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President Signs Executive Order Increasing Minimum Wage for Some Employees of Federal Contractors and Subcontractors
February 26, 2014

By Bruce B. Deadman

On February 12, 2014 President Obama signed an Executive Order establishing a minimum wage of $10.10 for the employees of certain federal contractors and subcontractors. The increased minimum wage requirement is effective January 1, 2015 and applicable to any contract entered into on or after the date of the Order.

There has been a lot speculation and some confusion regarding the scope of the Executive Order. The purpose of this Client Update is to provide clarification, to the best extent possible, as to what contracts are covered and which are not. The Order does direct the Secretary of Labor to issue further clarification by October 1, 2014.

What is the Effective Date of the Order?

January 1, 2015, with some limited exceptions for existing contracts.

Who and What IS Covered by the Order

The Order covers federal contractors and subcontractors who

  • perform construction work for the federal government under the Davis-Bacon Act;
  • provide services to the federal government using service employees under the Service Contract Act (SCA);
  • act as a concessionaire on Federal property; or
  • provides services to federal government employees, their dependents, or the general public on federal property or land.

Examples would include concrete work on federal highway or building projects, providing janitorial or maintenance work at a Federally owned or operated building; or operating as a concessionaire at a National Park or Wildlife Refuge.

Who and What is Not Covered by the Order

Contracts for the providing of goods or materials to the federal government, usually pursuant to the Walsh-Healey Act, are NOT covered by the Order. This distinction has and likely will continue to create confusion regarding the scope of this Order.

The Order has also created confusion within the disability rights advocacy community, because of its specific reference to its coverage of employment pursuant to a Sub-Minimum Wage Special Certificate issued under 29 U.S.C. 214(c). The Order; however, requires those covered by such Sub-Minimum Wage certificates to receive a minimum wage of at least $10.10 only if the work they are performing falls within the categories of covered contracts discussed above. For example, an individual working for a contractor under a Special Certificate as a janitor at a Federal Wildlife Refuge would be covered by this Order, whereas another individual also working under a Special Certificate for a contractor in a developmental vocational employment setting, which may include supported employment or entities within the definition of “sheltered workshops” in Section DWD 272.09(1)(g) of the Wisconsin Administrative Code, would not.

However, even in those cases not expressly covered by the Order, any organization that receives federal funding through contracts with the federal government is reminded to closely review the terms of any federal contract that is presented to them. The requirement of this Order requires the inclusion of certain wage requirements in the terms of certain federal government contracts. The inclusion of specific obligations, such as wage rates and other assurances, is not a new concept within the context of federal government contracts. All contractors are urged to take this opportunity to review contracts they are party to or future contracts that are presented to them to make certain to have a full understanding of any wage or other obligations that may be part of those agreements.

The full text of the Order is available at http://www.whitehouse.gov/the-press-office/2014/02/12/executive-order-minimum-wage-contractors.

Please contact your Davis & Kuelthau, s.c. attorney or Bruce B. Deadman at 920.431.2228 / bdeadman@dkattorneys.com.

 

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