On April 27, 2021, President Joe Biden signed an Executive Order (EO) requiring certain federal contractors to pay workers on government contracts at least $15 per hour beginning January 30, 2022. After 2022, the minimum wage will be adjusted annually for inflation at a rate set by the secretary of Labor (the secretary). The EO supported the minimum wage increase by stating that raising worker wages will promote efficiency in federal procurement through: (1) enhanced worker productivity and generation of higher-quality work from increased workers’ health, morale and effort; (2) reduced absenteeism and turnover; and (3) lowered supervisory and training costs.
On August 3, 2020, President Donald Trump signed an executive order and released a related fact sheet in furtherance of the White House’s continued efforts to ensure that federal agencies focus on using United States labor in their federal contracts. This new executive order, which is arguably in furtherance of the previous Buy American Hire American executive orders, requires federal agencies to review their contracts and subcontracts from fiscal years 2018 and 2019 to assess whether their contractors used temporary foreign labor to perform the contracts in the United States or performed such contracts in foreign countries when the work had previously been performed in the United States. Federal agencies are then required to determine whether these temporary foreign labor hiring practices and/or offshoring practices negatively affected opportunities for United States workers. Within the next six months, agencies are required to submit reports to the Office of Management and Budget with their findings and to recommend, if necessary, any proposed corrective actions and the timelines to implement such actions.
On September 15, 2017, the U.S. Department of Labor (“DOL”) announced the 2018 minimum wage rate for covered federal contractors and subcontractors, as required by Executive Order 13658.
Beginning January 1, 2018, the minimum wage for covered contractors will increase from $10.20 per hour to $10.35 per hour. The minimum cash wage for tipped employees performing work on or in connection with a covered federal contract will also increase from $6.80 per hour to $7.25 per hour, effective January 1, 2018. If the worker’s tips combined with the required cash wage of at least $7.25 per hour do not equal the minimum rate, then the contractor must increase the cash wage paid to a tipped employee to bring him or her up to $10.35 per hour.
On September 29, 2016, the Department of Labor (“DOL”) issued a Final Rule implementing Executive Order 13706, which requires federal contractors and subcontractors performing work on or in connection with certain contracts to provide employees with up to 56 hours (7 days) of paid sick leave per year beginning on January 1, 2017. However, because this rule became final relatively recently, the Final Rule implementing EO 13706 could be rescinded by exercise of the Congressional Review Act (5 U.S.C. §§ 801-808), which is not subject to filibuster.
Applicability of the Final Rule
The Final Rule applies to certain new contracts and replacement contracts for expiring contracts with the federal government requiring performance in whole or in part within the United States that result from solicitations issued on or after January 1, 2017 (or that are awarded outside the solicitation process on or after January 1, 2017).