President Obama Issues Executive Order Establishing a MInimum Wage for Federal Contractors

 
Monday, February 17, 2014
 
The White House Office of the Press Secretary released an Executive Order which was signed by President Obama to raise the minimum-wage rate for workers on federal contracts.  President Obama presented his plan during his State of the Union Address.  

The Order provides that parties who contract with the Federal Government will need to raise their hourly minimum wage to $10.10 an hour.  This rate will commence on January 1, 2015.  Beginning on January 1, 2016 and annually thereafter, the Secretary of Labor will post a new minimum wage 90 days before the new rate is to take effect.  The rate will be based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers or whichever instrument is being used to determine such information.  The new minimum wage law does not excuse any applicable Federal, State or municipal prevailing wage ordinance or law which establishes a minimum wage higher than the minimum wage established in the Executive Order.    

The minimum cash wage for tipped employees falling within the order's provisions will be $4.90 an hour (it is currently $2.13 per hour under the federal Fair Labor Standards Act).  It will rise annually thereafter until the rate equals 70% of the minimum rate ($7.07 based upon a $10.10 rate).  If the tips the employee receives does not bring the employee to the minimum wage, the employer must pay the shortfall in cash.

The implementation of the Order shall be carried out by the Secretary of Labor who is to issue regulations by October 1, 2014. The Secretary of Labor is also authorized to enforce the Order.  The Secretary has the authority to investigate potential violations of the Executive Order. 
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