45. (2014). The Department notes that the plain language of Executive Order 14026 compels a more expansive definition of the term new contract here than was promulgated under Executive Order 13658. How do taxes and spending work, and where do you fit in? This feature is not available for this document. 7101 et seq., and that disputes regarding whether a contractor has paid the wages prescribed by the order, as appropriate and consistent with applicable law, shall be disposed of only as provided by the Secretary in regulations issued pursuant to the order. The section provides that the contracting agency will, on its own initiative or within 15 calendar days of notification by the Department, incorporate the clause retroactive to commencement of performance under the contract through the exercise of any and all authority necessary. 37. The Department notes that, under the SCA and DBA, the Department and the FARC generally require the inclusion of a new or current prevailing wage determination upon the exercise of an option clause that extends the term of an existing contract. Section 3 of the Executive order governs how the minimum wage for Federal contractors and subcontractors applies to tipped employees. 55410). Consistent with the regulations implementing Executive Order 13658, see 29 CFR 10.2, the Department proposes to define executive departments and agencies that are subject to Executive Order 14026 by adopting the definition of executive agency provided in section 2.101 of the FAR. The Department notes that this proposed definition includes independent agencies. Due to employment growth, transfers increase slightly each year, reaching $1.55 billion in Year 10 (up from $1.47 billion in Year 1). The wage paid to the tipped employee to satisfy the Executive Order 14026 minimum wage comprises both the cash wage paid under section 3(a) of the Executive order and the amount of tips used for the tip credit, which is limited to the difference between the cash wage paid and the Executive order minimum wage. Section 1 of Executive Order 14026 expressly states that the minimum wage requirements of the order apply to workers performing work on or in connection with covered contracts. For example, in NAICS 44-45, the Department assumed each of the 2,032 small firms had 2.8 affected workers per firm (5,652 affected workers divided by 2,032 small firms). However, if a contract with the Federal Government is to be performed in part within and in part outside these geographical limits and is otherwise covered by the Executive order and part 23, the minimum wage requirements of the order and part 23 would apply with respect to that part of the contract that is performed within these geographical limits. The Department calculated the ratio of the number at NEXCOM or MCX fast-food establishments relative to AAFES and then multiplied that ratio by the 401 AAFES concessions contracts. Finally, the Department notes that, consistent with the rulemaking implementing Executive Order 13658, a contractor under part 23 is responsible for compliance by all covered lower-tier subcontractors. 3730, or criminal prosecution under 18 U.S.C. In addition to bilateral instruments, contracts include, but are not limited to, awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; exercised contract options; and bilateral contract modifications. Equal pay provisions prohibit sex-based wage differentials between men and women employed in the same establishment who perform jobs requiring equal effort, skill, and responsibility. (c) Other recordkeeping obligations. The Department estimated the number of employees who would, as a result of the Executive order and this proposed rule, see an increase in their hourly wage, i.e., affected employees. The Department estimates there will be 327,300 affected employees in the first year of implementation (Table 1). 6501 et seq., are not covered by Executive Order 14026 or part 23. An additional appendix, which will not publish in 29 CFR part 23, sets forth a poster regarding the Executive Order 14026 minimum wage for contractors with FLSA-covered workers performing work on or in connection with a covered contract. 79 FR 60672, n.8. Procurement contract for construction means a procurement contract for the construction, alteration, or repair (including painting and decorating) of public buildings or public works and which requires or involves the employment of mechanics or laborers, and any subcontract of any tier thereunder. There are Significant Business Costs to Replacing Employees. Most New Mexico businesses will see the state minimum wage increase and will be required to pay a minimum wage of: $12.00 per hour effective January 1, 2023 (previously $11.50 per hour effective . The rest of the methodology follows the methodology for the fifty states and Washington, DC. On Thursday, July 18, the U.S. House of Representatives is set to vote on a proposal to gradually raise the federal minimum wage to $15 per hour by October 2025. 86 FR 22836. To assess the impact on small contracting firms with affected employees, the Department assumed that affected employees would be distributed uniformly over small contracting firms within each industry. The contractor must notify all workers performing work on or in connection with a covered contract of the applicable minimum wage rate under the Executive Order. However, due to data limitations, these benefits are not monetized. The Executive order states that it does not apply to grants; contracts or agreements with Indian Tribes under the Indian Self-Determination and Education Assistance Act (Pub. Only official editions of the The Department multiplied 3.0 million by 0.52 percent to estimate that the Executive order will potentially affect 15,400 employees on covered procurement contracts in the information industry.[38]. The term public building or public work includes any building or work, the construction, prosecution, completion, or repair of which is carried on directly by authority of or with funds of a Federal agency to serve the interest of the general public. 1001. Further, in order for the minimum wage protections of the Executive order to extend to a particular worker performing work on or in connection with a covered contract, that worker's wages must also be governed by the DBA, SCA, or FLSA. Withholding likewise is an appropriate remedy under the Executive order for all covered contracts because the order directs the Department to adopt SCA and DBA enforcement processes to the extent practicable and to exercise authority to obtain compliance with the order. Proposed paragraph (e) also prohibits a contractor from discharging its minimum wage obligation to workers whose wages are governed by the SCA by providing the cash equivalent of fringe benefits, including vacation and holidays. The increases ranged from $0.22 in Michigan to $1.50 in Virginia. It specifies that the applicable minimum wage required to be paid to each worker performing work on or in connection with the contract should thereafter be adjusted each time the Secretary's annual determination of the applicable minimum wage under section 2(a)(ii) of the Executive order results in a higher minimum wage. This section also emphasizes that nothing in the Executive order or part 23 shall excuse noncompliance with any applicable Federal or state prevailing wage law or any applicable law or municipal ordinance establishing a minimum wage higher than the minimum wage established under the Executive order and part 23. A Survey of the Effects of the Minimum Wage on Prices. In addition to bilateral instruments, contracts include, but are not limited to, awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; exercised contract options; and bilateral contract modifications. Adopting a knowing or reckless disregard standard would constitute a departure from the DBA's debarment standard as well as from the SCA's debarment standard (under which debarment is warranted for SCA violations unless the Secretary of Labor recommends otherwise because of ususual circumstances), and would therefore be inconsistent with the Executive order's directive to adopt remedies and enforcement processes from the FLSA, SCA, DBA, and the regulations implementing Executive Order 13658 to the extent practicable. Executive Order 13563 further recognizes that some benefits are difficult to quantify and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify. Finally, proposed 23.30(c) states that the Executive order and part 23 only apply to contracts with the Federal Government requiring performance in whole or in part within the United States. Proposed paragraph (g)(4) requires the contractor to permit authorized representatives of the WHD to conduct the investigation, including interviewing workers at the worksite during normal working hours. BLS, Employment Projections. Although more recent data is available, the Department generally used data from 2019 to avoid any shifts in the data associated with the COVID-19 pandemic in 2020. Using wage data by industry results in Year 1 transfer payments $1.5 billion in 2020 dollars (Table 9). See 79 FR 9851. Directly affected workers would see their wages rise as the new minimum wage rate will exceed their current hourly pay. This proposed definition is identical to that set forth in 29 CFR 10.2, which in turn was derived from language found at 40 U.S.C. Id. Such amendments shall be allowed when justice and the presentation of the merits are served thereby, provided there is no prejudice to the objecting Start Printed Page 38894party's presentation on the merits. 6702(b)(5); 29 CFR 4.120. See 29 U.S.C. Where the Department or the contracting agency discovers or determines, whether before or subsequent to a contract award, that a contracting agency made an erroneous determination that Executive Order 14026 or this part did not apply to a particular contract and/or failed to include the applicable contract clause in a contract to which the Executive Order applies, the contracting agency, on its own initiative or within 15 calendar days of notification by an authorized representative of the Department of Labor, shall incorporate the contract clause in the contract retroactive to commencement of performance under the contract through the exercise of any and all authority that may be needed (including, where necessary, its authority to negotiate or amend, its authority to pay any necessary additional costs, and its authority under any contract provision authorizing changes, cancellation and termination). See 29 CFR 10.2. The tipped wage would rise to $6.75 from . 86 FR 22837. If a contracting agency fails to include the applicable contract clause in a contract to which the Executive Order applies, the contracting agency, on its own initiative or within 15 calendar days of notification by an authorized representative of the Department of Labor, shall incorporate the contract clause in the contract retroactive to commencement of performance under the contract through the exercise of any and all authority that may be needed (including, where necessary, its authority to negotiate or amend, its authority to pay any necessary additional costs, and its authority under any contract provision authorizing changes, cancellation and termination). It proposes that a contractor may not discharge any part of its minimum wage obligation under the Executive order by furnishing fringe benefits or, with respect to workers whose wages are governed by the SCA, the cash equivalent thereof. 2012); Hagan v. Echostar Satellite, LLC, 529 F.3d 617, 626 (5th Cir. Under the proposed rule, wages must be paid no later than one pay period following the end of the regular pay period in which such wages were earned or accrued. [25] It also provides that each party would serve such proposals and brief on all other parties. However, for purposes of the Executive order, the Department will view any worker who performs solely Start Printed Page 38834in connection with covered contracts for less than 20 percent of his or her hours worked in a given workweek to be excluded from the order and part 23. These tools are designed to help you understand the official document Contract or contract-like instrument means an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. Labour Economics 52(3), 40-53. https://doi.org/10.1016/j.labeco.2018.03.006. (a) In general. Exclusion of grants: Proposed 23.40(a) implements section 8(c) of Executive Order 14026, which states that the order does not apply to grants. 86 FR 22837. 3141 et seq., and the implementing regulations in this chapter. One paper by Draca et al. It will not result in increased expenditures by Tribal govenments because they are excluded from coverage under section 8(c) of the order. As stated earlier, the Department intends to publish a prominent general notice on all SCA and DBA wage determinations informing workers of the applicable Executive order minimum wage rate, to be updated on an annual basis in the event of any inflation-based increases to the rate pursuant to 23.50(b)(2). Average annualized regulatory familiarization costs over ten years, using a 7 percent discount rate, is $1.9 million. Wage determination includes any determination of minimum hourly wage rates or fringe benefits made by the Secretary of Labor pursuant to the provisions of the Service Contract Act or the Davis-Bacon Act. For comparisons to other countries see: List of countries by minimum wage. The Department proposes to interpret the prohibition on retaliation in paragraph (k) in accordance with its interpretation of the analogous FLSA provision. The Economic Policy Institute staff is unionized with the This term includes both new contracts and replacements for expiring contracts. (b) Method for determining the applicable Executive Order minimum wage. Although the DBA specifically includes fringe benefits within its definition of minimum wage, thereby allowing a contractor to meet its minimum wage obligation, in part, through the furnishing of fringe benefits, 40 U.S.C. Data are not available on the number of concessions contracts for other branches of the military. Id. (c) Decision. See 29 CFR 10.11(d). See 86 FR 22837. Moreover, the Department strongly encourages contractors to engage in regular outreach to workers performing on or in connection with covered contracts, particularly in the time period immediately before and after the annual minimum wage increase, to ensure such workers are aware of their rights and the wages to which they are entitled. (b) At any time prior to the closing of the hearing record, the complaint (investigative findings letter) or answer (response) may be amended with the permission of the Administrative Law Judge and upon such terms as he/she may approve. [6768] Hourly transfers are then multiplied by average weekly hours in the industry and 52 weeks. This could be used to identify whether a certain group is more or less likely to be impacted by this proposed rule. This part does not apply to student workers whose wages are calculated pursuant to special certificates issued under 29 U.S.C. v. Sec'y of Labor, 471 U.S. 290, 302 (1985); Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 740 (1981); D.A. to "Who ensures that workers are paid at least the minimum wage?". Notes: Values reflect the population likely to be affected by the proposed change in the federal minimum wage. This analysis excludes territories because revenue and payroll data are not available for territories. See 79 FR 9853 (section 7(g) of Executive Order 13658); see also 79 FR 60643, 60646 (final rule interpreting Executive Order 13658 to exclude from coverage independent regulatory agencies within the meaning of 44 U.S.C. General information about who is covered by the FLSA. Id. An official website of the United States government. However, nothing in the Order or this part is intended to limit or preclude a civil action under the False Claims Act, 31 U.S.C. Mayor Bowser Announces Minimum Wage Increase Effective July 1, 2023 | DC Meanwhile, higher-skilled workers saw increased job opportunities with minimum wage increases. All laborers and mechanics engaged in the construction of a public building or public work on the site of the work thus will be regarded as performing on a DBA-covered contract. Accordingly, subpart E of part 23 proposes to incorporate, to the extent practicable, the DBA and SCA administrative procedures that the regulations issued to implement Executive Order 13658 also incorporated, which are necessary to remedy potential violations and ensure compliance with the Executive order. The Department notes that the minimum wage requirements of Executive Order 14026 are separate and distinct legal obligations from the prevailing wage requirements of the SCA and the DBA. It also sets forth the general minimum wage requirement for contractors established by the Executive order, an antiretaliation provision, a prohibition against waiver of rights, and a severability clause. Share sensitive information only on official, Wage and Hour Division, Department of Labor. The order builds on the foundation established by Executive Order 13658, Establishing a Minimum Wage for Contractors, which was signed by President Barack Obama on February 12, 2014. 3. The proposed rule extends this coverage to FLSA-covered employees working on or in connection with DBA-covered contracts regardless of whether such employees are physically present on the DBA-covered construction worksite. 5811). See 29 CFR part 531 (FLSA); 29 CFR 4.168(a) (SCA); 29 CFR 5.5(a)(1) (DBA). Id. regulatory information on FederalRegister.gov with the objective of People Versus Machine: The Impact of Minimum Wages on Automatable Jobs. For example, a concessions contract with the Federal Government that is performed wholly within Puerto Rico and that was entered into on October 1, 2020, is not subject to the minimum wage requirement of Executive Order 13658 or 14026. This language is consistent with the Department's regulations implementing Executive Order 13658. Jobs at EPI [27] List of US states by minimum wage - Wikipedia Virginia's legislation raising the hourly minimum wage has cleared its final hurdle and is set to take effect on May 1, 2021. These markup elements allow the user to see how the document follows the As part of the investigation, the Administrator may conduct interviews with the relevant contractor, as well as the contractor's workers at the worksite during normal work hours; inspect the relevant contractor's records (including contract documents and payrolls, if applicable); make copies and transcriptions of such records; and require the production of any documentary or other evidence the Administrator deems necessary to determine whether a violation, including conduct warranting imposition of debarment, has occurred. These estimates for the NPS, FS, and BLM do not account for the possibility that the same firms may hold concessions contracts with more than one agency. When issues not raised by the pleadings are reasonably within the scope of the original complaint and are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings, and such amendments may be made as necessary to make them conform to the evidence. The hearing shall be conducted in accordance with the procedures set forth in 29 CFR part 6. It also explains that Executive Order 14026 does not create any rights under the Contract Disputes Act, 41 U.S.C. The Secretary possesses the authority to obtain compliance with the order, as well as the responsibility to issue regulations implementing the requirements of the order that incorporate, to the extent practicable, existing definitions, principles, procedures, remedies, and enforcement processes under the FLSA, SCA, DBA, Executive Order 13658, and the regulations issued to implement Executive Order 13658. Proposed 23.230 explains that deductions that reduce a worker's wages below the Executive order minimum wage rate may only be made under the limited circumstances set forth in this section. Impacts of Minimum Wages: Review of the International Evidence. What is the Minimum Wage for Workers Who Receive Tips? The Department further notes that if a contract is covered by a state prevailing wage law that establishes a higher wage rate applicable to a particular worker than the Executive order minimum wage, the contractor must pay that higher prevailing wage rate to the worker. Total employer costs were then compared to these revenues and payrolls. Proposed 23.580 sets forth a procedure for addressing questions regarding the application and interpretation of the rules contained in part 23. 101, military departments within the meaning of 5 U.S.C. In paying wages to a tipped employee as defined in section 3(t) of the Fair Labor Standards Act, 29 U.S.C. As shown in the tables below, such an increase in the federal wage floor would lift wages for 33.5 million workers across the country by 2025more than one-fifth of the wage-earning workforce. Proposed 23.30 explains the scope of the Executive order and its coverage of executive agencies, new contracts, types of contractual arrangements, and workers. Finally, as noted in the preamble section for subpart A, the Executive order covers certain non-procurement contracts. The Equal Access to Justice Act, as amended, does not apply to proceedings under this part. In other words, any worker who is entitled to be paid prevailing wages under the DBA or SCA would necessarily be performing on a covered contract. ol{list-style-type: decimal;} The Minimum Wage is raised by an act of Congress, and has no set schedule, but is generally raised every 3-7 years in response to rising inflation and cost-of-living. Therefore, total Year 1 implementation costs were estimated to equal $3.8 million ([$52.65 5 minutes 327,300 employees] + [$86.02 5 minutes 327,300 employees]). 's provisions. Because contractors with a contract subject to the Executive order may be required by the SCA or any other applicable law or regulation to pay a cash wage in excess of the Executive order minimum wage, section 3(b) of the order provides that in such circumstances contractors must pay the difference between the Executive order minimum wage and the higher required wage in cash to the tipped employees and may not make up the difference with additional tip credit. This obligation applies whether or not the contractor has included the Executive order contract clause, regardless of the number of covered lower-tier subcontractors, and regardless of how many levels of subcontractors separate the responsible prime or upper-tier contractor from the subcontractor that failed to comply with the Executive order.