Labor Secretary announces proposal to raise minimum wage for federal contract workers

Proposed rule would raise the minimum wage to $10.10 per hour for covered workers

WASHINGTON, D.C.—U.S. Secretary of Labor Thomas E. Perez on Thursday announced a proposed rule raising the minimum wage for workers on federal service and construction contracts to $10.10 per hour. The proposed rule implements Executive Order 13658, which was announced by President Barack Obama on Feb. 12.

“A core American value is that hard work should be rewarded with fair pay,” Perez said in a press release. “And as the president said in his State of the Union address, if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.

“Raising the minimum wage for workers on federal contracts will provide a much needed boost to many who are working hard, but still struggle to get by, and it will also benefit taxpayers with improved employee retention and productivity. Today the department took an important step toward making the promise of the executive order a reality for thousands of workers.”

“In America, nobody who works full time should have to raise their family in poverty,” said White House Domestic Policy Director Cecilia Muñoz. “President Obama is leading by example, raising the minimum wage for federal contract workers, and governors, mayors, and businesses around the country are answering the call to join him. Now it’s time for Congress to finish the job and raise the wage for everyone.”

The press release said the proposed rule provides guidance and sets standards for employers concerning coverage, including coverage of tipped employees and workers with disabilities. It also establishes an enforcement process familiar to most government contractors that will protect the right of workers to receive the new minimum wage. The proposed rule includes an economic analysis showing that nearly 200,000 workers will benefit from the increase, the release said.

Executive Order 13658 applies to new contracts and replacements for expiring contracts with the federal government that result from solicitations issued on or after Jan. 1, 2015, and to contracts that are awarded outside the solicitation process on or after Jan. 1, 2015.

The order applies to four major categories of contractual agreements: contracts for construction, service contracts under the Service Contract Act, concessions contracts, and contracts entered into by the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public. The department’s proposed rule came after extensive outreach to the federal contracting community, workers, and procurement and contracting officials throughout the executive branch, the release said.

In addition to the proposed rule the department issued for public comment on Thursday, the Office of Management and Budget and the department jointly provided initial guidance to agencies on steps they should take to begin implementing the increased minimum wage in advance of the rule being finalized. By issuing this guidance, OMB and the department are asking agencies to take reasonable and legally permissible steps immediately to begin implementing the order, so that workers on federal contracts can benefit from wage increases as soon as possible after Jan. 1.

The department encourages all interested parties to view the proposed rule and submit comments at http://www.regulations.gov. The regulation identification number is 1235-AA10. Comments must be received within 30 days following publication in the Federal Register. The department will review comments received and issue a final rule by Oct. 1. More information about the proposed rule and the joint guidance to federal agencies is available at http://www.dol.gov/whd/flsa/nprm-eo13658/.