The Department of Labor issued its final regulations to implement President Obama’s Executive Order raising the minimum wage to $10.10 per hour for workers on federal construction projects. The new minimum wage will not be effective until January 1, 2015, and will apply to most workers and most federal projects.
Executive Order 13658 applies to four major categories of contractual agreements:
- procurement contracts for construction covered by the Davis-Bacon Act (DBA) that exceed $2,000;
- service contracts covered by the Service Contract Act (SCA) that exceed $2,500;
- concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor’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.
The final rule contains certain narrow exclusions from coverage for the following types of contractual agreements:
- contracts and agreements with and grants to Indian Tribes under Public Law 93-638, as amended;
- any procurement contracts for construction that are not subject to the DBA (i.e., procurement contracts for construction under $2,000); and
- any contracts for services, except for those otherwise expressly covered by the final rule, that are exempted from coverage under the SCA or its implementing regulations.
The new minimum wage will not apply to certain workers, including:
- Apprentices, and messengers;
- Full-time Students; and
- Exempt employees under the FLSA, those working in a bona fide executive, administrative, or professional capacity
Take Away: The regulations implementing President Obama’s Executive Order exceed 250 pages. The Department of Labor published a Fact Sheet that summarizes the rules. But, given the very low contract values and limited exclusions, it is likely that this rule will apply to your workers engaged on federal contracts.