United States: Federal Contractor Minimum Wage Provisions Finalized

Last Updated: October 17 2014
Article by Tina D. Reynolds and Steven W. Cave

In July, we alerted government contractors and subcontractors to the Department of Labor's (DoL) Proposed Rule to implement Executive Order (EO) 13658, which raises the minimum wage for covered employees working directly on, or contributing to, covered federal contracts and subcontracts to $10.10 per hour.

As we stated in our initial client alert, EO 13658 requires, beginning January 1, 2015, that covered federal contracts and subcontracts contain a clause specifying that the minimum wage to be paid to covered workers must be at least $10.10 per hour. As discussed further below, the EO and implementing regulations do not require contractors to pay all employees the minimum wage.

After the DoL published its Proposed Rule to implement the Executive Order in June of this year, it received more than 6,500 comments. The Final Rule, published on October 7, 2014 addresses many of these, but it appears the DoL found most of the comments unpersuasive. As a result, the Final Rule largely tracks the Proposed Rule. A few changes, some of which are discussed below, were made in response to comments, however.


  • The Final Rule narrows the definition of "contractor" to apply only to companies awarded a covered federal government contract or subcontract. The Proposed Rule broadly defined "contractor" to include former and prospective contractors and subcontractors not currently performing federal government work.
  • The Final Rule limits its application to contracts that are awarded pursuant to solicitations issued on or after January 1, 2015, or awarded outside the solicitation process if the contract is issued on or after January 1, 2015. Under certain circumstances clarified by the Final Rule, certain contracts entered into prior to January 1, 2015, can constitute a "new contract" covered by the Rule. These include, for example, renewing or extending a contract on or after January 1, 2015, pursuant to bi-lateral negotiation.
  • The Final Rule clarifies which federal contracts and subcontracts are covered. These include: (1) procurement contracts for construction that are covered by the Davis-Bacon Act (DBA); (2) contracts for services that are covered by the Service Contract Act (SCA); (3) contracts for concessions (including concessions contracts excluded from coverage under the SCA); and (4) contracts issued in connection with federal property or related to offering services for federal employees, their dependents, or the general public. Grants are expressly excluded from coverage. As a result, only those workers performing directly on, or in connection with, a covered contract or subcontract are entitled to receive the minimum wage.
  • Although all workers performing services "directly on" a covered contract are considered covered employees, the Proposed Rule raised questions about which employees providing services "in connection with" a covered contract are covered. The Final Rule clarifies a provision in the Proposed Rule regarding coverage of workers performing support services "in connection with a covered contract" who are covered by the Fair Labor Standards Act (FLSA). The Proposed Rule states that such workers must be paid the minimum wage even though they are not "service workers" covered by the SCA or onsite "laborers and mechanics" covered by the DBA. To address concerns related to this proposed provision, newly added subsection 10.4(f) creates a "20 percent of hours worked" exclusion. This exclusion states that workers performing less than 20 percent of their hours in a workweek to provide support in connection with a covered contract are not required to receive the $10.10 minimum wage. The "20 percent of hours worked" exclusion does not apply to workers performing services directly on a covered contract.
  • The Final Rule sets forth each agency's responsibility to notify contractors of the Rule's application. Agencies are required to insert the minimum wage clause into covered contracts and, if they fail to do so, the contractor may be entitled to an equitable adjustment to the contract value to reimburse the contractor for the additional labor costs.
  • Beginning January 1, 2016, and annually thereafter, the minimum-wage for federal contractors may be increased by the Secretary of Labor in correlation with the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers. If applicable, the Secretary must publish the new minimum wage at least 90 days before it is scheduled to take effect.
  • The Final Rule implements new recordkeeping and notice requirements. First, contractors are required to maintain adequate records regarding each worker's occupation, job classification, and total wages paid. Second, as with numerous regulatory requirements, contractors are now required to prominently post the new minimum wage rights and display a poster (to be created and provided by the DoL) providing information to support workers.
  • Lastly, the Final Rule articulates the potential remedies and sanctions for failing to comply. Potential sanctions include: (1) requiring payment of back wages owed to workers; (2) withholding of amounts due to the contractor in order to satisfy the contractor's wage obligations; and/or (3) debarment for a period of up to three years.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Tina D. Reynolds
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions