Ask the Expert, FLSA/Wages

Ask the Expert: Minimum Wage Requirements for Subcontractors

Do subcontractors have to comply with Executive Order 13658, which increased the minimum wage for federal contractors?

As of January 1, 2016, both contractors and subcontractors performing work on, or in connection, with a covered federal contract (covered by Executive Order (EO) 13658) are required to pay $10.15 minimum wage. In order to be covered, the following criteria must be met:

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

(2) The minimum wage requirement applies to all contracts for construction covered by the Davis-Bacon Act; contracts for services covered by the Service Contract Act; concessions contracts, 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.

For more information on contract coverage and other details, see the DOL website.

It is important to note that covered contractors and subcontractors must include the EO contract clause in any covered lower-tiered subcontracts. They also must notify all workers performing on or in connection with a covered contract of the applicable minimum wage rate under the EO.

A copy of the notice containing the 2016 minimum wage rates can be found on DOL’s website (link above). Contractors and subcontractors must pay covered workers the EO minimum wage for all hours worked on or in connection with covered contracts and must comply with pay frequency and recordkeeping obligations.

For tipped workers, the EO’s wage increase was from $4.90 to $5.85 in 2016. For more information on the changes, read this article from HR.BLR.com.