On April 27, 2021, President Biden issued Executive Order 14026, raising to $15 per hour — with increases to be published annually — the minimum wage certain federal contractors must pay workers performing work “on or in connection with” a covered Federal contract or subcontract. The types of contracts impacted include those covered by the Service Contract Act, the Davis-Bacon Act, certain concession contracts, and certain contracts related to federal property and the offering of services the general public, federal employees and their dependents. The current minimum wage is $10.95 per hour, established by Executive Order 13658 during the Obama Administration.
On July 21, 2021, the Department of Labor (“DOL”) announced the much anticipated Notice of Proposed Rule Making (“NPRM”) detailing the proposed regulations to implement the new minimum wage requirements. The NPRM is scheduled to be published in the Federal Register on July 22, 2021, with the new requirements intended to be effective January 30, 2022. However, contracting agencies are encouraged to implement the new minimum wage requirements in existing contracts.
While the NPRM is substantially similar in key areas to the final regulations implementing Executive Order 13658, it is notably more expansive in critical areas, including coverage of “new contracts,” expanded coverage of geographic areas, and limitations on exclusions of tipped subminimum wage workers. Most importantly, the NPRM proposes coverage of the same types of contracts as those covered by Executive Order 13658, but for the most part all such contracts likely will be subject to coverage on or after January 30, 2022, including those never covered by Executive Order 13658 requirements.
For more information about the NPRM, and what contractors should do now to prepare, please see our client alert here: Proposed Regulations Implementing $15 Hourly Federal Contractor Minimum Wage Executive Order