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DOL Proposes New Federal Contractor Minimum Wage to Carry Out Executive Order

    Client Alerts
  • June 20, 2014
In February, President Obama signed Executive Order 13,658 increasing the minimum wage for work performed by federal contractors to $10.10 per hour. The Order resulted from the administration’s continuing frustration with Congress’ refusal to enact increases to the federal minimum wage applicable to employers in general. DOL estimates that the increase will affect 200,000 employees.
The proposed rule includes the same minimum wage for disabled workers in special certificate programs. This would replace the current rule that permits payment of a lower wage rate to these workers. The minimum wage for tipped employees of federal contractors would rise to $4.90 upon finalization of the rules, and would increase an additional $0.95 per year until it equals 70% of the $10.10 minimum.
Most federal contractors pay well in excess of this new minimum, and its impact is expected to be relatively minor. Employers holding federal concessions contracts, or those providing custodial or other services in federal buildings would bear most of the burden resulting from the increases. The rule is expected to become final by October 1 with the increases taking effect as early as January 1, 2015.