On June 17, 2014, the U.S. Department of Labor issued its proposed rules to implement Executive Order 13658 which requires federal contractors to pay a higher minimum wage. The Executive Order requires the hourly minimum wage to be increased to $10.10 an hour.
Here are a few highlights of the proposed regulations:
The proposed rule will apply to contracts that are entered into after January 1, 2015.
Only certain types of contracts will be covered. These include:
- Procurement contracts exceeding $2,000 for construction covered by the Davis-Bacon Act;
- Service contracts exceeding $2,500 covered by the Service Contract Act;
- Concession contracts under which the federal government grants a right to use federal property, – including those contracts excluded from the Service Contract Act coverage; and
- Contracts to provide services to federal employees, their dependents, or the general public on federal property.
Required Contract Language
The new rule requires federal agencies to include a minimum wage clause in all covered contracts and all contractors and subcontractors must include the same clause in lower-tier subcontract. A portion of the required language is:
(a) Executive Order 13658. This contract is subject to Executive Order 13658, the regulations issued by the Secretary of Labor in this part pursuant to the Executive Order, and the following provisions. (b) Minimum Wages. (1) Each worker (as defined in § 10.2) employed in the performance of this contract by the prime contractor or any subcontractor, regardless of any contractual relationship which may be alleged to exist between the contractor and worker, shall be paid not less than the applicable minimum wage under Executive Order 13658. (2) The minimum wage required to be paid to each worker performing work on or in connection with this contract between January 1, 2015 and December 31, 2015 shall be $10.10 per hour through December 31, 2015
The remainder of the required language can be found in Appendix A to section 10. Given the length of the required contract language, I hope reference can be made to the regulation instead of adding the entire clause.
The proposed regulations can be found here.
The Department of Labor’s fact sheet on its proposed rules can found here.