By Michael Drab
In 2014, President Obama signed an executive order requiring federal contractors to pay $10.10 per hour to workers performing work on or in connection with certain covered federal contracts for construction or services. Under that executive order, the minimum wage paid by federal contractors increased to $11.25 ($7.90 for tipped workers) on January 1 of this year.
However, on April 27, 2021, President Biden signed EO 14026, raising the hourly minimum wage to $15.00 ($10.50 for tipped workers). That new minimum wage is set to take effect on January 30, 2022, and will increase annually based on inflation.
On January 13, 2022, the United States Department of Labor published Field Assistance Bulletin (FAB) No. 2022-1 clarifying the requirements of EO 14026.
What Contracts Are Covered
The FAB identifies four categories of contracts covered by EO 14026:
- procurement contracts for construction covered by the Davis-Bacon Act (DBA);
- service contracts covered by the Service Contract Act (SCA);
- concessions contracts; and
- contracts entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.
Where the New Mandate Applies
The FAB also defines the geographic scope of the EO’s application as including the 50 states or the District of Columbia as well as in Puerto Rico, the Virgin Islands, Outer Continental Shelf Lands as defined in the Outer Continental Shelf Lands Act, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Wake Island, and Johnston Island.
Who Is Covered
The FAB further identifies workers covered by the EO as:
- workers whose wages under the contract are governed by the FLSA, SCA, or DBA; and
- workers employed on or in connection with a covered contract.
The FAB explains the $15 minimum wage requirement for all contract workers and clarifies changes to minimum wage requirements for contract workers in tipped occupations and workers with disabilities employed on covered contracts under Section 14(c) of the Fair Labor Standards Act.
Additionally, the FAB provides information on worker notice requirements, subcontractor requirements, recordkeeping requirements, and anti-retaliation provisions and remedies. The FAB also requires contracting agencies to incorporate the applicable EO contract clauses into covered prime contracts, and those same clauses must flow-down to subcontractors performing work under a covered federal contract.
For questions about how your business may be impacted on the increased minimum wage for federal contractors, please contact a member of Jackson Walker’s Labor & Employment practice.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.