Department Of Labor Issues Proposed Rule Raising Minimum Wage To $10.10 For Federal Contractor Employees

Following through on President Barack Obama's initiative to increase the minimum wage for employees employed by federal contractors, the United States Department of Labor (DOL) issued a proposed rule that implements Executive Order (EO) 13658. The DOL's implementation of the order will affect "hundreds of thousands of people working under contracts with the federal government to provide services or construction who are currently making less than $10.10 an hour." Fact Sheet, The White House, Opportunity for All: Rewarding Hard Work, (Feb. 12, 2014).

President Obama issued EO 13658 to increase the minimum wage that federal contractors and subcontractors have to pay their employees to $10.10 per hour commencing January 1, 2015. Establishing a minimum wage for federal contractors, 79 Fed. Reg. 34 § 2(i) (proposed June 12, 2014) (to be codified 29 C.F.R. pt. 10). Additionally, beginning January 1, 2016, the EO requires that the Secretary of Labor annually increase the minimum wage amount "by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers." 79 Fed. Reg. 34 § 2(a)(ii)(A)-(B).

The EO covers the following federal government contracts:

Procurement contracts for construction covered by the Davis Bacon Act; Service contracts covered by the Service Contract Act; Concessions contracts, including any concessions contract covered by the department's regulations at 29 CFR 4.133(b); and "Contracts in connection with federal property or lands and related to offering services for Federal employees, their dependents, or the general public. 29 C.F.R. pt. 10 (proposed June 12, 2014).1 Further, the proposed rule establishes standards ensuring that both tipped workers and disabled persons earn at least $10.10 per hour. 79 Fed. Reg. 34 § 3. For example, if a worker does "not receive a sufficient additional amount on account of tips, when combined with the hourly cash wage paid by the employer, such that their wages are equal to [$10.10]" the employer must increase the cash wage of the workers...