$10.10 minimum wage for contractors set for January 1

President Barack Obama’s Executive Order raising the minimum wage for federal contractors and subcontractors is set to take effect for all federal contracts beginning on or after January 1.

Obama signed Executive Order 13658 on February 12. The U.S. Department of Labor (DOL) announced the final rule implementing the order on October 1. The DOL has said the order will affect nearly 200,000 workers.

Obama had urged Congress to raise the federal minimum wage for all workers covered under the Fair Labor Standards Act (FLSA) to $10.10 an hour, but that effort failed in Congress. The current minimum wage, in force since 2009, is $7.25 an hour. Obama’s Executive Order applies only to employees of federal contractors and subcontractors. Congressional action is necessary to raise the general minimum wage.

The order applies to new contracts and replacements for expiring contracts with the federal government that result from solicitations issued on or after January 1, 2015, as well as to contracts awarded outside the solicitation process on or after January 1, 2015. The new contractor minimum wage will be indexed to inflation in the future.

In addition to raising the regular minimum wage for employees of contractors, the Executive Order raises the special minimum wage for tipped workers. Under the order, tipped workers will earn at least $10.10 an hour through a combination of pay from the employer and tips. The hourly cash wage that employers must pay tipped workers will be at least $4.90 per hour and will increase annually until it is 70 percent of the regular minimum wage.

The Executive Order also covers workers with disabilities who earn less than the minimum wage because of productivity wage scales. Currently, workers whose productivity is affected by a mental or physical disability may be paid a subminimum wage. Under the new order, workers covered by service or concessions contracts must earn at least $10.10 per hour.

The DOL has posted a frequently asked questions document giving details about the new wage.