S.C. 6501

et seq.

Finally, proposed § 13.3(b) implements section 6(e) of the Executive Order, which provides that for SCA-covered contracts, the Executive Order applies only to those prime contracts that exceed the threshold for prevailing wage requirements specified in the SCA. 80 FR 54700. Although the SCA covers all non-exempted contracts with the Federal Government that have the “principal purpose” of furnishing services in the United States through the use of service employees regardless of the value of the contract, the prevailing wage requirements of the SCA only apply to covered contracts in excess of $2,500. 41 U.S.C. 6702(a)(2). Consistent with the SCA, there is no value threshold requirement for application of Executive Order 13706 and part 13 to subcontracts awarded under such prime contracts.

Contracts for Concessions:

Proposed § 13.3(a)(1)(iii) implements the Executive Order's coverage of a “contract or contract-like instrument for concessions, including any concessions contract excluded by the Department of Labor's regulations at 29 CFR 4.133(b),” 80 FR 54699, just as the Minimum Wage Executive Order Final Rule implemented identical language in that Order,

see

79 FR 60638, 60652. The proposed definition of

concessions contract

is addressed in the discussion of proposed § 13.2.

The SCA generally covers contracts for concessionaire services.

See

29 CFR 4.130(a)(11). Pursuant to the Secretary's authority under section 4(b) of the SCA, however, the SCA's regulations specifically exempt from coverage concession contracts “principally for the furnishing of food, lodging, automobile fuel, souvenirs, newspaper stands, and recreational equipment to the general public.” 29 CFR 4.133(b); 48 FR 49736, 49753 (Oct. 27, 1983).

1

Proposed § 13.3(a)(1)(iii) extends coverage of the Executive Order and part 13 to all concession contracts with the Federal Government, including those exempted from SCA coverage. For example, the Executive Order generally covers souvenir shops at national monuments as well as boat rental facilities and fast food restaurants at National Parks. In addition, consistent with the SCA's implementing regulations at 29 CFR 4.107(a), the Department notes that the Executive Order generally applies to concessions contracts with nonappropriated fund instrumentalities under the jurisdiction of the Armed Forces or other Federal agencies.

1

This exemption applies to certain concessions contracts that provide services to the general public, but does not apply to concessions contracts that provide services to the Federal Government or its personnel or to concessions services provided incidentally to the principal purpose of a covered SCA contract.

See, e.g.,

29 CFR 4.130 (providing an illustrative list of SCA-covered contracts);

In the Matter of Alcatraz Cruises, LLC,

ARB Case No. 07-024, 2009 WL 250456 (ARB Jan. 23, 2009) (holding that the SCA regulatory exemption at 29 CFR 4.133(b) does not apply to National Park Service contracts for ferry transportation services to and from Alcatraz Island).

Proposed § 13.3(b) implements the value threshold requirements of section 6(e) of Executive Order 13706. 80 FR 54699-700. Pursuant to that section, the Executive Order applies to an SCA-covered concessions contract only if it exceeds $2,500.

Id.;

41 U.S.C. 6702(a)(2). Section 6(e) of the Executive Order further provides that, for procurement contracts where employees' wages are governed by the FLSA, such as any procurement contracts for concessionaire services that are excluded from SCA coverage under 29 CFR 4.133(b), part 13 applies only to contracts that exceed the $3,000 micro-purchase threshold, as defined in 41 U.S.C. 1902(a). There is no value threshold for application of Executive Order 13706 and part 13 to subcontracts awarded under covered prime contracts or for non-procurement concessions contracts that are not covered by the SCA.

Contracts in Connection with Federal Property or Lands and Related to Offering Services:

Proposed § 13.3(a)(1)(iv) implements section 6(d)(i)(D) of the Executive Order, which extends coverage to contracts entered into with the Federal Government in connection with Federal property or lands and related to offering services for

Federal employees, their dependents, or the general public.

See

80 FR 54699;

see also

79 FR 60655 (Minimum Wage Executive Order Final Rule preamble discussion of identical provisions in the Minimum Wage Executive Order and 29 CFR part 10). To the extent that such agreements are not otherwise covered by § 13.3(a)(1), the Department interprets this provision as generally including leases of Federal property, including space and facilities, and licenses to use such property entered into by the Federal Government for the purpose of offering services to the Federal Government, its personnel, or the general public. In other words, a private entity that leases space in a Federal building to provide services to Federal employees or the general public would be covered by the Executive Order and part 13 regardless of whether the lease is subject to the SCA. Although evidence that an agency has retained some measure of control over the terms and conditions of the lease or license to provide services is not necessary for purposes of determining applicability of this section, such a circumstance strongly indicates that the agreement involved is covered by section 6(d)(i)(D) of the Executive Order and proposed § 13.3(a)(1)(iv). Pursuant to this interpretation, a private fast food or casual dining restaurant that rents space in a Federal building and serves food to the general public would be subject to the Executive Order's paid sick leave requirements even if the contract does not constitute a concessions contract for purposes of the Order and part 13. Additional examples of agreements that would generally be covered by the Executive Order and part 13 under this approach, even if they are not subject to the SCA, include delegated leases of space in a Federal building from an agency to a contractor whereby the contractor operates a child care center, credit union, gift shop, barber shop, health clinic, or fitness center in the space to serve Federal employees and/or the general public.

Despite this broad definition, the Department notes some limits to it. Coverage under this section only extends to contracts that are in connection with Federal property or lands. The Department does not interpret section 6(d)(i)(D)'s reference to “Federal property” to encompass money; as a result, purely financial transactions with the Federal Government,

i.e.,

contracts that are not in connection with physical property or lands, would not be covered by the Executive Order or part 13. For example, if a Federal agency contracts with an outside catering company to provide and deliver coffee for a conference, such a contract will not be considered a covered contract under section 6(d)(i)(D), although it would be a covered contract under section 6(d)(i)(B) if it is covered by the SCA. In addition, section 6(d)(i)(D) coverage only extends to contracts “related to offering services for Federal employees, their dependents, or the general public.” Therefore, if a Federal agency contracts with a company to solely supply materials in connection with Federal property or lands, the Department will not consider the contract to be covered by section 6(d)(i)(D) because it is not a contract related to offering services. Likewise, because a license or permit to conduct a wedding on Federal property or lands generally would not relate to offering services for Federal employees, their dependents, or the general public, but rather would only relate to offering services to the specific individual applicant(s), the Department would not consider such a contract covered by section 6(d)(i)(D).

Pursuant to proposed § 13.3(b) and section 6(e) of Executive Order 13706, 80 FR 54700, the Order and part 13 apply only to SCA-covered prime contracts in connection with Federal property and related to offering services if such contracts exceed $2,500.

Id.;

41 U.S.C. 6702(a)(2). For procurement contracts in connection with Federal property and related to offering services where employees' wages are governed by the FLSA (rather than the SCA), part 13 applies only to such contracts that exceed the $3,000 micro-purchase threshold, as defined in 41 U.S.C. 1902(a). As to subcontracts awarded under prime contracts in this category and non-procurement contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public that are not SCA-covered, there is no value threshold for coverage under Executive Order 13706 and part 13.

Contracts Subject to the Walsh-Healey Public Contracts Act:

Finally, the Department proposes to include as § 13.3(d) a statement that contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the Federal Government,

i.e.,

those subject to the Walsh-Healey Public Contracts Act (PCA), 41 U.S.C. 6501

et seq.,

are not covered by Executive Order 13706 or part 13. As in the Minimum Wage Executive Order rulemaking, the Department proposes to exercise its authority under the Order to “provid[e] exclusions from the requirements set forth in this order where appropriate,” 80 FR 64698, and to follow the regulations set forth in the FAR at 48 CFR 22.402(b) in addressing whether the DBA (and thus the Executive Order) applies to construction work on a PCA contract. Under this approach, where a PCA-covered contract involves a substantial and segregable amount of construction work that is subject to the DBA, employees whose wages are governed by the DBA or FLSA, including those who qualify for an exemption from the FLSA's minimum wage and overtime provisions, are covered by the Executive Order for the hours that they spend performing on or in connection with such DBA-covered construction work.

Coverage of Subcontracts

As explained in the Minimum Wage Executive Order rulemaking, 79 FR 60657-58, the same test for determining application of the Executive Order to prime contracts applies to the determination of whether a subcontract is covered by the Order, with the distinction that the value threshold requirements set forth in section 6(e) of the Order do not apply to subcontracts. In other words, the requirements of the Order apply to a subcontract if the subcontract qualifies as a

contract

or

contract-like instrument

under the definition set forth in part 13 and it falls within one of the four specifically enumerated types of contracts set forth in section 6(d)(i) of the Order and proposed § 13.3(a)(1).

Pursuant to this approach, only covered subcontracts of covered prime contracts are subject to the requirements of the Executive Order. Therefore, just as the Executive Order does not apply to prime contracts that are subject to the PCA, it likewise does not apply to subcontracts for the manufacturing or furnishing of materials, supplies, articles, or equipment. In other words, the Executive Order does not apply to subcontracts for the manufacturing or furnishing of materials, supplies, articles, or equipment between a manufacturer or other supplier and a covered contractor for use on a covered Federal contract. For example, a subcontract to supply napkins and utensils to a covered prime contractor operating a fast food restaurant on a military base is not a covered subcontract for purposes of this Order. The Executive Order likewise does not apply to contracts under which a contractor orders materials from a construction materials supplier.

Coverage of Employees

Proposed § 13.3(a)(2) implements section 6(d)(ii) of Executive Order

13706, which provides that the paid sick leave requirements of the Order only apply if the wages of employees under a covered contract are governed by the DBA, SCA, or FLSA, including employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions. 80 FR 54699. This coverage provision is distinct from that in Executive Order 13658 in that the Minimum Wage Executive Order did not cover employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions,

see

79 FR 9853; the discussion below reflects this distinction.

An employee's wages are governed by the FLSA for purposes of section 6(d)(ii) of the Executive Order and part 13 if the employee is entitled to minimum wage and/or overtime compensation under sections 6 and/or 7 of the FLSA or the employee's wages are calculated pursuant to special certificates issued under section 14 of the FLSA.

See

29 U.S.C. 206, 207, 214. The Department interprets the Order's explicit coverage of employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions to mean that the Order and part 13 apply to an employee who would be entitled to minimum wage and/or overtime compensation under the FLSA but for the application of an exemption from the FLSA's minimum wage and overtime requirements pursuant to section 13 of the Act.

See

29 U.S.C. 213. Such employees include those employed in a bona fide executive, administrative, or professional capacity as defined in section 13(a)(1) of the FLSA, 29 U.S.C. 213(a)(1), and 29 CFR part 541.

The Department interprets the Order's reference to employees whose wages are governed by the DBA to include laborers and mechanics who are covered by the DBA, including any individual who is employed on a DBA-covered contract and individually registered in a bona fide apprenticeship program registered with the Department's Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship. The Department also interprets the language in section 6(d)(ii) of Executive Order 13706 and proposed § 13.3(a)(2) to extend coverage to employees performing on or in connection with DBA-covered contracts for construction who are not laborers or mechanics but whose wages are governed by the FLSA as provided above, including those who qualify for an exemption from the FLSA's minimum wage and overtime provisions. Although such employees are not covered by the DBA itself because they are not “laborers and mechanics,” 40 U.S.C. 3142(b), such individuals are employees performing on or in connection with a contract subject to the Executive Order whose wages are governed by the FLSA, including those who qualify for an exemption from the FLSA's minimum wage and overtime provisions, and thus are covered by section 6(d) of the Order. 80 FR 54699. This coverage extends to employees whose wages are governed by the FLSA, including those who qualify for an exemption from the FLSA's minimum wage and overtime provisions, who are working on or in connection with DBA-covered contracts regardless of whether such employees are physically present on the DBA-covered construction worksite.

The Order also refers to employees whose wages are governed by the SCA. The SCA provides that “service employees” directly engaged in providing specific services called for by the SCA-covered contract are entitled to SCA prevailing wage rates. 41 U.S.C. 6701(3), 6703; 29 CFR 4.152. These employees are covered by the plain language of section 6(d) of Executive Order 13706. This category includes individuals who are employed on an SCA contract and individually registered in a bona fide apprenticeship program registered with the Department's Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship.

Under the SCA, “service employees” who do not perform the services required by an SCA-covered contract but whose duties are “necessary to performance of the contract” must be paid at least the FLSA minimum wage. 29 CFR 4.153;

see also

41 U.S.C. 6704(a). The Department interprets the language in section 6(d)(ii) of Executive Order 13706 and proposed § 13.3(a)(2) to extend coverage to this category of employee. For example, an accounting clerk who is paid hourly to process invoices and work orders on an SCA-covered contract for janitorial services would likely not qualify as performing services required by the contract (and therefore would not be entitled to SCA prevailing wages), but the clerk would be entitled to at least the FLSA minimum wage. Therefore, the clerk would be covered by the Executive Order.

Furthermore, some employees perform work on or in connection with SCA-covered contracts but are not “service employees” for purposes of the Act because that term does not include an individual employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in the FLSA regulations at 29 CFR part 541. 41 U.S.C. 6701(3)(C). As explained above, these employees are covered pursuant to section 6(d)(ii) of the Executive Order. For example, a contractor could employ a manager who meets the test for the executive employee exemption under 29 U.S.C. 213(a)(1) and 29 CFR 541.100 to supervise janitors on an SCA-covered contract for cleaning services at a Federal building. Because that manager performs work on a covered contract and qualifies for an exemption from the FLSA's minimum wage and overtime provisions, she would be entitled to the paid sick leave required by Executive Order 13706 and part 13.

The Department notes that where State or local government employees are performing on or in connection with covered contracts and their wages are governed by the SCA or the FLSA, including employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions, such employees are entitled to the protections of the Executive Order and part 13. The DBA does not apply to construction performed by State or local government employees.

On or In Connection With

The paid sick leave requirements of Executive Order 13706 and part 13 apply to employees performing work “on or in connection with” covered contracts. As it did in the Minimum Wage Executive Order rulemaking,

see

79 FR 60671-72, the Department interprets these terms in a manner consistent with SCA regulations,

see, e.g.,

29 CFR 4.150-.155. Specifically, the Department views employees performing “on” a covered contract as those employees directly performing the specific services called for by the contract. Whether an employee is performing “on” a covered contract will be determined, as explained in the Minimum Wage Executive Order Final Rule, 79 FR 60660, in part by the scope of work or a similar statement set forth in the covered contract that identifies the work (

e.g.,

the services or construction) to be performed under the contract. Accordingly, all laborers and mechanics engaged in the construction of a public building or public work on the site of the work will be regarded as performing “on” a DBA-covered contract, and all service employees performing the specific services called for by an SCA-covered contract will also be regarded as performing “on” a

contract covered by the Executive Order. In other words, any employee who is entitled to be paid DBA or SCA prevailing wages is necessarily performing “on” a covered contract. For purposes of concessions contracts and contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public that are not covered by the SCA, the Department will regard any employee performing the specific services called for by the contract as performing “on” the covered contract in the manner described above.

The Department regards an employee performing “in connection with” a covered contract to be any employee who is performing work activities that are necessary to the performance of a covered contract but who is not directly engaged in performing the specific services called for by the contract itself. This standard, also articulated in the Minimum Wage Executive Order rulemaking, is derived from SCA regulations.

See

79 FR 60659 (citing 29 CFR 4.150-.155).

The Department notes that the Order does not extend to employees who are not engaged in working on or in connection with a covered contract. For example, a technician who is hired to repair a DBA contractor's electronic time system or a janitor who is hired to clean the bathrooms at the DBA contractor's company headquarters are not covered by the Order because they are not performing the specific duties called for by the contract or other services or work necessary to the performance of the contract. Similarly, the Executive Order would not apply to a landscaper at the home office of an SCA contractor because that employee is not performing the specific duties called for by the SCA contract or other services or work necessary to the performance of the contract. And the Executive Order would not apply to an employee hired by a covered concessionaire to redesign the storefront sign for a snack shop in a National Park unless the redesign of the sign was called for by the concessions contract itself or otherwise necessary to the performance of the contract. The Department notes for clarity that because the Order and part 13 do not apply to employees of Federal contractors who do no work on or in connection with a covered contract, a contractor could be required to provide paid sick leave to some of its employees but not others; in other words, it is not the case that because a contractor has one or more Federal contracts, all of its projects becomes covered.

Geographic Scope

Proposed § 13.3(c), which is identical to 29 CFR 10.3(c) as promulgated in the Minimum Wage Executive Order Final Rule,

see

79 FR 60723, provides that Executive Order 13706 and part 13 only apply to contracts with the Federal Government requiring performance in whole or in part within the United States. This interpretation is reflected in the Department's proposed definition of the term

United States,

which provides that when used in a geographic sense, the

United States

means the 50 States and the District of Columbia. Under this approach, the requirements of the Order and part 13 would not apply to contracts with the Federal Government to be performed in their entirety outside the geographical limits of the United States as thus defined. If a contract with the Federal Government is to be performed in part within and in part outside these geographical limits and is otherwise covered by the Executive Order and part 13, however, the requirements of the Order and part 13 would apply with respect to that part of the contract that is performed within the United States,

i.e.,

employees would accrue paid sick leave based on their hours worked on or in connection with covered contracts within the United States, and could likewise use accrued paid sick leave while performing on or in connection with a covered contract within the United States. As with other instances described below in which employees perform some work covered by the Executive Order and part 13 and other work that is not, or if some employees working on or in connection with a covered contract do so in the United States and others do so outside the United States, a contractor wishing to comply with the Order's paid sick leave requirements as to only some employees on a contract or only some of an employee's hours worked must keep records adequately segregating non-covered work from covered work. If a contractor does not make and maintain such records, in the absence of other proof regarding the location of the work, all of the employees' hours worked on or in connection with the covered contract and/or all of the employees working on or in connection with the covered contract will be presumed to be covered by the Order and part 13.

Section 13.4 Exclusions

Proposed § 13.4 sets forth exclusions from the Executive Order's requirements, including by implementing the exclusions set forth in section 6(f) of the Order and creating other limited exclusions from coverage as authorized by section 3(a) of the Executive Order.

See

80 FR 54698, 54700. Specifically, proposed § 13.4(a) through (d) describes the limited categories of contractual arrangements with the Federal Government for services or construction that are excluded from the paid sick leave requirements of the Executive Order and part 13, and proposed § 13.4(e) establishes a narrow category of employees that are excluded from coverage of the Order and part 13.

Proposed § 13.4(a) implements the statement in section 6(f) of Executive Order 13706 that the Order does not apply to “grants.” 80 FR 54700. As it did in the Minimum Wage Executive Order rulemaking,

see

79 FR 60665-66, the Department interprets this provision to mean that the paid sick leave requirements of the Executive Order and part 13 do not apply to grants as that term is used in the Federal Grant and Cooperative Agreement Act, 31 U.S.C. 6301

et seq.

That statute defines a “grant agreement” as “the legal instrument reflecting a relationship between the United States Government and a State, a local government, or other recipient when—(1) the principal purpose of the relationship is to transfer a thing of value to the State or local government or other recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and (2) substantial involvement is not expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.” 31 U.S.C. 6304. Section 2.101 of the FAR similarly excludes “grants,” as defined in the Federal Grant and Cooperative Agreement Act, from its coverage of contracts. 48 CFR 2.101. Several appellate courts have also adopted this construction of “grants” in defining the term for purposes of other Federal statutory schemes.

See, e.g.,

Chem. Service, Inc.

v.

Environmental Monitoring Systems Laboratory,

12 F.3d 1256, 1258 (3rd Cir. 1993) (applying same definition of “grants” for purposes of 15 U.S.C. 3710a);

East Arkansas Legal Services

v.

Legal Services Corp.,

742 F.2d 1472, 1478 (D.C. Cir. 1984) (applying same definition of “grants” in interpreting 42 U.S.C. 2996a). If a contract qualifies as a grant within the meaning of the Federal Grant and Cooperative Agreement Act, it would be excluded from coverage of Executive Order 13706 and part 13.

Proposed § 13.4(b) implements the other exclusion set forth in section 6(f) of Executive Order 13706, which states that the Order does not apply to “contracts and agreements with and grants to Indian Tribes under the Indian Self-Determination and Education Assistance Act (Pub. L. 93-638), as amended.” 80 FR 54700. This proposed provision is identical to 29 CFR 10.4(b) as promulgated by the Minimum Wage Executive Order.

See

79 FR 60723.

Proposed § 13.4(c) provides that any procurement contracts for construction that are not subject to the DBA are excluded from coverage of the Executive Order and part 13. This proposed provision is identical to 29 CFR 10.4(c) as promulgated by the Minimum Wage Executive Order Final Rule.

See

79 FR 60723. The Department proposes to make coverage of construction contracts under the Executive Order and part 13 consistent with coverage under the DBA in order to assist all interested parties in understanding their rights and obligations under Executive Order 13706.

Similarly, proposed § 13.4(d) incorporates the SCA's exemption of certain service contracts into the exclusionary provisions of the Executive Order. This proposed provision excludes from coverage of the Executive Order and part 13 any contracts for services, except for those expressly covered by proposed § 13.3(a)(1)(iii) or (iv), that are exempted from coverage under the SCA, pursuant to its statutory language at 41 U.S.C. 6702(b) or its implementing regulations, including those at 29 CFR 4.115 through 4.122 and 29 CFR 4.123(d) and (e). The Department notes that this exemption would not apply if the relevant service contract is expressly included within the Executive Order's coverage by proposed § 13.3(a)(1)(iii) or (iv). For example, certain types of concessions contracts are excluded from SCA coverage pursuant to 29 CFR 4.133(b) but are explicitly covered by section 6(d)(i)(C) of the Executive Order and part 13 under proposed § 13.3(a)(1)(iii). The Department notes that any comments addressing whether the Department should change proposed § 13.3(a)(1)(ii) to extend coverage to any categories of “procurement contracts for services” beyond those covered by the SCA would be relevant to this proposed provision as well.

Proposed § 13.4(e) provides that the accrual requirements of part 13 do not apply to employees performing in connection with covered contracts,

i.e.,

those employees who perform work duties necessary to the performance of the contract but who are not directly engaged in performing the specific work called for by the contract, who spend less than 20 percent of their hours worked in a particular workweek performing in connection with such contracts. It further provides that this exclusion is inapplicable to employees performing on covered contracts,

i.e.,

those employees directly engaged in performing the specific work called for by the contract, at any point during the workweek. Finally, it explains that this exclusion is also inapplicable to employees performing in connection with covered contracts with respect to any workweek in which the employees spend 20 percent or more of their hours worked performing in connection with a covered contract. This provision adopts language included in the Minimum Wage Executive Order Final Rule in response to comments expressing concern about new burdens on contractors associated with employees who spend an insubstantial amount of time performing work in connection with covered contracts (in particular, DBA-covered contractors that did not previously segregate hours worked by FLSA-covered employees, including those who were not present on the site of the construction work). 79 FR 60659, 60724 (codified at 29 CFR 10.4(f)). The Department explained in that rulemaking that it expected the exclusion to significantly mitigate the recordkeeping concerns identified by commenters without substantially affecting the Executive Order's economy and efficiency interests, and noted that it has used a 20 percent threshold for other purposes in the SCA and DBA contexts. 79 FR 60660 (citing 29 CFR 4.123(e)(2); WHD FOH ¶¶ 15e06, 15e10(b), 15e16(c), and 15e19).

As explained in the Minimum Wage Executive Order rulemaking, 79 FR 60659-62, this exclusion does not apply to any employee performing “on,” rather than “in connection with,” a covered contract at any point during the workweek. (The meaning of these terms is addressed above, in the discussion of the coverage provisions of proposed § 13.3.) If an employee spends any time performing on a covered contract and that employee's wages are governed by the DBA, SCA, or FLSA, including employees who qualify for an exemption from the FLSA's minimum wage and overtime provisions, the employee will be entitled to accrue and use paid sick leave pursuant to the Executive Order as to all time performing on or in connection with covered contracts in that workweek. For an employee solely performing “in connection with” a covered contract, however, the Executive Order's paid sick leave requirements will only apply if that employee spends 20 percent or more of her hours worked in a given workweek performing in connection with covered contracts. Therefore, in order to apply this exclusion correctly, contractors must accurately distinguish between employees performing “on” a covered contract and those employees performing “in connection with” a covered contract. As explained in the discussion of these concepts above, employees directly performing the specific services called for by the contract are performing “on” a covered contract. This category includes any employee who is entitled to be paid DBA or SCA prevailing wages; such an employee is therefore entitled to accrue and use paid sick leave as required by the Executive Order and part 13 regardless of whether such covered work constitutes less than 20 percent of the employee's overall hours worked in a particular workweek.

This exclusion could apply, however, to any employees who are not directly engaged in performing the specific construction identified in a DBA contract (

i.e.,

they are not DBA-covered laborers or mechanics) but whose services are necessary to the performance of the DBA contract, such as employees who do not perform the construction identified in the DBA contract either due to the nature of their non-physical duties and/or because they are not present on the site of the work, but whose duties would be regarded as essential for the performance of the contract. For example, proposed § 13.4(e) could apply to a security guard patrolling or monitoring a construction worksite where DBA-covered work is being performed or a clerk who processes the payroll for DBA contracts (either on or off the site of the work). If the security guard or clerk also performed the duties of a DBA-covered laborer or mechanic (for example, by painting or moving construction materials), however, the exclusion would not apply to any hours worked on or in connection with the contract in that workweek because that employee performed “on” the covered contract at some point in the workweek.

Similarly, any employees performing work in connection with an SCA contract who are not entitled to SCA prevailing wages but are, because they perform work “in connection with” an SCA-covered contract, entitled to at least the FLSA minimum wage could fall within the scope of this exclusion provided their work falls below the 20 percent threshold. For example, the exclusion could apply to an accounting

clerk who processes a few invoices for SCA contracts out of hundreds of other invoices for non-covered contracts during the workweek or a human resources employee who assists for short periods of time in the hiring of the employees performing on the SCA-covered contract in addition to the hiring of employees on other non-covered projects.

With respect to concessions contracts and contracts in connection with Federal property or lands and related to offering services, the proposed § 13.4(e) exclusion could apply to any employees performing in connection with such contracts who are not at any time directly engaged in performing the specific services identified in the contract but whose services or work duties are necessary to the performance of the covered contract. One example of an employee who could qualify for this exclusion is a clerk who handles the payroll for a child care center that leases space in a Federal building as well as the center's other locations that are not covered by the Executive Order and thus does not spend 20 percent or more of his time handling payroll for the child care center in the Federal building.

Importantly, as in the Minimum Wage Executive Order rulemaking, 79 FR 60661-62, the Department notes that a contractor seeking to rely on this exclusion must correctly determine the hours worked, make and maintain records (or other affirmative proof) that the employee did not work “on” a covered contract, and appropriately segregate the hours worked by the employee in connection with the covered contract from other work not subject to the Executive Order. This requirement is consistent with other instances, described elsewhere in this preamble, in which employees perform some work covered by the Executive Order and part 13 and some work that is not. In the absence of records or other proof demonstrating that an employee did not work “on” a covered contract and adequately segregating non-covered work from the work performed in connection with a covered contract, the exclusion will not apply, and employees who work in connection with a covered contract will be presumed to have spent all paid time performing such work throughout the workweek.

The quantum of affirmative proof necessary to support reliance on the exclusion will vary with the circumstances. For example, it may require considerably less affirmative proof to satisfy the proposed § 13.4(e) exclusion with respect to an accounting clerk who only occasionally processes an SCA-contract-related invoice than would be necessary to establish the exclusion with respect to a security guard who works on a DBA-covered site for at least several hours each week.

Additionally, the Department notes that in calculating hours worked by a particular employee in connection with covered contracts for purposes of determining whether this exclusion may apply, contractors must determine the aggregate amount of hours worked on or in connection with covered contracts in a given workweek by that employee. For example, if an administrative assistant works for a single employer 40 hours per week and spends 2 hours each week handling payroll for each of four separate SCA contracts, the 8 hours that the employee spends performing in connection with the four covered contracts must be aggregated for each workweek in order to determine whether the exclusion applies. In this case, the exclusion would not apply because the employee's hours worked in connection with the SCA contracts constitute 20 percent of her total hours worked for that workweek. As a result, the 8 hours that the employee spends performing in connection with the four covered contracts each workweek would count toward the accrual of paid sick leave.

Finally, the Department acknowledges that the Minimum Wage Executive Order rulemaking contained additional exclusions for certain categories of employees that are not replicated in this proposed rule. Specifically, under the Minimum Wage Executive Order regulations, employees whose wages are not governed by section 206(a)(1) of the FLSA because of the applicability of exemptions under section 213(a) are not entitled to the protections of Executive Order 13658. 29 CFR 10.4(e)(3). Executive Order 13706 expressly covers employees to whom an exemption from the FLSA's minimum wage and overtime provisions applies,

see

80 FR 54699, so no similar exclusion would be appropriate in this rulemaking. Additionally, the Minimum Wage Executive Order does not apply to employees whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(a) or (b). 29 CFR 10.4(e)(1), (2). Because the Department interprets Executive Order 13706 to be intended to apply to a broad range of employees, the Order explicitly applies to employees whose wages are governed by the FLSA, and the Order (unlike the Minimum Wage Executive Order) contains no reference to any category of employees whose wages are calculated pursuant to special certificates, the Department proposes to interpret Executive Order 13706 to apply to employees whose wages are calculated pursuant to special certificates under section 14 of the FLSA. It therefore does not propose to incorporate an exclusion for any such employees in this proposed rule.

Section 13.5 Paid Sick Leave for Federal Contractors and Subcontractors

Proposed § 13.5 implements section 2 of Executive Order 13706 by setting forth rules and restrictions regarding the accrual and use of paid sick leave.

Proposed § 13.5(a) addresses the accrual of paid sick leave. Proposed § 13.5(a)(1) provides that a contractor shall permit an employee to accrue not less than 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. This requirement implements section 2(a) of Executive Order 13706. 80 FR 54697. Proposed § 13.5(a) further provides that a contractor shall aggregate an employee's hours worked on or in connection with all covered contracts for that contractor for purposes of paid sick leave accrual. For example, if a subcontractor who installs windows in building construction projects sends a single employee to three separate DBA-covered projects, all the time the employee spends on all worksites—whether during the same or different workweeks—for the subcontractor must be added together to determine how much paid sick leave the employee has accrued. If in one workweek the employee spent 20 hours at Site A and 10 hours at Site B, she would have accrued 1 hour of paid sick leave at the end of that workweek; if in the next workweek the employee spent 30 hours at Site C, she would then have a total accrual of 2 hours of paid sick leave. As for an employee who falls within the 20 percent of hours worked exclusion created by proposed § 13.4(e) for some workweeks but not others, only the employee's hours worked on or in connection with covered contracts during workweeks in which the exclusion does not apply would count toward accrual of paid sick leave.

Proposed § 13.5(a)(1)(i) explains that for purposes of Executive Order 13706 and part 13, “hours worked” includes all time for which an employee is or should be paid, meaning time an employee spends working or in paid time off status, including time when the employee is using paid sick leave or any other paid time off provided by the contractor. This definition is different from the use of the term “hours worked” in other contexts and applies only for purposes of the Executive Order. It includes (but is broader than)

all time considered “hours worked” for purposes of the SCA and the FLSA,

i.e.,

all time an employee is suffered or permitted to work. 29 CFR 4.178 (explaining that “[i]n general, the hours worked by an employee include all periods in which the employee is suffered or permitted to work whether or not required to do so, and all time during which the employee is required to be on duty or to be on the employer's premises or to be at a prescribed workplace”); 29 CFR 785.11 (“Work not requested but suffered or permitted is work time.”);

see also

29 CFR part 785 (FLSA regulations regarding hours worked principles).

The Department's interpretation of “hours worked” under Executive Order 13706 to additionally include paid time off, although distinct from the FLSA and SCA definitions of the term, is analogous to the accrual of vacation leave under the SCA, where absences from work (with or without pay) generally count toward satisfaction of length of service requirements for vacation benefits. 29 CFR 4.173(b)(1). And it is consistent with the OPM regulation regarding leave accrual by federal employees, which provides that an employee accrues leave each pay period based on time she is “in a pay status.” 5 CFR 630.202(a). The Department's interpretation also reflects its view that basing paid sick leave accrual on all time an employee is in pay status, rather than merely on when the employee is suffered or permitted to work, will be administratively easier (or no more difficult) for contractors to implement. The Department further notes that this interpretation generally will have minimal impact on the rate of an employee's accrual of paid sick leave and, with respect to many employees who work at least full time (or potentially even less) each week on or in connection with covered contracts, will have no impact on the total amount of paid sick leave accrued per year because such employees will reach the maximum 56 hours within each accrual year regardless of whether paid time off is included. The Department reiterates that this broad definition of hours worked is only for purposes of the Executive Order and part 13 and has no bearing on the definition of hours worked in other contexts, such as the definition for purposes of the FLSA and SCA, which is set forth in longstanding regulations under those statutes.

See

29 CFR part 785 (FLSA hours worked principles); 29 CFR 4.178 (adopting FLSA hours worked principles for purposes of the SCA).

The Department reiterates that only hours worked (as that term is defined for purposes of the Order and part 13) on or in connection with a covered contract, rather than hours worked on or in connection with a non-covered contract, count toward paid sick leave accrual. For example, if an employee works on an SCA-covered contract for security services for 30 hours each workweek and works for the same contractor on a private contract for security services an additional 30 hours each workweek, the contractor would only be required to allow that employee to accrue 1, rather than 2, hours of paid sick leave each workweek. Similarly, if an employee works for one contractor on a DBA-covered contract for construction for 2 months and then on a private contract for construction for 2 months, the contractor would only be required to allow the employee to accrue paid sick leave during the first 2 months. But the Department proposes to require contractors who wish to distinguish covered and non-covered hours worked for purposes of paid sick leave accrual to keep records that clearly reflect that distinction. Specifically, proposed § 13.5(a)(1)(i) explains that to properly exclude time spent on non-covered work from an employee's hours worked that count toward the accrual of paid sick leave, a contractor must accurately identify in its records the employee's covered and non-covered hours worked. In the absence of records or other proof adequately segregating the time—whether because of a contractor's inadequate recordkeeping, because the contractor preferred permitting the employee to more rapidly accrue paid sick leave rather than keeping such records, or for another reason—the employee would be presumed to have spent all paid time performing work on or in connection with a covered contract. This policy is consistent with the treatment of hours worked on SCA- and non-SCA-covered contracts,

see

29 CFR 4.178, 4.179, as well as the treatment of covered versus non-covered time under the Minimum Wage Executive Order rulemaking,

see

79 FR 60660-61, 60672.

Proposed § 13.5(a)(1)(ii) provides that a contractor shall calculate an employee's accrual of paid sick leave no less frequently than at the conclusion of each workweek, but it is not required to allow employees to accrue paid sick leave in increments smaller than 1 hour for completion of any fraction of 30 hours worked. In other words, a contractor must treat each employee's paid sick leave as accruing no less frequently than at the end of each workweek, but an employee need only be permitted to accrue a full hour of paid sick leave after working a full 30 hours, rather than accruing any fraction of an hour for any fraction of 30 hours worked during the workweek. The Department considers “workweek” to have the meaning explained in the FLSA regulations,

i.e.,

a fixed and regularly recurring period of 168 hours—seven consecutive 24-hour periods—that need not coincide with the calendar week but must generally remain fixed for each employee.

See

29 CFR 778.105.

Proposed § 13.5(a)(1)(ii) further explains that any remaining fraction of 30 hours worked shall be added to hours worked for the same contractor in subsequent workweeks to reach the next 30 hours worked provided that the next workweek in which the employee performs on or in connection with a covered contract occurs within the same accrual year. (The term

accrual year

is defined in proposed § 13.2 and further explained below.) For example, assume an employee works on a covered concessions contract for 45 hours in workweek 1 and 20 hours in workweek 2. At the conclusion of workweek 1, the employee will have accrued 1 hour of paid sick leave based on her first 30 hours worked and, unless the employer chooses to allow accrual in increments smaller than 1 hour, will not have accrued additional paid sick leave based on the additional 15 hours she worked in that workweek. At the conclusion of workweek 2, the employee will have accrued an additional hour of paid sick leave based on the additional 15 hours in workweek 1 plus her first 15 hours worked in workweek 2. The employee need not have earned any paid sick leave based on the remaining 5 hours worked during workweek 2. If the employee spends several subsequent weeks working for the contractor on a private contract and then returns to working on the covered concessions contract, under this provision as proposed, those remaining 5 hours would be added to her subsequent hours worked on the concessions contract for purposes of reaching her next accrued hour of paid sick leave (provided her return to the covered concessions contract occurred within the same accrual year as workweek 2, and, as explained below, provided that the same, rather than a successor, contractor holds the concessions contract). An employer may elect to permit employees to accrue paid sick leave in fractions of an hour—because it finds the related recordkeeping less burdensome than keeping track of hours worked from previous workweeks, it allows for use of

paid sick leave in increments smaller than 1 hour, or for any other reason—provided all hours worked for the contractor on or in connection with covered contracts within the accrual year are counted toward an employee's paid sick leave accrual.

Proposed § 13.5(a)(1)(iii) addresses the accrual of paid sick leave for employees as to whom contractors are not obligated by another statute to keep records of hours worked. For most employees on covered contracts, such as service employees on SCA-covered contracts, laborers and mechanics on DBA-covered contracts, and all employees performing work on or in connection with any covered contract whose wages are governed by the FLSA, contractors are already obligated by the SCA, DBA, or FLSA to keep records of employees' hours worked as that term is defined under those statutes. 29 CFR 4.6(g)(1)(iii), 4.185 (SCA); 29 CFR 5.5(a)(3)(i) (DBA); 29 CFR 516.2(a)(7), 516.30(a) (FLSA). As to those employees, therefore, contractors are already collecting information central to calculating the accrual of paid sick leave. But for those employees who are employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in 29 CFR part 541, contractors are not currently required by the SCA, DBA, or FLSA to keep such records.

See

29 CFR 4.6(g)(1)(iii), 4.156, 4.185 (requiring that records be kept for “service employees” to whom the SCA applies and excluding from that category “persons employed in an executive, administrative, or professional capacity as those terms are defined in 29 CFR part 541); 29 CFR 5.5(a)(3)(i), 5.2(m) (requiring that records be kept for “laborers and mechanics” to whom the DBA applies and excluding from those terms “[p]ersons employed in a bona fide executive, administrative, or professional capacity as defined in part 541 of this title”); 29 CFR 516.3 (excusing employers of “each employee in a bona fide executive, administrative, or professional capacity . . . as defined in part 541 of this chapter” from the FLSA requirement to maintain and preserve records of hours worked). In order not to impose a new recordkeeping burden on employers of such employees, proposed § 13.5(a)(1)(iii) would allow contractors to choose to continue not to keep records of such employees' hours worked, but instead to allow the employees to accrue paid sick leave as though the employees were working on or in connection with a covered contract for 40 hours per week. Contractors may, under the proposed provision, choose to calculate paid sick leave accrual by tracking the employee's actual hours worked. Contractors who do so, however, must permit the relevant employees to accrue paid sick leave based on their actual hours worked consistently across workweeks rather than, for example, using the 40 hours assumption in workweeks during which an employee works more than 40 hours but not those in which the employee works fewer. The Department would apply these principles to any employees exempt from the FLSA's minimum wage and overtime provisions and not covered by the SCA or DBA. This approach is consistent with FMLA recordkeeping regulations, under which there is a general requirement that FMLA-covered employers keep records of hours worked by employees eligible for FMLA leave but an exception with respect to employees who are not covered by or are exempt from the FLSA; employers of those employees need not keep such records so long as the employer presumes that the employees have met the hours requirement for FMLA eligibility.

See

29 CFR 825.500(c)(1), (f). Proposed § 13.5(a)(1)(iii) further provides that if such an employee regularly works fewer than 40 hours per week on or in connection with covered contracts, whether because the employee splits time between covered and non-covered contracts or because the employee is part-time, the contractor may allow the employee to accrue paid sick leave based on the employee's typical number of hours worked on covered contracts per workweek. Although the contractor need not keep records of the employee's hours worked each week, to use a number less than 40 for this purpose, the contractor must have probative evidence of the employee's typical number of covered hours worked, such as payroll records showing that an employee who performs on a covered contract was paid for only 20 hours per week by the contractor.

Proposed § 13.5(a)(2) would require a contractor to inform an employee, in writing, of the amount of paid sick leave that the employee has accrued but not used (i) no less than monthly, (ii) at any time when the employee makes a request to use paid sick leave, (iii) upon the employee's request for such information, but no more often than once a week, (iv) upon a separation from employment, and (v) upon reinstatement of paid sick leave pursuant to § 13.5(b)(3). Some of these requirements are based on FMLA regulations regarding notification to an employee of how much leave will be or has been counted against her FMLA entitlement,

see

29 CFR 825.300(d)(6), but they are modified to account for the differences between FMLA leave and paid sick leave, including in the method of accrual. The fourth and fifth requirements are meant to ensure that employees who may be and ultimately are rehired by a contractor or a successor contractor know how much paid sick leave they should and do have available upon such rehiring. The Department believes it is important that employees be able to determine whether absences will be paid (so they can, for example, schedule their own or their family members' doctors' appointments to occur after they have accrued sufficient paid sick leave), and does not believe these notification requirements will create a significant burden for contractors. The Department notes that a contractor's existing procedure for informing employees of their available paid time off, such as notification accompanying each paycheck or an online system an employee can check at any time, can be used to satisfy or partially satisfy these requirements provided it is written (including electronically) and clearly indicates the amount of paid sick leave an employee has accrued separately from indicating amounts of other types of paid time off available (except where the employer's paid time off policy satisfies the requirements of proposed § 13.5(f)(5), described below).

Proposed § 13.5(a)(3) permits a contractor to choose to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year rather than allowing the employee to accrue such leave based on hours worked over time. As proposed, it further provides that in such circumstances, the contractor need not comply with the accrual requirements described in proposed § 13.5(a)(1). The contractor must, however, allow carryover of paid sick leave as required by proposed § 13.5(b)(2), and although the contractor may limit the amount of paid sick leave an employee may carry over to no less than 56 hours, the contractor may not limit the amount of paid sick leave an employee has available for use at any point as is otherwise permitted by proposed § 13.5(b)(3). For example, if a contractor exercises this option and an employee carries over 16 hours of paid sick leave from one accrual year to the next (as described in the discussion of proposed § 13.5(b)(2) below), the contractor must permit the employee to have 72 hours (16 hours plus 56 hours) of paid sick

leave available for use as of the beginning of the second accrual year (because the contractor is not permitted to limit an employee's paid sick leave at any point in time as described in the discussion of proposed § 13.5(b)(3) below). Under proposed § 13.5(c)(4), described below, the contractor may not limit the employee's use of that paid sick leave in the second (or any) accrual year, but the employee's use can effectively be limited if the contractor sets, as permitted by this proposed provision, a limit on the amount of paid sick leave an employee can carry over from year to year; in the example, if the employee who had 72 hours of paid sick leave at the beginning of accrual year 2 did not use any leave in that year, she could be permitted to carry over only 56 hours into accrual year 3. The Department believes this option will be beneficial to contractors that find the tracking of hours worked and/or calculations of paid sick leave accrual to be burdensome, and it provides employees with the full amount of paid sick leave contemplated by the Executive Order at the beginning of each accrual year.

Proposed § 13.5(b) implements the Executive Order's provisions, in sections 2(b), (d), and (j), regarding maximum accrual, carryover, and reinstatement of paid sick leave as well as non-payment for unused paid sick leave. Proposed § 13.5(b)(1) provides that a contractor may limit the amount of paid sick leave an employee is permitted to accrue at not less than 56 hours in each accrual year. Proposed § 13.5(b)(1) would also provide detail regarding an

accrual year,

a term defined in proposed § 13.2. The Department proposes to explain that an accrual year is a 12-month period beginning on the date an employee's work on or in connection with a covered contract began or any other fixed date chosen by the contractor, such as the date a covered contract began, the date the contractor's fiscal year begins, a date relevant under State law, or the date a contractor uses for determining employees' leave entitlements under the FMLA pursuant to 29 CFR 825.200. Under this proposal, a contractor may choose its accrual year but must use a consistent option for all employees and may not select or change its accrual year in order to avoid the paid sick leave requirements of Executive Order 13706 and part 13. As under the FMLA, if a contractor does not select an accrual year, the option that provides the most beneficial outcome to the employee will be used.

See

29 CFR 825.200(e).

Proposed § 13.5(b)(2) provides that paid sick leave shall carry over from one accrual year to the next. This proposed language would mean that upon the date a contractor has selected as the beginning of the accrual year, an employee would continue to have available for use as much paid sick leave as the employee had accrued but not used as of the end of the previous accrual year. Proposed § 13.5(b)(2) further provides that paid sick leave carried over from the previous accrual year shall not count toward any limit the contractor sets on the annual accrual of paid sick leave. For example, if an employee carries over 30 unused hours of paid sick leave from accrual year 1 to accrual year 2, she must still be permitted to accrue up to 56 additional hours of paid sick leave in accrual year 2 rather than only 26 (because 30 plus 26 is 56), subject to the limitations described below.

Proposed § 13.5(b)(3) provides that a contractor may limit the amount of paid sick leave an employee is permitted to have available for use at any point to not less than 56 hours and further explains that even if an employee has accrued fewer than 56 hours of paid sick leave since the beginning of the accrual year, the employee need only be permitted to accrue additional paid sick leave if the employee has fewer than 56 hours available for use. For example, if an employee carries over 56 hours of paid sick leave into a new accrual year, a contractor may prohibit that employee from accruing any additional paid sick leave until she has used some portion of that leave. If and when she does use paid sick leave, she must be permitted to accrue additional paid sick leave, up to a limit of no less than 56 hours for the accrual year, beginning with hours worked in the workweek after she has used paid sick leave such that her amount of available paid sick leave is less than 56 hours. Similarly, if an employee carries over 16 hours of paid sick leave into a new accrual year, she must be permitted to accrue 40 additional hours of paid sick leave even if she does not use any paid sick leave while that accrual occurs. Once she has 56 hours of paid sick leave accrued, the contractor may prohibit her from accruing any additional leave unless, and until the workweek after, she uses some portion of the 56 hours. If she uses, for example, 24 hours of paid sick leave in the same accrual year (such that she has 32 hours remaining available for use), she must be permitted to accrue up to at least 16 more hours (in addition to the 40 hours she has already accrued during the accrual year) for a total of 56 hours accrued in that accrual year. If she did so, she would then have 48 hours of paid sick leave (32 previously available hours plus 16 newly accrued hours) available for use and could be limited to that amount until the next accrual year.

Proposed § 13.5(b)(4) implements the second clause of section 2(d) of the Executive Order by providing that paid sick leave shall be reinstated for employees rehired by the same contractor or a successor contractor within 12 months after a job separation. The proposed text specifies that this reinstatement requirement applies whether the employee leaves and returns to a job on or in connection with a single covered contract or works for a single contractor on or in connection with more than one covered contract, regardless of whether the employee remains employed by the contractor to work on non-covered contracts in between periods of working on covered contracts. For example, if a service employee on an SCA-covered contract accrued but did not use 12 hours of paid sick leave, moved to a different work site to perform work unrelated to a contract with the Federal Government (either with or not with the same employer), and after 6 months, returned to the original SCA-covered contract, that employee would begin back on the original job with 12 hours of paid sick leave available for use. Pursuant to proposed §§ 13.5(a)(2) and 13.5(b)(1), if her first week back on the job is within the same accrual year during which she accrued those 12 hours, the contractor would be required to count any fraction of 30 hours worked in her previous time on the contract toward the accrual of her next hour of paid sick leave, but the contractor may limit her additional accrual in that accrual year to 44 hours such that she can only accrue 56 hours total in the accrual year.

Proposed § 13.5(b)(4) further explains that the reinstatement requirement also applies if an employee takes a job on or in connection with a covered successor contract after working for a different contractor on or in connection with the predecessor contract, including when an employee is entitled to a right of first refusal of employment from a successor contractor under Executive Order 13495. (The terms “successor contract” and “predecessor contract” are defined in proposed § 13.2, and the requirements that a predecessor contractor submit to a contracting agency, and a contracting agency provide to a successor contractor, a certified list of relevant employees' accrued, unused paid sick leave appear in proposed §§ 13.26 and 13.11(f), respectively.) For example, if an employee performing work on a contract

to sell food to the public in a National Park has accrued 16 hours of paid sick leave, the contract ends, a different contractor takes over the food stand, and that employee is rehired by the successor contractor, he would begin the new job with 16 hours of paid sick leave. Because the successor contractor is not the same contractor for which the employee previously worked, proposed § 13.5(a)(2) does not require that the successor contractor count any fraction of 30 hours worked for the predecessor contractor toward the accrual of the employee's next hour of paid sick leave. (This means that predecessor and successor contractors will not have to submit and receive, respectively, information about any such fraction of 30 hours worked for each employee.) The successor contractor must, however, treat any of the previously accrued paid sick leave as carried over

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