The Department of Labor’s Wage and Hour Division (WHD) has published notice in the Federal Register that the minimum wage for workers performing on or in connection with a federal contract under Executive Order 13658 will rise thirty-five cents per hour from $10.60 to $10.95 effective January 1, 2021. The minimum wage for covered tipped workers will increase twenty-five cents per hour from $7.40 to $7.65.
Executive Order 13658, implemented in 2014, is notoriously complex and difficult to administer.
The Order only applies to certain workers, specifically those whose wages are governed by the Fair Labor Standards Act, the Davis-Bacon Act, or the Service Contract Act.
And the Order only applies to certain types of federal contracts covered by the Davis-Bacon Act, the Service Contracts Act, concessions contracts (even those exempted by the Service Contracts Act), and contracts “in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.”
Finally, the Order exempts grants, contracts and agreements with Indian Tribes, procurement contracts for construction, and service contracts exempted by the Service Contract Act (except concessions).
Successful administration requires federal contractors and subcontractors to diligently comply with equal opportunity clause “flow-down” requirements, closely monitor contracting activity, track employee hours spent on specific tasks, etc. In the alternative, many federal contractor employers simply set their organizations’ minimum wages at the federal contractor minimum across the board, whether a particular employee performs work on or in connection with a federal contract or not. Many federal contractor employers have determined it is ultimately cheaper to pay all employees at least the federal contractor minimum wage than to try to administer the record keeping required by the Order.