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Community banks duck new expense

Despite worries, new Executive Order appears to not touch smaller banks

Community banks duck new expense

President Obama signed an Executive Order on Sept. 7, establishing a new paid sick leave benefit. More particularly, the President ordered federal agencies to ensure that federal contracts entered into after Jan. 1, 2017, include a provision where employees earn not less than one hour of paid sick leave for every 30 hours worked. The Executive Order further defines acceptable components to a federal contractor’s sick leave policy.

The Executive Order provides that the Secretary of Labor will issue regulations by Sept. 30, 2016, to implement the Executive Order. The Executive Order tracks the federal acquisition regulations, which does govern federal procurement solicitations and contracts.

Section 6(d) the Order defines the contracts which will carry these obligations. The Executive Order provides that the new obligations will extend to procurement contracts for services or construction, contracts covered by the Service Contract Act, concession contracts, and contracts entered into regarding federal property and lands.

Based upon our analysis of the Executive Order language, our firms does not believe that these obligations will extend to community banks, by virtue of their relationship with FDIC. We further, based on the language of the Executive Order, do not believe these obligations will extend to community banks given their role in federal savings bond transactions.

It appears that these standards will apply to federal government contractors covered by another Executive Order, which increased the minimum wage for those entities to $10.10 per hour.

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Steve Greene

Steve Greene is managing member at Helms & Greene, LLC.  He specializes in employment litigation, employee benefits issues, and compensation matters. Greene oversees employment litigation nationally, including discrimination, harassment, retaliation, ERISA, and breach of contract actions against employers. He has worked with major corporations on overtime exemption compliance and in design of compliant compensation methodologies. He has also assisted firms in managing Department of Labor and state regulatory investigations. He worked with Marian Exall, who recently retired from her authorship of “The Human Element.”

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