DOL Proposes Rule to Enforce Federal Contractor Wage Increase

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Many federal contractors would have to pay workers at least $15 an hour by 2022 under a proposed rule from the U.S. Department of Labor (DOL) that would implement and enforce a recent executive order.

In April, President Joe Biden signed Executive Order 14026, which aims to promote "economy and efficiency in federal procurement by increasing the hourly minimum wage paid by the parties that contract with the federal government to $15.00 for those workers working on or in connection with a federal government contract," according to the White House.

The rule would also eliminate subminimum wage rates for federal contract workers with disabilities and workers who customarily receive tips.

We've gathered articles on the news from SHRM Online and other trusted media outlets.

The Details

The DOL's proposed rule would establish procedures to implement and enforce the executive order by:

  • Increasing the minimum wage for workers performing work on covered federal contracts to $15 an hour starting on Jan. 30, 2022.
  • Continuing to index the minimum wage for federal contract workers to keep pace with inflation.
  • Eliminating the tipped minimum wage for federal contract workers by 2024.
  • Establishing a $15 minimum wage for workers with disabilities who perform work on covered contracts.
  • Restoring minimum-wage protections to outfitters and guides who operate on federal lands.

"Our proposed regulations to implement President Biden's executive order will ensure taxpayer dollars uphold the dignity of work and provide a living wage to workers on federal contracts, including cleaning, maintenance, nursing and food service workers whose efforts are critical to the nation's pandemic recovery," said Wage and Hour Division Acting Administrator Jessica Looman. 

The proposed rule will be published in the Federal Register on July 22, and the DOL is seeking comments from the public until Aug. 23.

(U.S. Department of Labor)

Application

The new order updates a 2014 presidential executive order and would raise the minimum wage for federal contract workers by $4.05 an hour. The current rate is $10.95.

Although the prior rule applied only to new and renewed federal contracts, the new proposal would apply the $15 minimum wage to existing contracts when agencies opt to purchase additional supplies or services. The DOL broadly interpreted the executive order by defining applicable contracts to include "all contracts and any subcontracts of any tier thereunder, whether negotiated or advertised, including any procurement actions, lease agreements, cooperative agreements, provider agreements, intergovernmental service agreements, service agreements, licenses, permits, or any other type of agreement, regardless of nomenclature, type, or particular form, and whether entered into verbally or in writing," according to the proposed rule. Eligible workers include apprentices.

(Bloomberg Law)

Pressure on Congress

The measure would raise the wages of hundreds of thousands of employees who are working on federal contracts, according to the White House. Additionally, the wage hike is expected to increase pressure on Congress to raise the private-sector minimum wage. Sen. Bernie Sanders, I-Vt., said in a tweet that "Congress should follow [Biden's] lead and end starvation wages for the rest of the nation." The Hill reported that "unlike the broader minimum wage, however, the wage for contractors is funded by the federal government, meaning the costs would theoretically be passed on to the taxpayer or add to the deficit."

Rep. Virginia Foxx, R-N.C., opposes the proposed rule. She said a $15 minimum wage "will severely disadvantage small businesses competing for federal contracts because they are poorly positioned to absorb these additional expenses."

(SHRM Online) and (Committee on Education and Labor Republicans)

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Salary Increase Projections for 2022

Pay raises in the U.S. are returning to pre-pandemic levels but rising prices mean higher salaries aren't likely to keep pace with inflation.

Pay raises in the U.S. are returning to pre-pandemic levels but rising prices mean higher salaries aren't likely to keep pace with inflation.

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