Monday, February 17, 2014

Executive Order Signed Regarding Minimum Wage Increase for New Federal Contract Workers

Dana Halvorson

Last week, President Obama signed an Executive Order raising the minimum wage from $7.25 to $10.10 for new federal contract workers by 2015. The $10.10 per hour raise is effective January 1, 2015. According to a legal alert from Ford & Harrison LLP, on January 1, 2016, and annually thereafter, covered employers will be required to pay their employees an increased amount to be determined by the Secretary of Labor that is tied into the Consumer Price Index. The Executive Order applies if the contract or subcontract is a procurement contract for services or construction, is a contract for services covered by the Service Contract Act, and the wages of workers under such contract are governed by the Fair Labor Standards Act, the Service Contract Act, or the Davis-Bacon Act. The Executive Order requires the U.S. Department of Labor to issue implementing regulations on or before October 1, 2014. Employers with federal contracts or subcontracts should review their contracts and subcontracts with their attorneys before January 1, 2015 to determine whether they might be covered by this Executive Order.

It is important to note that this Executive Order does not impact Medicare (Parts A and B) or Medicaid providers, as it is a long-standing policy that they are not “federal contractors.” However, if you have VA patients, you are considered to be a federal contractor, and thus, this executive action may apply to your circumstances. That being said, AHCA continues its support for the VA’s proposed rule on Provider Agreements, which, among other things, increases the opportunity for veterans to obtain non-VA extended care serves from local providers that furnish vital and often life-sustaining medical services. AHCA is currently awaiting the final rule.

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