Minimum Wage for Federal Contractors Will Be Indexed for Inflation
Author: Michael Cardman, XpertHR Legal Editor
February 13, 2014
The new minimum wage for employees of federal contractors will be adjusted for inflation each year, according to an executive order signed by President Obama on February 12.
The federal contractor minimum wage will start at $10.10 per hour on January 1, 2015; then, on January 1 of each following year, it will be adjusted by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, rounded to the nearest five cents.
Effective immediately, federal agencies must include in all new contracts a clause requiring that this minimum wage be paid to all workers. In turn, contractors and any subcontractors must incorporate this clause into lower-tier subcontracts.
The executive order also provides new details about the scope of coverage for the new minimum wage. It applies to any new contract or "contract-like instrument" under which workers' wages are governed by the Fair Labor Standards Act, the Service Contract Act or the Davis-Bacon Act that is:
- For services or construction;
- For services covered by the Service Contract Act;
- For concessions, including those excluded by Department of Labor regulations at 29 C.F.R. § 4.133(b); or
- 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.
The U.S. Department of Labor is directed to issue by October 1, 2014, regulations to carry out the new executive order. These regulations will likely provide further information about the precise meanings of the aforementioned terms, including "contract-like instrument."