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Volume XI, Number 267

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DOL Proposes New Rule to Establish Minimum Wage Standards for Federal Contractors

On July 22, 2021, the U.S. Department of Labor (DOL) published a notice of proposed rulemaking to outline the standards and procedures that it will use to administer President Joe Biden’s Executive Order 14026, which he signed on April 27, 2021. Executive Order 14026 proposed an increase to the minimum wage for workers performing work on federal contracts to $15 per hour beginning January 30, 2022. The proposed rule applies only to federal contractors. It builds upon Executive Order 13658 signed by then-president Barack Obama that established a minimum wage of $10.10 for federal contractors with annual increases for inflation. The current rate is $10.95 per hour; the minimum wage for tipped federal contract workers is $7.65 per hour. Below is a brief summary of the scope of the DOL’s proposed rule and changes, if finalized.

Scope and Summary

In accordance with the executive order, the new $15 minimum wage for federal contracts would “only appl[y] to a new contract, new solicitation, extension or renewal of an existing contract, and exercise of an option on an existing contract.” “New contracts” include extensions or renewals of existing contracts or contract-like instruments, and exercises of options on existing contracts or contract-like instruments on or after January 30, 2022. Thus, the federal government may have the authority to exercise certain options in “old” contracts not subject to the $15 rate and make them subject to the new $15 wage requirement.

The DOL’s proposed rule includes provisions

  • increasing the minimum wage for “workers performing work on or in connection with covered Federal contracts to $15.00 per hour, beginning January 30, 2022”;

  • continuing to index the federal contractor minimum wage in future years to the Consumer Price Index;

  • eliminating the tipped minimum wage for federal contract workers by 2024 (there will be an incremental increase in the tipped minimum wage until January 1, 2024, when the minimum wage for tipped federal contract workers will be 100 percent of the standard minimum wage for federal contract workers);

  • ensuring a $15 minimum wage for workers with disabilities performing work on or in connection with covered contracts; and

  • restoring minimum wage protections to outfitters and guides operating on federal lands.

Key Takeaways

If finalized, the proposed rule will increase the minimum wage from $10.95 to $15.00 per hour for work performed on or in connection with covered federal contracts beginning January 30, 2022. Beginning January 1, 2023, and annually thereafter, the secretary of labor will have the discretion to issue further increases to the minimum wage. Comments on the proposed rule are due on or before August 23, 2021. Executive Order 14026 directs the DOL to issue final regulations by November 24, 2021.

© 2021, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.National Law Review, Volume XI, Number 208
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About this Author

Justin P. Grose, Ogletree, employment lawyer
Associate

Justin P. Grose is a trial lawyer whose practice focuses on civil litigation in state and federal court. His practice also includes appellate work arguing before the appellate courts of Oklahoma, as well as the United States Tenth Circuit Court of Appeals. While in public service, his practice primarily consisted of defending state agencies and state employees involving tort claims, administrative actions, civil rights allegations, employment law, and constitutional challenges. He now represents employers in all aspects of labor and employment law.

While in law...

405 546 3758
Samuel H. Ottinger Health Attorney Ogletree Deakins Law Firm Cleveland
Associate

Sam is an associate in the Cleveland office of Ogletree Deakins.

A graduate of Case Western Reserve University School of Law, cum laude, Sam received a concentration in health law, with honors.

He served as a judicial extern for Judge Christoper Boyko in the U.S. District Court for the Northern District of Ohio and Judge Timothy McCormack in the Eighth District Ohio Court of Appeals. Sam also served as a legal extern at the National Labor Relations Board, Region 8 and worked for two Cleveland-based...

216-274-6912
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