In latest edition of The Wright Toolbox:
- Final Rule Issued on Federal Contractor Minimum Wages – read now
Final Rule Issued on Federal Contractor Minimum Wages
On November 22, 2021, the Department of Labor announced the publication of the Final Rule implementing Executive Order 14026. That Executive Order was issued on April 27, 2021 by President Biden, titled “Increasing the Minimum Wage for Federal Contractors.” The Executive Order raises the minimum wage paid by federal contractors to workers performing work on or in connection with covered federal contracts to $15.00 per hour, beginning January 30, 2022. The Order also provides that beginning January 1, 2023, and annually thereafter, the hourly rate will be set at an amount determined by the Secretary of Labor. This Final Rule establishes standards and procedures for implementing and enforcing the minimum wage protections of the Executive Order, and also becomes effective on January 30, 2022.
The new minimum wage requirements apply only to “new contracts” with the Federal Government. A “new contract” is defined as contract that is entered into on or after January 30, 2022. A contract that is entered into prior to January 30, 2022 will also constitute a “new contract” if, on or after January 30, 2022 the contract is renewed, extended or an option on the contract is exercised. For contracts that were entered into prior to January 30, 2022, the Order’s minimum wage requirement only applies prospectively as of the date that such contract is renewed or extended on or after January 30, 2022, and not the date that the contract was originally entered into. However, the Final Rule provides that the Executive Order does not apply to contracts that result from a solicitation issued prior to January 30, 2022, and that are entered into on or between January 30, 2022 and March 30, 2022.
Under the Final Rule, the Executive Order applies to a wide range of contracts with the Federal Government for services and construction. Coverage generally extends to four major categories of contractual agreements: Procurement contracts for construction covered by the Davis Bacon Act (“DBA”); Service contracts covered by the Services Contract Act (“SCA”); Concessions contracts, including any concessions contract excluded from the SCA 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. There are also value threshold requirements for coverage, but those are very small. For example, the Executive Order will apply to prime contracts covered by the DBA that exceed $2,000 and prime contracts covered by the SCA that exceed $2,500. Contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the Federal Government, including those subject to the Walsh-Healey Public Contracts Act, 41 U.S.C. 6501 et seq., are not covered by the Executive Order. To the extent practicable, the Final Rule incorporates existing definitions, procedures, remedies, and enforcement processes under the Fair Labor Standards Act (FLSA), the Service Contract Act (SCA), the Davis-Bacon Act (DBA), and prior Executive Order 13658. If you have any questions about the Executive Order or the Final Rule, please contact our Government Contracts Practice Group.