SUBMITTED VIA REGULATIONS. GOV
Robert Waterman, Compliance Specialist
Wage and Hour Division
U.S. Department of Labor
200 Constitution Avenue NW
Washington, DC 20210
Re: Notice of Proposed Rulemaking: Implementing Executive Order 13706 - Establish Paid Sick Leave for Federal Contractors (RIN 1235-AA13)
Dear Mr. Waterman:
The ERISA Industry Committee (ERIC) appreciates the opportunity to submit comments in response to the proposed rule issued by the Department of Labor (DOL) on February 25, 2016, to implement Executive Order 13706. As you are aware, the Executive Order was issued by President Obama on September 7, 2015, and would require federal contractors and subcontractors to provide their employees with at least 56 hours of sick leave annually.
ERIC is the only national trade association advocating solely for the employee benefit and compensation interests of the country’s largest employers. ERIC supports the ability of its large employer members to tailor health, retirement, and other benefits for millions of employees, retirees, and their families. ERIC’s members provide comprehensive benefit packages to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals, such as the Executive Order, that would affect its members’ ability to provide consistent benefits in a cost-effective manner.
The federal government along with state and local governments continue to implement new employment related laws. With the passage of each new law, the likelihood of conflicts between and among these laws from differing jurisdictions only increases, which leads to administrative and compliance issues for large employers that operate in a number of locations. Many ERIC members employ workers in every state and most major localities across the country. Additionally, federal contractors must also comply with requirements pursuant to various laws and Executive Orders.
One area in which this patchwork of state, local and now federal requirements is particularly difficult to manage is paid sick leave. There are currently four states, the District of Columbia and nearly 20 local jurisdictions with paid sick leave laws. Recently, the State of California implemented a new paid leave law, and a number of large employers adapted to this new law not solely in the State of California, but across numerous other localities to maintain consistency of benefits offered to employees. The inconsistent laws implemented by governments that large employers must traverse to ensure compliance with such laws create a tremendous problem that is only made worse for federal contractors. If the goal of the rule is for federal contractors to provide paid sick leave then the rule should be crafted to minimize the administrative burdens associated with providing this benefit.
Distinguishing between employees who work on federal contracts (covered by this Executive Order) and those working on preexisting federal contracts (not covered); and employees working only in connection with federal contracts for less than 20 percent of their time (not covered) and those working more than that (covered); is exceedingly challenging and not practicable, particularly for companies that do both government and non-government work. Thus, to reduce the risk of excluding covered employees, it is likely that many large employers affected will have to apply these requirements to a larger group than what is mandated by the Executive Order. Foremost, however, because of the mechanics of this mandate, as well as the procedural requirements, this obligation is far more burdensome than necessary.
As set forth below, we urge the DOL to reconsider and revise the mechanics and certain administrative requirements of the proposed rule to facilitate compliance and reduce unnecessary burdens. Specifically, we request that the DOL consider revising the proposed rule to:
- eliminate the carryover for employers who choose to frontload paid sick time;
- require employers to provide notification indicating the amount of paid sick leave remaining on a less frequent basis then stated in the proposed rule; and
- not require employers to maintain copies of notifications provided and not have to designate the leave in records as ‘paid sick leave taken pursuant to Executive Order 13706.’
If these revisions are not made, and we encourage that they are, we respectfully request a grace period of at least one year to ensure employers are provided ample time to implement system modifications to enable proper tracking, required notifications and record keeping.
I. Employers that Frontload Paid Sick Leave Should Not Need to Provide Carryover.
A number of state and local paid sick leave laws allow employers to ‘frontload’ paid sick time. An employer will frontload, or provide all designated time up front, upon hire or at the beginning of a calendar year, as a way to ensure an employee has sick time immediately available and to decrease the administrative burden on the employer.
Several current paid sick leave laws eliminate the need to track leave accrual and provide a carryover if the employer frontloads the paid sick leave time. Large employers, including those with federal contracts, will frequently select this option of frontloading the paid sick leave time since it can be overly cumbersome to accurately track the accrual and carryover.
When time is frontloaded, there is obviously no reason to track accrual. Indeed, there is no accrual as all time is provided in a lump sum up front. Thus, the proposed rule does not require tracking of accrual for employers who frontload paid sick leave. Similarly, however, there is also no reason to allow carryover of unused paid sick time; however, the proposed rule does require a carryover of up to 56 hours of paid sick time. The only purpose of allowing carryover is so employees have paid sick time available at the start of each year. When sick time is frontloaded, carryover of unused time is unnecessary as the employee receives a full bank of hours at the start of each year in perpetuity. Thus, the proposed rule only creates a more burdensome environment for the employer.
The overriding goal of this Executive Order is to ensure that employees who work on federal contracts are given a minimum amount of paid sick leave on an annual basis to use for specified, allowable purposes. It is a worthy goal, which can be achieved with minimal burden on employers if the DOL revises the proposed rule and allows employers who choose to frontload the paid sick leave to eliminate carryover.
- Notifications to Employees of Available Paid Sick Time Should Be Less Burdensome.
As currently written, the proposed rule would require employers to provide employees with written notifications of the amount of paid sick leave that the employee has accrued, but not used:
- No less than monthly,
- At any time when the employee makes a request to use paid sick leave,
- Upon the employee’s request for such information, but no more often than once a week,
- Upon separation from employment, and
- Upon reinstatement of paid sick leave in the event of rehire.
The commentary states that ‘these notification requirements will [not] create a significant burden for contractors.’ 81 Fed. Reg. 9592, 9611. For most large employers, unfortunately, these requirements will greatly increase the administrative burden.
In fact, these notification requirements, which entitle employees to request that this information be provided on a weekly basis, will increase the recordkeeping burden on employers, particularly national employers who must comply with varying notification requirements in different jurisdictions. While other paid sick leave laws do require notification, they require it at predictable and regular intervals. The notification of accrued time is directly linked to the employer’s payroll or other system of record. Any change to the notification policy will cause a massive overhaul of this system for each employer. In addition, the change to the system may require changes to external vendor systems that the employer utilizes to provide other benefits to the employees, such as Family and Medical Leave Act administrators.
If an employer is provided with adequate notice (e.g., at least one year), it may be possible for a system to be updated to adhere to the new notification policy. However, it is not possible for an electronic system to take into account situations, such as oral requests for time-off, that are not recorded for in the system at regular intervals. In any event, the notification requirement greatly exceeds to purpose of the Executive Order and only causes a drastic increase in the administrative burden on employers.
We urge reconsideration of the notification and record keeping requirements in two other respects. First, the proposed rule requires employers to make and maintain copies of all notifications provided to employees. This requirement involves thousands of pages of records and will only drastically increase the administrative burden for employers, especially those employers who engage on long-term contracts with the federal government. We do not believe this requirement furthers any additional public policy goal under this Executive Order and respectfully request that it is removed or changed to decrease the burden on the employer.
Second, employers are supposed to designate leave in their records as ‘paid sick leave pursuant to Executive Order 13706.’ (Id.) However, the paid sick leave might satisfy the requirements of more than one law, such as the state or local law. As drafted, this proposed rule could conflict with the proper adherence to other laws that are in place to benefit the employee. In addition, this requirement will only confuse the employee, if the employee is receiving paid time off due to other laws. Lastly, it is standard practice for employers to use the same time keeping system for all employees. For these employers, requiring leave to be labelled as ‘paid sick leave pursuant to Executive Order 13706’ only complicates the time and attendance practices of the employer.
For these reasons, the notification and record keeping requirements ought to be modified and significantly reduced for all employers.
- Additional Time is Necessary for System Modifications to Enable Timely Compliance with the Tracking, Notification and Record Keeping Requirements.
For all of the reasons set forth above, we urge the DOL to reconsider the carryover and notification requirements. As explained above, eliminating the carryover requirement and substantially reducing the notification requirements would make compliance far less burdensome and disruptive to regular operations of large, national employers. In addition, we urge the DOL to provide a grace period of one year to allow employers to make necessary modifications to their systems to enable compliance with the extensive tracking and notification requirements currently proposed.
Thank you for your consideration of these comments. If you have any questions, or if ERIC can be of further assistance, please contact us at (202) 789-1400.
Senior Vice President, Retirement Policy