November 23rd, 2016
Feds Amend Rule on Minimum Wage Hike for Federal Contractors
Three federal agencies – the Department of Defense, the General Services Administration, and NASA – issued an interim rule, effective December 15th, on the new minimum wage for federal contractors. On February 12th, President Obama issued an Executive Order raising the minimum wage to $10.10 for employees of federal contractors on contracts negotiated on or after January 1, 2015. The Executive Order also indexed future raises in the minimum wage to inflation.
The interim rule adds a new section to the Federal Acquisition Regulations. In addition to raising the minimum wage to $10.10 per hour, the rule provides that the Secretary of Labor will annually determine the raise in the minimum wage based on the Consumer Price Index. The rule allows a federal contractor to request a price adjustment in its federal contract to compensate for the increase labor costs of any such adjustment.
The rule provides that a primary contractor is responsible for any violations of the minimum wage by its subcontractors. But the rule also provides that upper-tier sub-contractors are not liable for violations by lower-tier subcontractors. This last provision differs from the rule previously issued by the Department of Labor.