Hunton Employment & Labor Perspectives

On February 12, 2014, President Obama announced Executive Order 13658, “Establishing a Minimum Wage for Contractors.”  The order seeks to raise the hourly minimum wage paid to workers performing services on covered Federal contracts to: (i) $10.10 per hour, beginning January 1, 2015; and (ii) beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of Labor in accordance with the Order.

Four months to the day after the order was signed, on June 12, 2014, the Secretary of Labor, Thomas E. Perez, announced a proposed rule raising the minimum wage for workers on certain federal construction and service contracts to $10.10.   The order and proposed regulations cover four major categories of contractual agreements:

• Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
• Service contracts covered by the Service Contract Act (SCA);
• Concession contracts, including concessions contracts excluded from the SCA by the DOL’s regulation at 29 C.F.R. 4.133(b); and
• Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents or the general public.

The employees covered by the proposed rule include:  (1) those who are entitled to the Fair Labor Standards Act minimum wage, (2) service employees who are entitled to prevailing wages under the SCA; and (3) laborers and mechanics who are entitled to prevailing wages under the DBA.