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Federal Contractors’ Alert: Minimum Wage for Workers Is Going Up January 30, 2022

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With the help of the US Department of Labor (DOL), the Biden Government made good on its promise to increase the minimum wage for workers who work on new or updated federal contracts (including expanded, renewed, or exercise of a choice on a current contract). The President’s full Executive Order might be found on the White House site.

This was done by the DOL on 22nd November 2021, with its Final Rule requiring that such workers’ minimum pay will now be $15.00 an hour beginning 30th January 2022. Remember whether your local or state minimum wage is more. Also, you need to pay the higher minimum wage so this new law won’t influence those employees already earning more money. The Rule allows for a yearly raise to keep in accordance with inflation as set by the Secretary of Labor. The new minimum wage is also going to flow down to sub-contracts as well.

Tipped employees earned progressive bumps along the way: $10.50 an hour beginning on 30th January 2022; 85% of the federal wage as a result as of 1st January 2023 (rounded to closest $0.05); and full federal minimum wage in effect as of 1st January 2024 and beyond.

Are All Federal Contracts Covered?

No. Similar to the vaccination mandate for federal contractors. This new rule generally applies to the following types of federal contracts (so long as the wages of these workers are governed by the Fair Labor Standards Act, the Service Contract Act, and/or the Davis-Bacon Act):

  • Contracts for services covered by the Service Contract Act;
  • Procurement contracts for construction covered by the Davis-Bacon Act;
  • Contracts for concessions; and
  • Contracts entered into with the Federal Government regarding Federal Property or lands and related to offering services for Federal employees, their dependents, or the general public.

The minimum wage increase does not apply to the following:

  • Grants;
  • Contracts or agreements with Indian Tribes;
  • Procurement contracts for construction that are rejected from coverage of the Davis-Bacon Act;
  • Contracts for services that are excluded from coverage under the Service Contract Act;
  • Employees who are excluded from the minimum wage requirements of the Fair Labor Standards Act under 29 U.S.C. §§ 213(a) and 214(a)– (b) (furthermore, learners, apprentices, messengers, certain students, and white-collar exempted employees);
  • FLSA-covered workers performing in connection with covered contracts. For less than 20 percent of their work hours in a given workweek; and
  • Contracts that result from a solicitation given before 30th January 2022, and that are entered into on or between 30th January 2022 and 30th March 2022.

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Remember, the DOL encouraged all offices to follow this same way and increase the minimum wage. Accordingly, even if they do not fall into these categories. In this way, it is ideal to ensure that you review any new contracts or any updates to existing federal contracts. Made on or after January 30th to determine if the new guideline will apply to your workforce.

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