The U.S. Department of Labor (DOL) has issued final regulations implementing the provisions of Executive Order 13658 that raises the minimum wage federal contractors are required to pay workers on covered contracts. Specifically, the Executive Order:
- raises the minimum wage for workers on federal service and construction contracts to $10.10 per hour beginning January 1, 2015
- establishes a tipped employee minimum wage rate of $4.90 for work on covered contracts
- provides for annual increases in the minimum wage rate equal to the annual percentage increase in the Consumer Price Index, beginning Jan. 1, 2016.
Executive Order 13658 applies to four major categories of contractual agreements:
- Construction contracts covered by the Davis-Bacon Act (DBA)
- Service contracts covered by the Service Contract Act (SCA)
- Concessions contracts, such as contracts to furnish food, lodging, automobile fuel, souvenirs, newspaper stands and recreational equipment
- Contracts to provide services on federal property for federal employees or the general public.
The final rule requires covered contracts to include a specific clause that acknowledges the minimum wage obligations of the contractor under the contract.
Workers who are entitled to the Executive Order Minimum Wage
Workers performing on or in connection with covered Federal contracts whose wages are governed by the FLSA, the SCA, or the DBA are generally entitled to receive the Executive Order minimum wage for all time spent performing on or in connection with covered Federal contracts.
Notice and Recordkeeping
The Final Rule requires contractors on covered contracts to post notice of the annual Executive Order minimum wage rate. For SCA and DBA contractors, the minimum wage rate will be included on wage determinations that covered contractors are already required to post.
In addition, the US DOL has developed a posting for contractors with FLSA-covered workers to be posted prominently in the workplace. It will release soon. The notice can also be posted electronically.
Contractors and subcontractors must make and maintain, for three years, payroll records for each worker, as is required under the FLSA, SCA, or DBA.