Wednesday, October 15, 2014

DOL Final Rule on $10.10 Hourly Federal Contractor Minimum Wage and Webinar on New Obligations of Government Contractors

Dana Halvorson

As noted in previous editions of Capitol Connection, on February 12, 2014, President Obama signed Executive Order 13658, Establishing a Minimum Wage for Contractors. The Executive Order raises the hourly minimum wage paid by contractors to workers performing on covered Federal contracts to: (i) $10.10 per hour, beginning January 1, 2015; and (ii) beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of the Department of Labor (DoL) in accordance with the Order. On October 1, 2014, DOL published the final rule implementing the provisions of Executive Order 13658.

Executive Order 13658 applies to new contracts and replacements for expiring contracts with the Federal Government that result from solicitations issued on or after January 1, 2015, or to contracts that are awarded outside the solicitation process on or after January 1, 2015. It is long-standing policy that Medicare (Parts A and B) or Medicaid providers are not considered to be federal contractors. However, if a provider currently has VA patients, they are considered to be a federal contractor. As noted in Capitol Connection last week, if you are considering entering into a VA contract once 2015 begins, Executive Order 13658 will be applicable to you as you will be a federal contractor. The $10.10 wage rate will apply to all new contracts executed on or after that date. AHCA received further clarification recently on the final rule regarding those with existing VA contracts. The $10.10 rate will not apply to existing contracts unless there is a bilateral negotiation that modifies the contract, thus deeming it as “new”. Automatic rate increases issued at the annual renewal of the option years does not deem a contract as “new”. Service Contract Act wage determinations for existing contracts will not reflect the $10.10 rate, but will reflect wage rates prior to the rule. That being said, if you have a VA contract, you will want to visit with your legal counsel or local or regional VA contact on how this minimum wage increase will impact you at the time of the renewal of your contract option year. It is also important to note that under the VA Provider agreement proposed rule AHCA has been working to finalize, providers would not be considered federal contractors, and would therefore not have to follow complex federal contracting and reporting rules. AHCA is currently awaiting the release of the final rule, and will keep its members posted on any updates relating to this matter.  

For more information, including a fact sheet and FAQ on the DOL final rule, please visit the Wage and Hour Division’s Executive Order 13658 web page at

You might also be interested to know about a webinar that the law firm of Jackson Lewis will be offering complimentary on October 29, 2014, on the number of new legal obligations government contractors must follow according to President Obama’s executive orders. In addition to the minimum wage, these obligations include “Pay Transparency” Requirements, Annual “Equal Pay Report” Filing with the OFCCP, LGBT Anti-Discrimination, and Required Reporting of Labor and Employment Law Violations. You can register for the webinar being held from 2-3:30pm EDT here.

If you have any questions, please contact AHCA’s Dana Halvorson or Dianne De La Mare.

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