President Increases Minimum Wage for Federal Contractors

The President recently signed an Executive Order establishing a minimum wage of $10.10 per hour for federal contractors and subcontractors beginning January 1, 2015. Also taking effect on January 1, 2015 is an increased minimum wage for tipped federal contract workers, which will be $4.90 per hour, an increase of $2.77 per hour from the current minimum wage requirement per hour for tipped employees (which is $2.13). Additionally, the Executive Order mandates an increase of at least $0.95 every year for the affected tipped employee minimum wage until the minimum wage for tipped employees reaches at least 70 percent of the regular minimum wage for federal government contractors. The Executive Order further mandates that where tips fail to elevate a tipped employee’s wage to at least $10.10 per hour the employer will be responsible for paying the difference. Finally, the Executive Order instructs the Secretary of Labor, who is charged with enforcing the wage requirements, to issue applicable regulations by October 1, 2014.

Although the above wage changes will not take effect until January 1, 2015, the Executive Order, which took effect immediately upon receipt of the President’s signature, encourages employers who are currently negotiating federal contracts to ensure that all employees working under these contracts will be paid at least $10.10 per hour as of January 1, 2015.