DOL Issues Final Rule on Enforcement of Contractors’ Minimum Wage Executive Order

DOL Issues Final Rule on Enforcement of Contractors' Minimum Wage Executive Order
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DOL Issues Final Rule on Enforcement of Contractors’ Minimum Wage Executive Order

On October 1, 2014, the Department of Labor (DOL) issued its “Final Rule” on enforcement of Executive Order No.13658: Minimum Wage for Contractors, which was signed by President Obama on February 12, 2014.The Executive Order will apply to all new construction contracts entered with the federal government on or after January 1, 2015.

It is imperative contractors understand and adhere to the law as a violation could result in a contract suspension or even a termination of a contract.

  • Key elements of the final rule:
  • It requires that all employees of contractors and subcontractors who perform services on a federal contract must be paid at least $10.10 per hour (straight time).
  • This applies to any employee covered by the Davis-Bacon Act (field workers), but also to any employee covered by the Fair Labor Standards Act. For the first time, office, clerical and other support personnel (persons “performing other duties necessary to the performance of the contract”) must be paid this higher wage for work performed on federal contracts.
  • The contractors and subcontractors have to keep records of the wages and hours of all employees for three years, and keep them available for audit.
  • There are exemptions, including contracts performed outside the United States; federal grant programs.
  • The wage rate is to be indexed annually, and rounded to the closest $.05.
  • General contractors are responsible for compliance by their subcontractors and must include the clause in all covered subcontracts.
  • Contractors must notify all covered workers of the new minimum wage rate either by posting “in a prominent and accessible place at the worksite” the applicable wage determination, where it may “be readily seen by workers” or electronically if this is how notices are customarily posted for a firm.
  • There is a penalty for any retaliation against an employee who files a complaint alleging non-compliance, and the law cannot be waived by employees.
  • DOL may request that a contracting officer withhold funds from a contractor to make up for underpayments to it or its subcontractors’ employees.
  • If a contractor is found to have violated the law, payments under its contract may be suspended until the violation is cured. Violation is also a ground for termination of the contract.

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