President Signs New Executive Order Increasing Federally Contracted Workers’ Wages to $10.10
President Barack Obama signed a new executive order on February 12, 2014 raising the minimum wage to $10.10 per hour for workers working under new and renegotiated federal contracts starting on January 1, 2015. Wage rates will remain the same under current government contracts until the time of their renewal or renegotiation. Government subcontractors will also be subject to the order. The federal and state minimum wage rates paid to employees who are not employed under federal contracts or subcontracts are not affected by this order.
Workers covered by this order include employees in the construction, services and concessions industries working under federal contracts and subcontracts. The order also mandates that disabled workers who are paid less than non-disabled employees performing the same job be paid the new $10.10 minimum wage effective January 1, 2015. Tipped workers who work under government contracts will receive $4.90 per hour effective January 1, 2015, and their hourly wage will be increased by 95 cents each year thereafter until their hourly wage equals 70 percent of the minimum wage for non-tipped workers. Additional cost of living raises will follow in subsequent years.
Although many of the details of the February 12, 2014 executive order remain unclear, the U.S. Department of Labor will issue regulations no later than October 1, 2014 that will provide specific information concerning the implementation of the order.
As a reminder, a contract is only applicable to the executive order if it is:
- “a procurement contract for services or construction;”
- includes services covered by the Service Contract Act;
- a concessions contract; or
- is connected with “Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.”
What Does This Mean for My Business?
Federal contractors do not need to take any immediate action to comply with the new executive order. However, employers bidding on federal contracts where the solicitation for such contract begins on or after January 15, 2015 or employers that have a federal contract which will be renegotiated in 2015, will need to comply with the increased minimum wage requirements.
Leech Tishman’s Employment Practice Group is available to discuss with you the increases to the wages of federally contracted workers and has experience with other federal, state, and local wage and hour issues as well as all employment issues affecting federal contractors.
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