Starting January 30, 2022, new federal contracts that aren't procurement contracts should consist of a clause requiring federal contractors to pay at least $15 consistent with hour to employees appearing paintings on or in reference to the federal settlement. That minimal salary charge will boom yearly primarily based totally on modifications to the Consumer Price Index. The federal authorities predicts that this requirement might also additionally effect over 1/2 of one million firms. Federal contractors with procurement contracts (i.e., the ones contracts ruled via way of means of the federal acquisition rules) will begin to see this clause blanketed in new contracts as soon as the Federal Acquisition and Regulatory Council problems the specified FAR clause.
This extrade flows from a brand new U.S. Department of Labor (DOL) rule imposing and imposing Executive Order 14026, “Increasing the Minimum Wage for federal contractors,” signed via way of means of President Biden April 27, 2021. The new rule provides element 23 to Title 29 of the Code of Federal Regulations and amends present rules (codified at 29 CFR element 10) to make clear that they'll retain to use to included contracts entered into, extended, or renewed thru January 29, 2022.
Relationship to Prior Executive Orders
Executive Order 14026 and the brand new rule construct on the muse set up via way of means of President Obama’s Executive Order 13658, “Establishing a Minimum Wage for Contractors,” which President Obama signed February 12, 2014. The 2014 Order set an preliminary minimal salary, to boom every 12 months thereafter according with the Consumer Price Index. By January 1, 2021, that in advance scheme set a minimal salary of $10.ninety five consistent with hour for included hourly personnel and $7.sixty five consistent with hour for included tipped personnel. (Source: jdsupra.com)
What Contracts does Executive Order 14026 Cover?
The new rule calls for federal corporations to consist of a clause in included contracts that situations charge on compliance with the brand new salary requirements. Covered contracts are described to consist of now no longer most effective new federal contracts, however additionally settlement-like instruments, solicitations, and extensions or renewals of present contracts (pursuant to an exercised alternative or otherwise) ruled via way of means of the Fair Labor Standards Act (FLSA), Service Contract Act (SCA), and Davis 1st Baron Beaverbrook Act (DBA) on or after January 30, 2022. They consist of procurement contracts, concessionaire contracts (inclusive of the ones excluded via way of means of in advance guidelines at 29 CFR 4.122), and provider contracts related with federal belongings or lands. However, procurement contracts will now no longer be impacted via way of means of the brand new rule till the Federal Acquisition and Regulatory Council problems the specified FAR clause.
Longtime contractors must word that that is broader than Executive Order 13658, which changed into now no longer induced via way of means of renewals or extensions pursuant to an organisation’s unilateral workout of an present alternative. Under the brand new rule on federal contractor, a renewal or extension of a settlement would require the organisation to consist of the brand new settlement clause, and consequently require the contractor to pay the brand new minimal salary all through the renewal or extension period.
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