The Department of Labor has issued a proposed rule to implement the new Executive Order (E.O) 13658 – Establishing a Minimum Wage for Contractors – which raises the minimum wage of certain federal contractors to $10.10 per hour starting January 1, 2015. Issued in February, the E.O. covers federal contracts and contract-like instruments that are the result of solicitations issued on or after January 1, 2015. Contractors, in turn, are required to incorporate the E.O. minimum wage clause in their lower-tier subcontracts.
According to a fact sheet on the new proposal, the minimum wage obligation applies to all contracts for construction covered by the Davis-Bacon Act, but not contracts that are subject only to the Davis-Bacon Related Acts; contracts for services exceeding $2,500 covered by the Service Contract Act (SCA); concessions contracts, including those excluded from SCA coverage by regulations, such as contracts to furnish food, lodging, automobile fuel, souvenirs, newspaper stands, and/or recreational equipment on federal property; and contracts to provide services, such as child care or dry cleaning, in federal buildings for federal employees or the general public.
The proposed rule lists certain narrow exclusions, including grants, procurement contracts for construction that are not subject to the Davis-Bacon Act (i.e., those under $2,000), “and any contracts for services, except for those otherwise expressly covered by the proposed rule, that are exempted from coverage under the SCA or its implementing regulations.”
The general categories of employees covered by the E.O. include:
- employees who are entitled to the FLSA minimum wage;
- service employees who are entitled to prevailing wages under the SCA; and
- laborers and mechanics who are entitled to prevailing wages under the Davis-Bacon Act.
Notably, the proposal provides a number of definitions, including one for nebulous “contract-like instrument.” As explained in a set of frequently asked questions (FAQs):
The Department has proposed to collectively define the terms “contract” and “contract-like instrument” for purposes of the Executive Order as an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. The proposed definition of the term “contract” broadly includes 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.
More information on the proposed rule, including Q&As on contractor and contracting agency requirements, enforcement, and rule coverage, can be found here.