The Department of Labor has announced that starting on the 1st of January, 2023, the minimum wage rate for employees working on or in connection with federal contracts will increase to $16.20 per hour.
This increase is by Executive Order 14026 and applies to the following types of contracts:
- Construction procurement that is covered by the Davis-Bacon Act.
- Service contracts that are covered under the Service Contract Act.
- Concessions contracts, including any concessions contract excluded from the Service Contract Act by the Department’s regulations at 29 CFR 4.133(b).
- Connected to federal property or lands and related to providing services for government employees and their dependents or the public.
Who are considered “workers?”
A federal contracting employee is considered a “worker” if:
- engaged in work on or in connection with a contract covered by Executive Order 14026
- wages under the aforementioned contract are governed by the SCA, the FLSA, or the DBA, regardless of the contractual relationship between the employer and the individual.
- the person's wages are calculated pursuant to certificates issued under 29 U.S.C. 214(c)
- this person is working on or in connection with a contract and individually registered in a bona fide apprenticeship or training program that has been registered with the Department’s Employment and Training Administration, Office of Apprenticeship.
Furthermore, beginning January 1, 2023, tipped employees performing work on or in connection with contracts covered by Executive Order 14026 must be paid a minimum cash wage of $13.75 per hour. It is the responsibility of contractors covered by Executive Order 14026 to ensure that workers receive no less than the minimum wage rates in effect during each calendar year in which a covered contract is performed. It is also good to note that starting on the 1st of January 2023 and annually thereafter, the wage will increase by an amount determined by the Secretary under the E.O. It also calls for the removal of the tip credit beginning on the 1st of January 2024.
You can get the entire details of this new EO 14026 here; you may also access the FAQs for the Executive Order.
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I’m Kristin, the PWCPA PC Customer Success Specialist. For more information about this topic, or any other, you can always reach me through our customer ticketing system.