Overview
This section implements Executive Order 14026, establishing the minimum hourly wage requirements for workers performing on or in connection with federal contracts and subcontracts. It defines the baseline wage, the process for annual adjustments, and how these requirements interact with other prevailing wage laws.
Key Rules
- Minimum Wage Threshold: Established at an initial $15.00 per hour effective January 30, 2022.
- Annual Adjustments: The rate is adjusted every January 1st by the Secretary of Labor, with public notification required at least 90 days in advance.
- Hierarchy of Wage Rates: Contractors must comply with whichever rate is highest among the E.O. minimum, federal/state prevailing wage laws, local ordinances, or collective bargaining agreements (CBAs).
- Price Adjustment Limitations: While contractors must pay the highest applicable wage, price adjustments under this specific FAR subpart are only available for increases in the E.O. minimum wage, not for increases driven by other state or local laws.
- Tipped Workers: Specific DOL regulations (29 CFR 23.240(b) and 23.280) govern the application of the E.O. minimum wage to workers who regularly receive more than $30 a month in tips.
Practical Implications
- Contractors must proactively monitor the Department of Labor's annual wage determinations to ensure payroll compliance before the January 1st effective date each year.
- When bidding or managing contracts in jurisdictions with high local minimum wages, contractors must account for those costs independently, as they cannot seek price adjustments under this subpart for non-E.O. mandated increases.