Overview
This section identifies specific categories of employees and contract actions that are exempt from the paid sick leave requirements mandated by Executive Order 13706 and FAR Subpart 22.21. It distinguishes between direct and indirect labor and clarifies when contract extensions do not trigger these requirements.
Key Rules
- The 20 Percent Threshold: Employees performing "in connection with" a covered contract (performing indirect tasks necessary to the contract) are excluded if they spend less than 20% of their total work hours in a given workweek on that contract.
- Direct Labor Exception: The 20% exclusion does not apply to employees working "on" a contract (those directly performing the specific tasks identified in the contract); these employees are covered regardless of the hours worked.
- Collective Bargaining Agreements (CBA): Employees covered by a CBA ratified before September 30, 2016, were granted a temporary exclusion until the agreement terminated or January 1, 2020, provided certain sick leave minimums or supplements were met.
- Unilateral Options: If the government exercises a pre-negotiated option to renew an existing contract that lacks the paid sick leave clause (FAR 52.222-62), the clause is not automatically required to be added.
Practical Implications
- Contractors must maintain accurate records to distinguish between employees working "on" a contract versus those working "in connection with" it to justify exclusions under the 20% rule.
- The exclusion for unilateral options provides cost certainty for contractors, as they will not be forced to implement a new paid sick leave program mid-stream during a standard option renewal unless the contract is otherwise significantly modified.