Heads up! The minimum wage is now $10.10 per hour

by Michael Haberman on November 5, 2014 · 1 comment


Federal_contractsWe have seen the headlines. We have heard the news stories. We have seen the protests. It has happened, the minimum wage will increase as of January 1, 2015, at least for some workers.

Federal Contractors

It would be nice if there was one standard that all contractors had to conform to, but unfortunately that is not the case with this one. Despite the President’s pronouncements that workers on Federal contracts are getting a raise there are a slew of exemptions and some unusual inclusions. I will try to summarize these to give you a taste of this. As the law firm Fisher & Phillips, LLP says, “The new minimum wage will apply to some, but not all, employees working directly on covered federal contracts, and it will apply to many others who do not work on the contract but work “in connection” with it.”

Who is not covered?

Let’s cover the “not” of this question first. According to Tom Rebel, of Fisher & Phillips, “the minimum wage does not apply to government contracts and subcontracts for the manufacturing or furnishing of materials, supplies, articles or equipment which are covered under the Walsh-Healey Public Contracts Act.” Some information about the Walsh-Healey Public Contracts Act (PCA) shows that it applies to contractors with contracts in excess of $10,000 for the manufacturing or furnishing of materials, supplies, articles, or equipment to the U.S. government or the District of Columbia. The Act covers employees who produce, assemble, handle, or ship goods under these contracts.

I find it interesting that the federal government has exempted itself from having to pay higher wages in the contracts for supplies for itself.

Rebel also tells us that also excluded are most service contracts exempt from the Service Contract Act such as contracts for public utility service, including electric light and power, water, steam and gas. Also excluded are contracts and grants to Indian tribes.

Who is covered?

Most other federal contracts under the Service Contract Act and the Davis-Bacon Act are covered. They also threw in others not previously covered and these include things like “contracts where the government or its employees are not directly benefited or involved, such as concessions contracts where the government grants a right to use federal property for furnishing services such as food, lodging, automobile fuel, and recreational equipment. It also includes concession contracts which are excluded from SCA coverage such as contracts to operate souvenir shops or provide food or lodging in national parks” according to Rebel.

What workers are affected?

Mr. Rebel tells us “For those contracts and subcontracts that are covered, workers who work directly on the federal contract or subcontract are covered except for those who would be exempt from the minimum wage under the Fair Labor Standards Act, such as bona fide executive, administrative, and professional employees. Also, workers paid under special certificates for learners, apprentices, and students are excluded.”

Worker with disabilities are covered, as long as they spend 20% of their time working providing services necessary for the fulfillment of the contract. But only those hours actually spent working on the contract are eligible for the minimum wage.

Tipped employees working under federal contracts will have to be paid a tipped wage of at least 70% of the indexed minimum wage. Right now that amount would be $4.90.

It will continue to increase

The minimum wage for federal contracts is not set like the Federal minimum wage. This minimum wage will be indexed to the consumer price index and adjusted annually, as do many states these days with their state minimum wage.

But if you are a minimum wage earner or a minimum wage payer you can see that this is a more complicated issue than just “the minimum wage for all workers under Federal contracts is $10.10” so make sure you understand the provisions of your contracts to see if you are really covered.


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