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New Federal Minimum Wage For Contractors

10/13/2014 | Construction Blog

After Congress refused to pass a new minimum wage law, President Obama signed Executive Order 13658 in June of this year raising the minimum wage on all new contracts or replacement contracts for expiring agreements issued after January 1, 2015, to $10.10 an hour. The Department of Labor’s Wage and Hour Division then issued a final rule following that lead on October 7, 2014. This change in the law will apply to construction contractors until at least the expiration of President Obama’s term and the entry of a subsequent Executive Order by subsequent President and/or Department of Labor Change in policy.

The new minimum wage rule brings with it several other requirements:

  1. If a worker is entitled to a rage rate higher than this minimum wage by law, the higher rate applies. This includes Davis-Bacon requirements and begs the question of whether this new rule is even necessary.
  2. Contractors must include the Executive Order contract clause in any covered lower-tiered subcontract and notify workers of the required minimum wage if it applies.
  3. The rule contains provisions mandating the frequency at which payments must be made to workers and certain recordkeeping obligations.
  4. The rule contains anti-kickback and anti-retaliation provisions as well.

Because the Executive Order has been formalized into a final rule by the Wage and Hour Division, expect enforcement to be regular and in the same manner as prevailing wage rules are enforced.

For more information on the rule and how it will be administered, interested parties can go to the Department of Labor’s website here.