US DOL Details New Minimum Wage Rates Connected to Federal Contracts

US DOL Details New Minimum Wage Rates Connected to Federal Contracts

On September 16, 2021, the U.S. Department of Labor (DOL) issued a notice detailing new minimum wage rates for employees who perform work on or connected to federal contracts. The rate will increase to $11.25 an hour for existing contracts on Jan 1, 2022. Starting Jan. 30, 2022, the rate will be $15 for work performed on new, renewed, and extended contracts.

Broad Definition of Federal Contracts

The DOL’s proposed rule broadly interprets Biden’s executive order by defining covered contracts to
include “subcontracts, lease agreements on federal property, licenses, permits, and other forms of
agreements between the U.S. government and private-sector businesses.”

We’ve rounded up resources and articles from SHRM Online and other trusted outlets on the news.

Rate To Apply

The notice in The Federal Register provides clarity on how two separate executive orders apply to covered federal contracts. In 2014, Executive Order 13658 established an inflation-tied formula for calculating the minimum wage for workers on federal contracts. Under the formula, the rate will rise to $11.25 at the beginning of 2022. In April 2021, however, Biden signed Executive Order 14026 requiring federal contractors with “covered new, renewed and extended contracts” to pay a minimum wage of $15 an hour by Jan. 30, 2022.

The minimum wage that covered contractors must pay tipped employees will rise to $7.90 an hour on
Jan. 1, 2022.

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