On October 1, 2014, the U.S. Department of Labor (DOL) published a final rule implementing President Obama’s Executive Order 13658, which raises the minimum wage federal contractors must pay to hourly employees and some tipped employees performing work on certain federal construction and service contracts to $10.10 per hour.
The rule applies generally to four major categories of contracts:
- Procurement contracts for construction covered by the Davis Bacon Act
- Contracts covered by the Service Contract Act
- Concessions contracts to furnish food, lodging, automobile fuel, souvenirs, newspaper stands, and/or recreational equipment on federal property
- Contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the public.
The rule excludes grants and public utility services. The rule applies to new contracts and replacements for expiring contracts that result from solicitations issued on or after January 1, 2015, or to contracts awarded outside the solicitation process on or after January 1, 2015. Covered contractors must include the contract clause in lower-tiered subcontracts.
The minimum wage may increase each year over the span of covered multi-year contracts. Beginning January 1, 2016, and annually thereafter, the Secretary of Labor will determine the minimum wage consistent with the Consumer Price Index. Any change in the wage must be published at least 90 days in advance.
The DOL plans to publish the rule in the Federal Register this week. The foregoing summarizes requirements and obligations created by the rule. Contact MSEC for information specific to your organization.