Recently, the U.S. Department of Labor (DOL) issued final regulations implementing Executive Order 13658 (Executive Order – Minimum Wage for Contractors), requiring that workers on covered federal contracts and subcontracts be paid an increased minimum wage. These final regulations serve as a reminder to clients with federal contracts that all non-exempt workers must be paid the mandated minimum wage.

Who is Covered?

Contractors and subcontractors that have procurement contracts with the federal government where the solicitation for the contract issued on or after January 1, 2015. The regulations apply to workers on covered contracts whose wages are governed by the Fair Labor Standards Act, the Service Contract Act, or the Davis-Bacon Act.

What is the Minimum Wage?

Beginning on January 1, 2015, the minimum wage for workers on covered contracts and subcontracts is $10.10 per hour. Beginning on January 1, 2016, the minimum wage will be an amount determined by the Secretary of Labor and tied to the Consumer Price Index. Any fringe benefits provided by contractors will not discharge any portion of the minimum wage requirement.

Is Overtime Required?

Covered workers are eligible for overtime at 1.5 the regular rate of pay for all hours worked over 40 in a workweek.

Are Deductions Allowed?

Deductions that reduce the rate of pay below the minimum wage are lawful only if they are:

  1. required by federal, state, or local law; (ii) made to a third party pursuant to a court order;
  2. directed by voluntary assignment by the worker to his or her authorized representative; or
  3. made for the reasonable cost or fair value of contractor-provided board, lodging, or other facilities.

Click here to view the DOL’s final regulations.