The minimum wage for federal contractors and subcontractors will rise from the current $10.95 an hour to $15.00 effective Jan. 30, 2022, and will increase each year after that.
However, the final rule issued by the Labor Department does not apply automatically to all federal contractors, notes attorney Leslie Stout-Tabackman of the Jackson Lewis law firm.
The wage hike was decreed by President Biden in an executive order that he issued earlier this year. Labor unions have sought a nationwide $15 minimum wage for all workers since 2012.
The new wage applies to:
• Procurement contracts for construction covered by the Davis-Bacon Act, (DBA) but not the Davis-Bacon related acts.
• Service Contract Act (SCA) covered contracts.
• Concessions contracts – meaning contracts under which the federal government grants a right to use federal property, including land or facilities, for furnishing services.
• Contracts related to federal property and the offering of services to the general public, federal employees and their dependents.
The minimum wage does not apply to grants and contracts for the manufacturing or furnishing of materials, supplies, articles or equipment to the federal government, as well as contracts excluded from coverage under the SCA or DBA.
The rule includes a “less-than-20% exception” for workers who only perform work in connection with a covered contract, but who do not perform any direct work on the contract.
For workers who spend less than 20% of their hours in a workweek working indirectly in connection with a covered contract, the contractor need not pay the $15 wage for any hours for that workweek.
Employers should plan for wage increases for covered workers who are not currently making $15 per hour, Stout-Tabackman recommends.