On January 1, 2015, pursuant to Executive Order 13658 (EO), the minimum wage for federal contractors and subcontractors will increase to $10.10 per hour. The EO also applies to tipped workers as well and mandates that they be paid at least $4.90. This amount is scheduled to increase every January 1st, and the rate is tied to the Consumer Price Index. The change in the minimum wage affects all workers who are performing work on covered federal service and construction government contracts as of the effective date. The secretary will publish the amount of the yearly increase no later than 90 days before the increase will take effect.
The EO applies to:
- New contracts with the federal government.
- Certain replacements for expiring contracts where the solicitation will be issued on or after January 1, 2015.
- Contracts awarded on or after January 1, 2015, outside of the solicitation process.
The changes pertaining to federal contractors or subcontractors are complex and require a close examination of the EO and the final rule that implements the new minimum wage regulation. Payroll administrators should ensure they understand their obligations under the rule and implement them in time for the January 1, 2015, effective date.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
