On July 21, 2021, the US Department of Labor (“DOL”) announced that a wide range of government contractors would be required to pay private sector employees at least $ 15 an hour, as part of a plan to implement President Joe Biden’s executive order signed last April. Our blog post on President Biden’s executive order demanding wage increases can be found here.
The new minimum wage is expected to come into effect on new or extended contracts as of January 30, 2022. The minimum wage would increase by $ 4.05 from its current level of $ 10.95. In addition, the regulations would provide for annual increases to keep pace with inflation, eliminate the lower minimum wage for federally contracted tip workers by 2024, cover workers with disabilities and outfitters and guides operating on federal lands. . The DOL predicts that the wage increase would impact around 327,000 workers.
The DOL will accept public comments on the proposed rule for the next 30 days. President Biden’s executive order requires the DOL to finalize the settlement by November 24 of this year.
Employers with federal contracts should carefully review their agreements to determine if, and how, the proposed rule could affect rates of pay. In the event that the proposed rule becomes final, employers will now have to be prepared to enter into agreements in accordance with the new conditions.