Proposed minimum wage of $ 15 for federal contractors – Government, public sector


United States: Proposed minimum wage of $ 15 for federal contractors

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On July 22, 2021, the Department of Labor (DOL) released a notice of proposed regulations to increase the minimum wage for covered federal contractors to $ 15 per hour as of January 30, 2022. The proposed rule implements the Executive of President Biden of April 27, 2021. Ordinance, Minimum Wage Increase for Federal Contractors. It incorporates many of the existing definitions, procedures, remedies, and enforcement mechanisms that federal contractors are already familiar with under the Fair Labor Standards Act of 1938, the Service Contracts Act, and the Davis-Bacon Act, as well. than President Obama’s 2014 presidential decree. and associated regulations establishing the current minimum wage for federal contractors.

The purpose of the proposed rule is to strengthen the economy and efficiency of federal government procurement and to ensure that taxpayer dollars are directed to federal contractors who provide covered employees with a living wage. Unlike previous federal minimum wage regulations for government contracts, the proposed rule includes a requirement that the Secretary of Labor must annually adjust the minimum of $ 15 per hour based on changes in the price index at the consumption as of January 1, 2023 and annually thereafter. These annual adjustments cannot be lower than the minimum wage of the previous year.

Employees of covered federal contractors who will benefit from this rule include those who work in food service, cleaning and maintenance positions. Under current law, federal contractors are required to pay covered hourly workers a minimum wage of $ 10.95 per hour and tip employees $ 7.65 per hour. The proposed rule will phase out this distinction by requiring that all covered workers, including tip employees, receive at least 100% of the minimum wage in effect on January 1, 2024 and annually thereafter. The proposed rule also directs federal agencies to include a new clause in all covered contracts that must be passed on to lower level subcontractors to ensure that they also pay their employees the applicable minimum wage.

The proposed rule will apply to any new contract, solicitation, extension or renewal of an existing contract, or the exercise of an option on an existing contract issued after January 30, 2022, where workers’ wages are governed by the Service Contract Act. , Fair Labor Standards Act, Davis-Bacon Act and other DOL wage regulations. It does not apply to grants, contracts or agreements with Indian Tribes under the Indian Self-Determination and Educational Assistance Act, or to contracts or similar instruments expressly excluded by regulation or the law.

The DOL is accepting written comments on the proposed rule until August 23, 2021 and plans to publish a final rule by November 24, 2021. While the proposed rule is subject to change until finalized, Federal contractors and subcontractors should start developing a compliance plan to identify which of their employees will be covered by the rule and how best to ensure accurate record keeping now. This is especially important in cases where a contractor has a mix of federal and non-federal contracts.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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