Companies that entered into qualifying federal contracts since January 1, 2017 are required to have a sick leave policy, or an equivalent paid time off policy, that complies with federal Executive Order 13706. That Executive Order requires, among other things, that employers provide up to 56 hours of paid sick time each year. Arizona’s Fair Wages and Health Families Act (“Prop. 206”), due to take effect on July 1, 2017, requires, among other things, that employers provide up to 40 hours of paid sick time each year. Both of these paid sick leave laws have unique requirements.

Importantly, while there are some similarities between the Executive Order and Arizona’s Prop. 206, there are also many differences, such as the larger number of hours that can be accrued under Executive Order 13706. Other differences include:

1. the requirements for paid sick time accrual;
2. when those paid sick time hours can be used;
3. the carry-over of unused sick time provisions;
4. the usage cap amounts per year;
5. the reinstatement of unpaid sick period for recent rehires; and
6. the reporting requirements.

Thus, the mere fact that an existing policy provides for 56 or more hours of paid sick time does not mean that it necessarily complies with Executive Order 13706. Similarly, just because an existing PTO policy provides at least 40 hours of paid sick time does not mean that it complies with Prop. 206.

Not all federal contractors are covered under Executive Order 13706. This Executive Order applies to the following four major categories of contractor agreements:

1. procurement contracts for construction covered by the Davis-Bacon Act (DBA);
2. service contracts covered by the McNamara-O’Hara Service Contract Act (SCA);
3. concession contracts, including any concession contracts excluded from the SCA by the Department’s regulations at 29 CFR 4. 1333(b); and
4. contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.

The Executive Order does 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 Contract Act.

If a company is a federal contractor who has entered into one of the above listed types of covered contracts since January 1, 2017, it should already have in place a paid sick time policy or paid time off policy that complies with Executive Order 13706. If it does not already have such a policy, this is the time to implement one, and also use this as an opportunity to make sure that it complies with Prop. 206. If a federal contractor already has a policy that complies with the Executive Order, it would still be wise to review it now to ensure compliance with Prop. 206’s unique requirements prior to its July 1, 2017 effective date.