The OFCCP will publish a Notice of Proposed Rulemaking in tomorrow’s Federal Register implementing Executive Order (E.O.) 14026, “Increasing the Minimum Wage for Federal Contractors.” The Notice clocks in at 233 pages, so a full analysis will be forthcoming, but here are the basics for now.
On April 27, 2021, President Biden signed E.O. 14026, building on the previous minimum wage order from the Obama administration and accelerating that minimum wage hike. E.O. 14026 increases the minimum hourly rate for covered employees to $15.00 beginning January 30, 2022. The current federal contractor minimum wage rate is $10.95 per hour.
The two orders are built largely on the same framework, applying to contracts where wages are governed by the FLSA, the SCA, or the DBA and: procurement contracts for services or construction; a contract for services covered by the Service Contract Act; a contract for concessions; or certain contracts in connection with federal property or lands.
And yes, determining which employees are covered and for what work is exactly as complicated as it sounds. That is likely by design, to encourage covered employers to simply raise their minimum wages across the board.
But perhaps the most confusing aspect of the new order is the effective date. E.O. 14026 was effective immediately when signed back in April and instructs federal contracting agencies to make every effort to ensure that new contracts and renewals encourage contractors to pay affected employees according to the new rate. But it would appear that the Department of Labor’s Wage & Hour Division will not be enforcing the new E.O. until after the January 30, 2022 “effective date.”
The particulars of the new E.O. and the OFCCP’s proposed rule are only important if your organization is going to try to only pay the $15.00 per hour minimum rate for work on or in connection with a covered contract. Although we do not expect any big surprises, BCGi will publish a follow-up soon with a more in-depth analysis.
As always, if you have questions about this or any other OFCCP action, feel free to contact us at BCGi@biddle.com.
