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Federal Contracts' Minimum Wage Raised

Thursday, October 1, 2015

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Contractors working on applicable projects for the federal government will see a boost in their paychecks at the start of next year, when the annual minimum wage increase for goes into effect.

The U.S. Department of Labor’s Wage and Hourly Division published a notice of the increase in the Federal Register on Sept. 16. The new minimum wage, which goes into effect on Jan. 1, 2016, will be $10.15 per hour.

That’s five cents higher than the current wage, which was established by President Obama’s Executive Order 13658 in 2014.

Although the wage affects the lowest hourly rate for which federal construction and service contractors can be paid, the increase does not affect the current federal minimum wage. That remains at $7.25 per hour, the same level it has been since July 24, 2009.

 2014 Increase

As previously reported, Obama first raised the wage by Executive Order on Jan. 28, 2014. At the time, the White House released a Fact Sheet: Opportunity for All—Rewarding Hard Work several hours before the president made the announcement himself during the 2014 State of the Union Address.

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The new minimum wage for federal contractors and subcontractors will be $10.15 per hour starting Jan. 1, 2016. Those workers covered by the increase currently have a minimum wage of $10.10.

“The President is using his executive authority to lead by example, and will continue to work with Congress to finish the job for all Americans by passing the Harkin-Miller bill,” the Fact Sheet said.

In the Executive Order, the president raised the minimum wage for federal contractors and subcontractors to $10.10 per hour, effective Jan. 1, 2015. Beginning in January 2016, and annually thereafter, the amount of the wage increase is determined by the Secretary of Labor.

New Wage Hike

The new wage, the Order states, cannot be less than the amount in effect on the date the Secretary decides to raise the wage; must be increased by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers; and must be rounded to the nearest multiple of $0.05.

According to Heavy Construction, the workers affected by the increase include those whose wages are governed by the Davis-Bacon Act; the Service Contract Act; and non-exempt workers whose wages are governed by the Fair Labor Standards Act (FLSA) for time spent directly supporting a covered contract.

Covered workers with existing projects or awards are entitled to an adjustment by federal agencies if the annual inflation increase is not already covered by the existing contract or award, the magazine said.

   

Tagged categories: Construction; Contract awards; Contractors; Contracts; Department of Labor; Government; Government contracts; Labor; North America; Program/Project Management; Subcontractors

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