On June 12, 2014, U.S. Secretary of Labor Thomas E. Perez announced a proposed rule raising the minimum wage to $10.10 per hour starting on January 1, 2015, for workers on federal service and construction contracts. The proposed rule implements Executive Order 13658, “Establishing a Minimum Wage for Contractors,” which President Barack Obama signed on February 12. According to the U.S. Department of Labor’s (DOL) news release, in announcing the notice of proposed rulemaking (NPRM), Secretary Perez was “[f]ulfilling President Obama’s commitment to make 2014 a year of action to strengthen the economy and build the middle class.”

According to a fact sheet issued by the DOL’s Wage and Hour Division (WHD), the NPRM includes several key provisions, including definitions of several key terms. For example, the NPRM defines the “contracts,” “contract-like instruments,” and “concessions contracts” to which the new minimum wage requirement applies.

In addition, the NPRM details standards contractors can use to determine which employees are covered by the executive order and thus entitled to the new minimum wage. According to the fact sheet, the following employees are entitled to the new minimum wage if they are performing work on covered federal contracts:

  1. employees who are entitled to the Fair Labor Standards Act (FLSA) minimum wage;
  2. service employees who are entitled to prevailing wages under the McNamara-O’Hara Service Contract Act (SCA); and
  3. laborers and mechanics who are entitled to prevailing wages under the Davis-Bacon Act (DBA).

Additionally, the NPRM spells out contractors’ recordkeeping requirements and offers guidance on the required rate of pay owed to covered tipped workers and workers with disabilities.

The NPRM also explains the executive order’s enforcement procedures, according to which anyone who believes a violation has occurred may file a complaint with the WHD. The NPRM includes a mechanism for a WHD investigation process; an administrative process, including administrative hearings, to resolve disputes of fact or law; and an informal complaint resolution process. It also specifies the remedies and sanctions available for violations of the order, including back wages and debarment.

According to the information released by the DOL, the Office of Management and Budget (OMB) has reviewed and approved the NPRM. However, the NPRM has not yet been published in the Federal Register. (Note that there is a possibility that the published version will differ from the OMB-approved version released by the DOL.) Once published, the NPRM will include the dates of the public comment period.

Stay tuned for a detailed exposition of the NPRM by the leaders of our Wage and Hour, Affirmative Action and OFCCP Compliance, and Governmental Affairs practice groups.

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