DOL Announces 2016 Contractor Minimum Wage Rate

The Department of Labor has announced the 2016 minimum wage rate to be paid to workers performing work on or in connection with federal contracts covered by Executive Order 13658, Establishing a Minimum Wage for Contractors.

The 2014 executive order raised the hourly minimum wage paid by contractors to workers performing work on covered federal contracts to $10.10 per hour commencing January 1, 2015. For covered tipped employees, the order set an hourly cash wage of at least $4.90.

Beginning January 1, 2016, and annually thereafter, the Secretary of Labor adjusts the rate in accordance with the methodology set forth in the executive order.

DOL’s notice announces that the minimum wage rate that generally must be paid to workers performing work on or in connection with covered contracts will be $10.15 per hour. The required minimum cash wage for covered tipped employees will be $5.85 per hour.

For more information, see the full text of DOL’s notice.

Proposed DOL Rule Would Raise Minimum Wage

Secretary of Labor Thomas E. Perez announced a proposed rule raising the minimum wage for workers on federal service and construction contracts to $10.10 per hour. The rule implements President Obama’s Executive Order 13658, Establishing a Minimum Wage for Contractors.

Although the rule has not yet been published in the Federal Register, the Office of Management and Budget has reviewed and approved it. A copy of the OMB-approved version of the proposed rule appears on the Department of Labor website. A fact sheet detailing key provisions of the rule is also available of the DOL site.

The rule provides guidance and sets standards for contractors concerning coverage, including coverage of tipped employees and workers with disabilities. It also establishes an enforcement process to protect the right of workers to receive the new minimum wage. The proposed rule includes an economic analysis indicating that nearly two hundred thousand workers will benefit from the increase.

President Signs Executive Order Raising Minimum Wage for Contractor Employees

President Obama today signed an executive order raising the minimum wage for contractor employees to $10.10 per hour beginning January 1, 2015. The order also includes provisions to ensure that tipped workers earn at least $10.10 overall, through a combination of tips and an employer contribution. The order is intended to “promote economy and efficiency in procurement by contracting with sources who adequately compensate their workers.”

According to the order, raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs. As stated in a White House fact sheet, the employees who would see their wages go up under this executive order include nursing assistants providing care to veterans at nursing homes, concessions workers in National Parks, people serving food to troops, and individuals with disabilities working to maintain the grounds on military bases.

President Obama to Raise Minimum Wage for Contractor Employees

As announced in the State of the Union Address, President Obama will issue an executive order raising the minimum wage for workers on federal contracts. The rate will increase to $10.10 an hour. As stated in a White House fact sheet posted January 28, the President also wants to work with Congress to pass the Harkin-Miller bill, which would raise the federal minimum wage to the same rate and in the future indexed for inflation.

The beneficiaries of the President’s order will be those who work on new government contracts for services and construction and are currently paid less than $10.10 an hour — including janitors, construction workers, and military base workers who wash dishes, serve food, and do laundry. According to the fact sheet, the wage boost for contract workers will provide good value for the federal government and taxpayers, lower turnover, increase morale, lead to higher overall productivity, and improve the quality and efficiency of services provided to the government.

The White House also states that the wage increase will be manageable for contractors because it will apply to new contracts after the effective date of the order, giving contractors time to prepare and price their bids accordingly.