Department of Labor (DOL) Releases Proposed Rules to Implement $15 Minimum Wage for Federal Contractors
The U.S. Department of Labor (DOL) released proposed regulations that would establish a $15 minimum wage for a several employees who work for Federal Contractors.
Final regulations are expected to be released at the end of November. Although some agencies may choose to begin enforcement shortly after the final regulations are published, most Agencies likely will not begin enforcement until 2022.
Prime and subcontractors should review the proposed regulations now and plan to start complying within the timelines set forth in the regulations. However, it is important to note that, as with most regulations, contractor compliance will be dependent on the contracting agency inserting the proper clause into the agreement. Contractors should be cautious about paying the new minimum wage until it is mandated by their contract because the opportunity to gain a price adjustment based on the minimum wage could be lost. However, it is important to note that, if DOL concludes that the clause was inadvertently excluded by the contracting agency, DOL may require the retroactive insertion of that clause. In that instance, the contractor will be required to provide back wages and seek a price adjustment from the contracting agency.
Finally, DOL has noted that the proper payment of a $15 minimum wage is a condition that contractors must meet in order to receive payment from the Government for their services. See 86 FR 38823. The $15 minimum wage will be updated annually depending on the Consumer Price Index for Urban Wage Earners and Clerical Workers.
DOL has a range of tools at its disposal to ensure compliance with these regulations, including withholding of payments and possibly even a three-year debarment. Therefore, contractors should monitor and keep informed regarding the development of these rules.
We stand ready to assist in understanding whatever the current requirements may be and bringing existing relationships into compliance as needed.