Federal Contractor $15 Minimum Wage Rule Finalized; Takes Effect January 30, 2022

The DOL right now revealed the Final Rule implementing the $15 per hour minimal wage for federal contractor employees who work on or in reference to coated contracts, which President Biden licensed by in Executive Order 14026.   Constructing on former President Obama’s Govt Order 13658, President Biden in April 2021 issued the Order and the DOL published a Proposed Rule in July 2021.

The Order applies to “new contracts” on and after January 30, 2022.  Nevertheless, the time period “New Contract” has been expanded and applies to:

  • Extensions or renewals of current contracts or contract-like devices; and workouts of choices on current contracts or contract-like devices on or after January 30, 2022.

Thus, the federal authorities could train an choice in an “old” contract not topic to the $15 fee which might make the contract topic to the brand new $15 wage requirement.

Contracts ensuing from solicitations issued earlier than January 30, 2022 and entered into on or between January 30, 2022 and March 30, 2022 are exempted.  “However, if such a contract is subsequently extended or renewed, or an option is subsequently exercised under that contract, …” the $15 wage will apply.

Recall, additionally, that the $15 minimal wage applies solely to sure varieties of contracts:

  1. Procurement contracts for development coated by the Davis-Bacon Act(DBA), however not the Davis-Bacon Associated Acts;

  2. Service Contract Act (SCA) coated contracts;

  3. Concession contracts;

Concession contract means a contract underneath which the federal authorities grants a proper to make use of federal property, together with land or services, for furnishing companies. The time period concessions contract consists of however is just not restricted to a contract the principal function of which is to furnish meals, lodging, vehicle gasoline, souvenirs, newspaper stands, and/or leisure tools, no matter whether or not the companies are of direct profit to the Authorities, its personnel, or most people;

  1. Contracts associated to federal property and the providing of companies most people, Federal workers, and their dependents.

In distinction to Govt Order 14042 requiring COVID vaccines for federal contractors, procurement contracts for companies – distinguished from SCA contracts – are usually not coated for functions of the $15 minimal wage.  As well as, the Last Rule particularly carves out the next:

  • Contracts for the manufacturing or furnishing of supplies, provides, articles, or tools to the Federal Authorities;

  • Grants;

  • Contracts or agreements with Indian Tribes underneath the Indian Self-Dedication and Schooling Help Act;

  • Contracts excluded from protection underneath the SCA or DBA particularly excluded within the implementing rules;

  • Different contracts particularly excluded. See Last Rule Part 23.40.

Equally, not all federal contractor employees or workers are entitled to the $15 wage.  Reasonably, federal contractors should so compensate “workers.”  That time period means:

  • Any individual (worker, unbiased contractor or apprentice in a registered program) engaged in performing work on or in reference to a coated contractor or subcontract; and,

  • Whose wages underneath such contract are ruled by the Truthful Labor Requirements Act, the Service Contract Act, or the Davis-Bacon Act, apart from people employed in a bona fide government, administrative, or skilled capability.

Furthermore, a contractor needn’t pay the $15 wage to any employee whose wages are ruled by the FLSA (however not the DBA) who solely works “in connection with” a coated contract fewer than 20% of their workweek in any explicit week.

As with the COVID vaccination government order, the scope of employees working “in connection with” a coated contract is broad:

  • A employee performs “on” a contract if the employee immediately performs the precise companies known as for by the contract.

  • A employee performs “in connection with” a contract if the employee’s work actions are essential to the efficiency of a contract however are usually not the precise companies known as for by the contract.

The $15 wage is necessary, nevertheless, solely when a coated employee is performing work on or in reference to a coated contract, not for all work if the worker doesn’t work on or in reference to the contract always

“The contractor must pay each worker performing work on or in connection with a covered contract no less than the applicable Executive Order minimum wage for all hours worked on or in connection with the covered contract…”

Consider additionally that tipped workers are handled individually pursuant to Part 23.280 of the Last Rule.

Some federal contractors could not have any coated contracts/subcontracts or any employees incomes lower than $15 per hour on coated contracts.  Thus, figuring out coated contracts and present wages for employees is the place to start out.

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