{"id":10681,"date":"2023-10-11T12:53:19","date_gmt":"2023-10-11T16:53:19","guid":{"rendered":"https:\/\/www.wbcnet.org\/?post_type=member_news&p=10681"},"modified":"2023-11-13T14:40:55","modified_gmt":"2023-11-13T19:40:55","slug":"federal-contractor-hourly-minimum-wage-increased-to-17-20-starting-january-1-2024","status":"publish","type":"member_news","link":"https:\/\/www.wbcnet.org\/member_news\/federal-contractor-hourly-minimum-wage-increased-to-17-20-starting-january-1-2024\/","title":{"rendered":"Federal Contractor Hourly Minimum Wage Increased"},"content":{"rendered":"\n

Authors:  Steven Seeger<\/a> and Josephine M. Bahn<\/a><\/em>
<\/p>\n\n\n\n

On January 1, 2024, the hourly minimum wage for certain federal contractor employees will increase to $17.20<\/strong>, according to a Notice<\/a> issued by the Wage and Hour Division<\/a> of the United States Department of Labor (DOL) and published in the Federal Register on September 28, 2023. The wage increase for federal contractor employees extends the previous increase from January 1, 2023, to $16.20, which utilized Executive Order 14026<\/a> as a basis for the increase. The new rate will apply to any contract entered into, renewed, or extended on or after January 30, 2022. Further, under this Notice, the DOL noted that it was phasing out the lower wage rate that previously applied to tipped employees working under federal contracts.<\/p>\n\n\n\n

It is important to note that the new rule applies to all federal contracts and subcontracts and allows for contractors to request a price adjustment. \u201cPrices will be adjusted only for increased labor costs (including subcontractor labor costs) as a result of an increase in the annual [Executive Order] minimum wage, and for associated labor costs (including those for subcontractors).\u201d1<\/sup> These associated labor costs should include changes in social security and unemployment taxes and workers\u2019 compensation insurance.2<\/sup> Subcontractors may also be entitled to adjustments, and contractors should include such requests \u2013 contractors should consider these requests when making their claims for increased associated labor costs.3<\/sup> That said, all parties should review the payment provisions in their existing construction contracts, as well as those being negotiated and entered into after January 1, 2024, for compliance with the rule\u2019s new requirements.<\/p>\n\n\n\n

A federal minimum wage rate is less than 10 years old. Through Executive Order 13658<\/a>, signed by President Obama in 2014, the first minimum wage for federal contract workers was created \u2013 then $10.10 per hour. The secretary of the Department of Labor sets the hourly wage increase annually using guidance provided in Executive Order 13658. In 2021, President Biden extended the Obama-era order with Executive Order 14026, adjusting the minimum wage for contractors to $15.00. Thereafter, Executive Order 14026 also allowed the DOL to make annual adjustments each calendar year \u2013 with the adjustments taking effect on January 1 of the next calendar year. The DOL relied on Executive Order 14026 as its basis for the January 1, 2023, increase to $16.20.<\/p>\n\n\n\n

The new increase that takes effect on January 1, 2024, applies to any employee performing work \u201con or in connection with\u201d the following federal contracts:<\/p>\n\n\n\n

    \n
  1. Procurement contracts for construction covered by the Davis-Bacon Act.<\/li>\n\n\n\n
  2. Service contracts covered by the Service Contract Act.<\/li>\n\n\n\n
  3. Concessions contracts, including those that may be excluded from the Service Contract Act.<\/li>\n\n\n\n
  4. Federal property or lands contracts related to offering services for federal employees, their dependents, or the general public.<\/li>\n<\/ol>\n\n\n\n

    This wage increase applies to all federal contracts except those in Texas, Louisiana, and Mississippi. On September 26, 2023, a U.S. District Court Judge in the Southern District of Texas<\/a> blocked the minimum wage requirements of the final rule implementing Executive Order 14026 in those states. In issuing its order<\/a>, the court determined that President Biden exceeded his constitutional authority in issuing the Executive Order and that the Federal Property and Administrative Services Act, commonly known as the \u201cProcurement Act<\/a>,\u201d failed to provide President Biden the authority necessary to execute the order to increase the minimum wage pay of federal workers. As a result, the minimum wage requirements are not being enforced as to contracts or subcontracts to which Texas, Louisiana, or Mississippi \u2013 and their agencies \u2013 are a party.<\/p>\n\n\n\n

    1<\/sup> FAR 52.222-55(b)(3)(i).<\/a><\/p>\n\n\n\n

    2<\/sup> Id.<\/p>\n\n\n\n

    3<\/sup> FAR 52.222-55(b)(3)(ii).<\/p>\n","protected":false},"excerpt":{"rendered":"

    Authors:  Steven Seeger and Josephine M. Bahn On January 1, 2024, the hourly minimum wage for certain federal contractor employees will […]<\/p>\n","protected":false},"author":7,"featured_media":5122,"template":"","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[],"class_list":["post-10681","member_news","type-member_news","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\nFederal Contractor Hourly Minimum Wage Increased - Washington Building Congress<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wbcnet.org\/member_news\/federal-contractor-hourly-minimum-wage-increased-to-17-20-starting-january-1-2024\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Federal Contractor Hourly Minimum Wage Increased - Washington Building Congress\" \/>\n<meta property=\"og:description\" content=\"Authors:  Steven Seeger and Josephine M. 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