Executive Order (EO) 13658, “Establishing a Minimum Wage for Contractors,”
requires that federal contractors with new covered contracts, contract-like
instruments, and solicitations (collectively referred to as “contracts”)
pay a minimum wage of $10.10 per hour to workers performing on or
in connection with covered contracts. Covered contractors must also
include a clause in covered contracts and lower-tier subcontracts,
specifying, as a condition of payment, that the minimum wage is to
be paid to workers performing on or in connection with the contract
or any subcontract.
Beginning January 1, 2016, the rate will be increased
to $10.15 per hour and will be adjusted annually thereafter. The Secretary
of Labor will determine the EO minimum wage, indexed to inflation.
The amount of the EO minimum wage will be published by the secretary
at least 90 days before such new minimum wage is to take effect. The
wage rate will also be posted on the Wage and Hour Division’s (WHD) website
and theWage Determinations OnLine
website at www.wdol.gov.
Covered contracts. The minimum wage
EO applies to a wide range of contracts with the federal government
for services or construction. Four major categories of contractual
agreements are covered by the EO:
1. Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
2. Service contracts covered by the Service Contract
3. Concessions contracts, including any concessions contract
excluded from the SCA by the Department’s regulations at 29 CFR 4.133(b); and
4. Contracts in connection with federal property or lands
and related to offering services for federal employees, their dependents,
or the general public.
The EO applies only to prime contracts covered by the
DBA that exceed $2,000 and prime contracts covered by the SCA that
exceed $2,500. For procurement contracts where workers’ wages are
governed by the FLSA, the EO specifies that it applies only to contracts
that exceed $3,000. There is no value threshold requirement for subcontracts
awarded under such prime contracts.
The EO minimum wage generally applies to workers performing
on or in connection with the above types of contracts if the wages
of such workers are governed by the DBA, the SCA, or the FLSA. The
EO minimum wage requirements apply only to new contracts with the
federal government. A “new” contract is a contract that results from
a solicitation issued on or after January 1, 2015, or a contract that
is awarded outside the solicitation process on or after January 1,
2015. This term includes both new contracts and replacements for expiring
The implementing regulations for EO 13658 prohibit the taking of kickbacks
from wages paid to workers on covered contracts as well as retaliation
against any worker for exercising his or her rights under the EO or
the implementing regulations.
Covered workers. The final rule
defines the term “worker” as any person engaged in performing work
on or in connection with a contract covered by the EO, and whose wages
under the contract are governed by the FLSA, the SCA, or the DBA,
regardless of the contractual relationship alleged to exist between
the individual and the employer. The EO minimum wage applies to workers
performing on covered contracts, as well as workers performing in
connection with covered contracts. The DOL has stated that it views
a worker performing “on” a covered contract as any worker who directly
performs the specific services called for by the contract’s terms.
The DOL regards a worker performing “in connection with” a covered
contract as any worker who performs work activities that, although
are not the specific services called for by the contract’s terms,
are necessary to the performance of those specific services.
The minimum wage rate will apply to workers with disabilities
who are otherwise eligible for a subminimum wage under 29 USC 214(c).
Effective January 1, 2015, covered contractors must pay tipped workers
a minimum hourly wage of $4.90, in addition to the amount earned in
tips. If the combination of a worker’s tips and hourly wages does
not total at least $10.10 an hour, the employer must contribute the
balance. Beginning in 2016, the required minimum cash wage that generally
must be paid to tipped employees is $5.85 per hour. The minimum wage
for tipped workers will increase each year until the tipped minimum
wage equals 70 percent of the minimum wage for nontipped workers under
Exempt from EO coverage. Employees
who are exempt from the minimum wage protections of the FLSA are not
entitled to the minimum wage protections of the EO. For example, learners,
apprentices, messengers, and full-time students employed under special
certificates pursuant to FLSA Sections 14(a) and 14(b) are not entitled
to the EO minimum wage. Similarly, individuals employed in a bona
fide executive, administrative, or professional capacity, as those
terms are defined in FLSA’s regulations at 29 CFR 541, are exempt
from coverage of the EO.
Any FLSA-covered worker performing in connection with
covered contracts for less than 20 percent of his or her hours worked
in a given workweek will not be entitled to EO minimum wage. This
20 percent exclusion applies only to FLSA-covered workers performing
in connection with a covered contract for less than 20 percent of
their hours worked in a given workweek. The exclusion does not apply
to any workers performing on a covered contract, regardless of whether
such covered work constitutes less than 20 percent of his or her overall
hours worked in a particular workweek.
Recordkeeping and notice requirements. Covered contractors and subcontractors must make and maintain, the
following records for each worker for a period of at least 3 years:
1. Name, address, and Social Security number (SSN) of each
2. The worker’s occupation(s) or classification(s);
3. The rate or rates of wages paid;
4. The number of daily and weekly hours worked by each
5. Any deductions made; and
6. The total wages paid.
Contractors must permit authorized representatives of
the DOL’s Wage and Hour Division to conduct interviews with workers
at the worksite during normal working hours.
Notice. Under the final rule implementing
the minimum wage EO (29 CFR 10.29), covered contractors must notify all workers
performing work on or in connection with a covered contract of the
applicable minimum wage rate under the EO. With respect to service
employees on contracts covered by the SCA and laborers and mechanics
on contracts covered by the DBA, the contractor may meet this requirement
by posting, in a prominent and accessible place at the worksite, the
applicable wage determination under those statutes.
With respect to workers performing work on or in connection
with a covered contract whose wages are governed by the FLSA, the
contractor must post a notice provided by the DOL in a prominent and
accessible place at the worksite so it may be readily seen by workers.
Contractors that customarily post notices to workers electronically
may post the notice electronically, provided such electronic posting
is displayed prominently on any website that is maintained by the
contractor, whether external or internal, and customarily used for
notices to workers about terms and conditions of employment.
Contract clauses. Covered contractors
and subcontractors must include the EO contract clause in any covered
contracts and lower-tiered subcontracts. The full contract clause
will be deemed to have been incorporated by reference in a covered
contract if the contract contains the incorporation provisions stated
in the regulations. 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