Federal Contractor Minimum Wage of $10.10/per Hour, Effective 1/1/15

Federal Contractor Minimum Wage of $10.10/per Hour, Effective 1/1/15

Final Rule: Executive Order 13658, Establishing a Minimum Wage for Contractors

US Dept of LaborThe DOL issued a final rule  (Executive Order (EO) 13658) that establishes a minimum wage for federal contractors. This new federal minimum wage applies to workers covered under federal construction and service contracts. The minimum wage for the aforementioned workers will be set at $10.10 per hour, and goes into effect on 1/1/15. Continue reading to understand if this affects you and your work force, and the steps necessary to implement required recordkeeping and notification procedures.

Will this affect you?

Executive Order 13658 applies to four major categories of contractual agreements (Source, DOL.Gov – Fact Sheet):

  • Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
  • Service contracts covered by the Service Contract Act (SCA);
  • Concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b)
    • such as contracts to furnish food, lodging, automobile fuel, souvenirs, newspaper stands, and/or recreational equipment on Federal property; and
  • Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.
    • and contracts to provide services, such as child care or dry cleaning, in Federal buildings for Federal employees or the general public. (Source, DOL.Gov – Fact Sheet)

Exemptions from Minimum Wage for Contractors

The Executive Order and the final rule contain a few limited exclusions from coverage for certain workers. For example:

  • Workers who are employed in a bona fide executive, administrative, or professional capacity and who consequently are exempt from the FLSA’s minimum wage and overtime requirements are not entitled to receive the Executive Order minimum wage.
  • FLSA-covered workers performing “in connection with” covered contracts are also excluded from coverage of the Executive Order if they spend less than 20% of their work hours in a particular workweek performing in connection with covered contracts. (Source, DOL.Gov – Fact Sheet)

Additionally, the following narrow categories of contracts that are not subject to the Order’s minimum wage requirements:

  1. Grants, within the meaning of the Federal Grant and Cooperative Agreement Act, as amended, 31 U.S.C. 6301 et seq.;
  2. Contracts and agreements with and grants to Indian Tribes under the Indian Self-Determination and Education Assistance Act, as amended, 25 U.S.C. 450 et seq.;
  3. Procurement contracts for construction that are excluded from coverage of the DBA; and
  4. Contracts for services that are exempted from coverage under the SCA, unless expressly covered by the Executive Order and these regulations. For example, the SCA exempts contracts for public utility services, including electric light and power, water, steam, and gas, from its coverage. See 41 U.S.C. 6702(b)(5); 29 C.F.R. 4.120. It additionally exempts employment contracts providing for direct services to a Federal agency by an individual. See 41 U.S.C. 6702(b)(6); 29 C.F.R. 4.121. Such contracts would also be exempt from coverage of the Executive Order and these regulations.

(Source, DOL.Gov – FAQs)


Recordkeeping Procedures and Notifications

Under the terms of the final rule, covered contractors must make and maintain the following records for each worker for a period of at least 3 years:

  1. Name, address, and social security number of each worker;
  2. The worker’s occupation(s) or classification(s);
  3. The rate or rates of wages paid;
  4. The number of daily and weekly hours worked by each worker;
  5. Any deductions made; and
  6. The total wages paid.

Contractors must permit authorized representatives of the DOL’s Wage and Hour Division to conduct interviews with workers at the worksite during normal working hours. (Source, BLR.com)

What do you need to do?

If you are a covered contractor or subcontractor:

  • Ensure that the new EO 13658 contract clause is included in applicable contracts and lower-tier subcontracts
  • Notify all applicable workers of the minimum wage rate as applicable
  • Pay covered workers as is applicable with EO 13658
  • Comply with recordkeeping notifications
  • Kickbacks are prohibited, as is retaliation against workers under this EO


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About the Author

FosterThomas is a leading professional services company that provides solutions in the areas of Human Resources Consulting and Outsourcing, HR Staffing, Outsourced Recruiting, Employee Benefits Brokerage, Payroll Implementation and Services, HR for Government Contractors, Business Insurance, HR Compliance and Risk Management. We help organizations by providing solutions designed with a focus on cost containment strategies and increasing HR efficiency. FosterThomas HR Consulting was established in 1993 with offices in Annapolis, Maryland (Corporate), McLean, Virginia and Raleigh, North Carolina. Today, FosterThomas occupies a unique position as a full service provider of HR services.

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