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DOL issues proposed rule on $10.10 minimum wage for federal contractors

U.S. Secretary of Labor Thomas E. Perez announced a proposed rule on June 12 that will raise the minimum wage for workers on federal service and construction contracts to $10.10 per hour. The proposed rule implements the executive order President Barack Obama announced on February 12.

The proposed rule provides guidance and sets standards for employers concerning coverage, including coverage of tipped employees and workers with disabilities. It also establishes an enforcement process, according to an announcement from the U.S. Department of Labor (DOL). The DOL’s proposed rule includes an economic analysis showing that nearly 200,000 workers will see the increase.

Executive Order 13658 applies to new contracts and replacements for expiring contracts with the federal government that result from solicitations issued on or after January 1, 2015, and to contracts that are awarded outside the solicitation process on or after January 1, 2015.

The order applies to four major categories of contractual agreements: contracts for construction, service contracts under the Service Contract Act, concessions contracts, and contracts entered into by the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

In addition to the proposed rule, the DOL and the Office of Management and Budget (OMB) jointly provided initial guidance to agencies on steps they should take to begin implementing the increased minimum wage in advance of the rule being finalized. The DOL announcement said that by issuing the guidance, the OMB and the DOL are asking agencies to take reasonable and legally permissible steps immediately to begin implementing the order.

President Obama has been urging Congress to pass a bill that would raise the federal minimum wage for all workers—not just federal contractors—to $10.10 an hour, but the effort has so far fallen short. Without such a law, he turned to raising the minimum wage for contractors since that could be done by executive order.

Interested parties are invited to view the proposed rule and submit comments at www.regulations.gov. The regulation identification number is 1235-AA10. Comments must be received within 30 days following publication in the Federal Register. The DOL will review comments received and issue a final rule by October 1. More information about the proposed rule and the joint guidance to federal agencies is available at www.dol.gov/whd/flsa/nprm-eo13658.