Department of Labor Finalizes $15 Minimum Wage for Employees of Federal Contractors

On November 16, 2021, the Department of Labor printed a Final Rule implementing Executive Order 14026 and elevating the federal contractor minimal wage to $15 per hour underneath most federal authorities contracts entered into after January 30, 2022.  The Last Rule additionally will increase the minimal wage for staff who recurrently obtain tricks to $10.50 per hour and can remove the power of contractors to take a tip credit score efficient January 30, 2024.

Starting January 30, 2022, federal companies might be required to incorporate a contract clause imposing the elevated minimal wage within the following varieties of authorities contracts:

  • Procurement contracts for development coated by the Davis-Bacon Act;

  • Contracts for providers coated by the Service Contract Act;

  • Concessions contracts;

  • Contracts with the federal authorities in reference to federal property or lands and associated to providing providers for federal staff, their dependents, or most of the people.

Contractors topic to the clause should circulate the minimal wage requirement right down to subcontractors who work on the coated contract.  The clause won’t be included in federal grants, sure contracts with Indian Tribes, contracts excluded from the Davis-Bacon Act or Service Contract Act, contracts carried out outdoors the USA, and contracts for manufacturing or furnishing supplies, provides, articles, or gear.

As within the Discover of Proposed Rulemaking previous the Last Rule, staff are entitled to obtain the elevated minimal wage in the event that they carry out providers “on or in connection with” a federal contract.  Employees carry out providers “on” a federal contract once they instantly carry out the providers known as for by the contract. Employees carry out providers “in connection with” a federal contract once they carry out providers that aren’t required by the contract, however are essential to the efficiency of the contract’s providers, equivalent to safety, upkeep, or janitorial work at amenities that carry out federal contract work. Employees who solely carry out “in connection with” a federal contract should not topic to the minimal wage requirement in the event that they carry out lower than 20% of their work time on performing providers “in connection with” the contract.

As within the Discover of Proposed Rulemaking, the ultimate rule doesn’t create a non-public proper of motion for staff to sue contractors for unpaid wages.  Nevertheless, staff can submit complaints to the Department of Labor, which can end in sanctions for failing to pay the elevated minimal wage. These sanctions can embody withholding of contract funds from the prime contractor, the termination of contracts, and debarment from federal contracting.

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