Coming Soon: Increase to Federal Contractors/Subcontractors’ Minimum Wage; DOL Now Accepting Comments on Proposed Rulemaking
President Biden’s Executive Order on Increasing the Minimum Wage for Federal Contractors (the “Executive Order”), provides that beginning on January 30, 2022, certain federal contractors and subcontractors must include a statement in their contracts, as a condition of payment, that non-tipped workers employed in the performance of the contract/subcontract shall be paid at least $15.00 per hour. This hourly rate will be adjusted annually to account for inflation.
In addition, beginning on January 30, 2022, certain federal contractors and subcontractors must include a statement in their contracts, as a condition of payment, that tipped workers employed in the performance of the contract/subcontract shall be paid at least $10.50 per hour, in addition to tips. If that amount does not equal $15.00 per hour (or at such later date, the then-current minimum wage required for non-tipped federal contractors/subcontractors), the employer will be required to increase the wages to equal that amount (i.e., tip make-up). This hourly rate will be adjusted annually to account for inflation until January 1, 2024. Effective January 1, 2024, tipped workers employed in the performance of the contract/subcontract must be paid the same minimum wage as non-tipped employees.
On July 22, 2021, The Wage and Hour Division of the Department of Labor posted a Notice to Proposed Rulemaking (the “Notice”) to establish standards and procedures for implementing and enforcing the minimum wage protections of the Executive Order. Interested persons are invited to submit to written comments on the Notice to the Wage and Hour Division on or before August 23, 2021.
To which federal contracts and subcontracts does the Executive Order apply? New contracts entered into on or after January 30, 2022, the wages of workers under which are governed by: (1) the Fair Labor Standards Act; (2) the Service Contract Act; or (3) the Davis-Bacon Act, and to which at least one of the following applies:
(a) a procurement contract (or procurement-like instrument) for services or construction;
(b) a contract (or contract-like instrument) for services covered by the Service Contract Act;
(c) a contract (or contract-like instrument) for concessions (including any concessions contract excluded by the Department of Labor regulations); or
(d) a contract (or contract-like instrument) entered into with the Federal government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.
