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Federal Contractors’ Wage Increased

26 Oct

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Update Applicable to:

All Federal contractors, except Texas, Louisiana, and Mississippi.

What happened?

On Thursday, Sept. 28, the Wage and Hour Division of the U.S. Department of Labor (DOL) issued a notice published in the Federal Register increasing the minimum wage for employees of certain federal contractors to $17.20 effective Jan. 1, 2024.

What are the details?

On April 21, 2021, President Joe Biden signed Executive Order 14026, which raised the minimum wage paid by certain government contractors to $15.00 as of Jan. 1, 2022, and beginning January 1, 2023, and annually thereafter, an amount determined by the Secretary of Labor (Secretary). Under that executive order, the DOL issued a notice increasing the minimum hourly wage to $16.20 per hour effective Jan. 1, 2023, and to $17.20 per hour effective Jan. 1, 2024.

In addition to increasing the minimum wage to $17.20 per hour effective Jan. 1, 2024, the DOL also phased out the lower wage that previously applied to tipped employees under these federal contracts.

The new wage increase applies generally applies to workers performing work on or in connection with federal contracts that are entered into, renewed, or extended (pursuant to an option or otherwise) on or after January 30, 2022, in the following four categories:

I.                     Procurement contracts for construction covered by the Davis-Bacon Act.

II.                   Service contracts covered by the Service Contract Act.

III.                  Concessions contracts, including any concessions contracts excluded from the Service Contract Act by regulations at 29 CFR 4.133(b).

IV.                 Contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

The exception to these increments are the contracts and subcontracts in Texas, Louisiana, and Mississippi, because on September 26, 2023, a U.S. District Court Judge in the Southern District of Texas blocked the minimum wage requirements of the final rule implementing Executive Order 14026 in those states in an order.

For more information, please see the links below:

Law Firm articles: Article 1, Article 2, Article 3, Article 4

Official Notice

DOL Final Rule

DOL FAQs

DOL Video

What do employers need to do?

Federal contractors should consult the resources provided above for further information and be prepared to comply with the new rate in January.

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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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