Tag Archives: Federal Contractors

Federal Contractors’ Alert: Minimum Wage for Workers Is Going Up January 30, 2022


Contributed by Heather Bailey, November 30, 2021

With the help of the US Department of Labor (DOL), the Biden Administration made good on its promise to increase the minimum wage for workers who work on new or updated federal contracts (including extended, renewed, or exercise of an option on an existing contract). The President’s full Executive Order may be found on the White House website.

This was carried out by the DOL on November 22, 2021 with its Final Rule requiring that such workers’ minimum pay will now be $15.00 an hour starting January 30, 2022. Keep in mind if your local or state minimum wage is more, you have to pay the higher minimum wage so this new law will not affect those employees already earning more money. The Rule allows for an annual raise to keep in line with inflation as set by the Secretary of Labor. The new minimum wage is also going to flow down to sub-contracts as well.

Tipped employees earned progressive bumps along the way: $10.50 an hour starting on January 30, 2022; 85% of the federal wage in effect as of January 1, 2023 (rounded to nearest $0.05); and full federal minimum wage in effect as of January 1, 2024 and beyond.

Are All Federal Contracts Covered?

No. Much like the vaccination mandate for federal contractors, this new Rule generally applies to the following types of federal contracts (so long as the wages of these workers are governed by the Fair Labor Standards Act, the Service Contract Act and/or the Davis-Bacon Act):

  • Contracts for services covered by the Service Contract Act;
  • Procurement contracts for construction covered by the Davis-Bacon Act;
  • Contracts for concessions; and
  • Contracts entered into with the Federal Government in connection with Federal Property or lands and related to offering services for Federal employees, their dependents, or the general public.

The minimum wage increase does not apply to the following:

  • Grants;
  • Contracts or agreements with Indian Tribes;
  • Procurement contracts for construction that are excluded from coverage of the Davis-Bacon Act;
  • Contracts for services that are exempted from coverage under the Service Contract Act;
  • Employees who are exempt from the minimum wage requirements of the Fair Labor Standards Act under 29 U.S.C. §§ 213(a) and 214(a)–(b) (additionally, learners, apprentices, messengers, certain students and white-collar exempted employees);
  • FLSA-covered workers performing in connection with covered contracts for less than 20 percent of their work hours in a given workweek; and
  • Contracts that result from a solicitation issued before January 30, 2022, and that are entered into on or between January 30, 2022 and March 30, 2022.

Keep in mind, the DOL encouraged all agencies to follow this same path and increase the minimum wage accordingly even if they do not fall into these categories. Thus, it is best to make sure that you review any new contracts or any updates to existing federal contracts made on or after January 30th to determine if the new regulation will apply to your workforce.

Who is a Federal Contractor for Purposes of the Biden Vaccine Mandate?

Contributed by John R. Hayes, September 13, 2021

doctor hand wears medical glove holding syringe and vial bottle with covid 19 corona virus vaccine

On September 9, 2021 President Biden announced sweeping new vaccine mandates for federal employees, federal contractors, and an upcoming OSHA Emergency Temporary Standard Rule for companies with more than 100 employees. In light of this, already many employers are asking the question, “Am I a federal contractor subject to the vaccine mandate?” While the Executive Order regarding federal contractors is brand new, and we are awaiting more clarification from the Safer Federal Workforce Taskforce (Task Force), there is some language contained in the Order that can give employers an early roadmap.  The Executive Order applies to federal contracts that are:

  • Either a contract or contract-like instrument;
  • Entered into, extended, renewed, or has an option exercised on or after October 15, 2021; 
  • For any of the following:
    • services, construction, or leasehold interest in a property;
    • services covered by the Service Contract Labor Standards (formerly known as the Service Contracts Act);
    • concessions; and
    • work relating to federal property or lands and related to offering services for federal employees, their dependents, or the general public.

The Executive Order explicitly excludes:

  • Federal grants;
  • Contracts with Indian Tribes;
  • Employees who perform work outside of the United States;
  • Contracts equal or less than the simplified acquisition threshold (generally $250,000); and
  • Subcontracts solely for the provision of products.

However, the Executive Order leaves several unanswered questions that will hopefully be answered by the Task Force, which must issue its guidance by September 24, 2021.  For example, it is not clear if the mandate will be for onsite contractors only, but initially it appears to also cover employees working at the contractor’s facility.  It specifically states it applies to “workplace locations (as specified by the Task Force Guidance) in which an individual is working on or in connection with a Federal Government contract or contract-like instrument.”  Thus, the Executive Order is phrased to apply to any workplace locations where contract work is performed, rather than to employees performing the work.  Also, it appears to eliminate the option for federal contractor employees, provided for in the July 29, 2021 federal employee vaccination mandate, that allowed those workers to choose to wear a mask, socially distance, and subject themselves to regular testing instead of getting vaccinated.

As with all vaccine mandates, there will likely be exceptions for disabilities or sincerely held religious beliefs.  Each employer will have to make individual determinations regarding these exemptions. 

Some general takeaways at this time are that if you are a business operating under an existing federal contract that is not being renewed or has options exercised, you are not subject to the Executive Order.  Similarly, if your contract is for less than $250,000 you are likely not subject to the mandate.  However, it appears as if it is not limited just to onsite contractors (such as those in the construction industry), and so the vaccine mandate could expand to many more businesses (such as banks) that are operating under a federal contract yet not providing onsite work to federal agencies. 

Of course, all this is very preliminary given the lack of guidance from the Task Force. But for now, employers can at least get an idea of whether or not they are a contractor for purposes of the Executive Order.  While the specific details of the mandate are still to come, businesses who have new or renewed federal contracts (greater than $250,000) coming up can expect some sort of vaccine mandate on at least part of its workforce, and should begin to plan accordingly. We will be monitoring this situation closely and will provide updates as they occur.

DOL Issues Proposed Rule on $15 Minimum Wage for Certain Employees of Federal Contractors and Subcontractors

Contributed by Allison P. Sues, July 29, 2021

On July 23, 2021, the United States Department of Labor (DOL) announced a proposed rule to increase the minimum wage for employees of covered federal contractors and subcontractors to $15.00 per hour. This rule follows President Biden’s Executive Order calling for an increase to the minimum wage for federal contractors. The rule suggests that the minimum wage increase go into effect January 30, 2022 and increase annually beginning in 2023 based on inflation. 

The Proposed Rule is not final and may be revised. The DOL is accepting comments until August 21, 2021 and will publish its final rule on November 24, 2021. Regardless, federal contractors should begin to prepare for likely changes to the minimum wage for certain employees. To assist in this preparation, here are answers to key questions on this rule:

Who is covered by this increase in minimum wage?

In short, any workers on “new contracts” starting on January 30, 2022. 

To be covered, the employee must work on (i.e., performing the specific services provided in the contract) or in connection with (i.e., performing other duties necessary to the performance of the contract) a contract or subcontract with the federal government. The proposed rule intends to cover a wide range of contracts with the Federal Government that fall within four main categories: (1) procurement contracts covered under the Davis-Bacon Act, (2) service contracts covered by the Service Contract Act, (3) concessions contracts granting a right to use Federal land or other property for furnishing services, and (4) any other contracts in connection with Federal property or lands and related to offering services for Federal employees or the general public.  “New contracts” includes not only those new contracts entered into on or after January 30, 2022, but also any pre-existing contracts that are renewed or extended after that date. 

How much notice will employers receive for each subsequent increase to the minimum wage based on inflation?

The DOL will provide at least 90 days of notice before any increases to the minimum wage take effect. 

Does the $15.00 minimum wage extend to employees of federal contractors and subcontractors who earn some or most of their compensation through tips?

No. Under the proposed rule, tipped workers must be paid at least $10.50 per hour.

Will there be increases to the new minimum wage set for tipped workers?

Any time the minimum wage for non-tipped workers increases, the minimum wage for tipped workers will also increase to 85% of the new rate until January 1, 2024. Then, on or after January 1, 2024, tipped workers will receive the same minimum wage as non-tipped employees.

Does the proposed rule provide for additional compensation for tipped workers if their earnings do not equate to the minimum wage set for non-tipped employees?

Yes. If the combination of wages and tips received by the tipped workers does not equal or exceed the standard minimum wage set for non-tipped employees, the contractor must provide additional wages to make up the difference.

Who will enforce this new minimum wage?

The DOL Wage and Hour Division will enforce the new minimum wage. The DOL will accept and investigate complaints of non-compliance with the minimum wage. The DOL may request an employer to remedy any violation. If the employer does not remedy the violation, the DOL could require the contracting agency to withhold payments due under the covered contract to the contractor and then transfer that money to the worker who was not paid the minimum wage.

Federal Contractors – Protected Veterans and Disabled Individuals Need Love Too….

Contributed by Heather Bailey

Many federal contractors had their 2014 annual affirmative action plans in place prior to the March 24, 2014 effective date for contractors to begin analyzing and maintaining a hiring benchmark for protected veterans, as well as a utilization goal for disabled individuals.  However, the time is nearing to update those plans and be compliant with the new regulations.  What does this mean for you?


If you haven’t already started, you should begin asking your applicants to voluntarily self-identify whether they are a protected veteran or not (you do not ask them to identify the specific categories of veterans at this stage).  This is in addition to the existing requirement to then ask the person to self-identify once being given a job offer (which is where you can ask the specific categories).  Moreover, you should poll your current employees in anticipation of creating your upcoming affirmative action plan for 2015.  This is because you now have to analyze the amount of protected veterans you have in your workforce and if your outreach to veterans is effective in recruiting and hiring veterans.  The regulations give you two options: you can use the hiring benchmark posted by the OFCCP in its Benchmark Database or you can create your own following five factors such as applicant hiring ratios over the past year and the number of veterans in the previous four quarters who participated in the employment service delivery system in your state which is also posted in the Benchmark Database by the OFCCP.  Unless you have a compelling reason to create your own, the one-size fits all location benchmark can be used to simplify your analysis.  Then, you perform an analysis just like you do for your females and minorities to determine whether you meet the benchmark or not.

The good news here: you are not required to apply the benchmark to each specific job group – you can benchmark your company as a whole.  Lastly, your VETS-100A reports got a new name. Come August 2015, you’ll be looking for the VETS-4212 form to file.   Oh, and don’t forget to add “veteran status” to your EEO clauses!

Disabled Individuals

You need to start asking your applicants to voluntarily self-identify if they are disabled or not.  I know, this goes against everything we learned in employment law 101, but it’s true.  Do not reinvent the wheel and go rogue – use the actual self-id form created by the OFCCP, which can be found here:

http://www.dol.gov/ofccp/regs/compliance/sec503/Self_ID_Forms/VoluntarySelf-ID_CC-305_ENG_JRF_QA_508c.pdf.  Once offered a job, ask them to voluntarily self-identify again using the same form.  If you haven’t already, poll your current workforce using the same form – and then do so every 5 years for current employees.  The reasoning behind this is that some people may not want to identify themselves as having a disability prior to being offered a job, as well as, employees may develop disabilities over the course of time from the last time they were asked to self-identify.

Here, your recording efforts are a yard stick to see if you reached the aspirational national utilization goal of 7% of disabled individuals.  Again, you can focus on your entire workforce in your analysis of meeting this goal in your updated plan.  This is not to be used as a quota or a ceiling but a gauge to see if your recruitment efforts are once again effective.

It’s best to seek guidance from your employment labor counsel to ensure you are in compliance with all affirmative action requirements.  Waiting until the OFCCP audit letter comes may be too late.


The Final Rule on LGBT Equality in Federal Contracts is Here

Contributed by Steven Jados

Back in July, we told you that President Obama signed Executive Order 13672, which directed the Department of Labor to expand the Equal Employment Opportunity requirements for certain federal contracts so as to prohibit discrimination by contractors based on sexual orientation or gender identity.

Taking the cue from that Executive Order, on December 3, 2014, the Department of Labor issued its Final Rule implementing the Executive Order.  The Final Rule will take effect on April 8, 2015.

A central component of the Final Rule is its directive that covered contracts and subcontracts, as well as policy, notice, and affirmative action plan documents, must be re-drafted so that where those documents formerly stated “sex, or national origin,” they must now state, “sex, sexual orientation, gender identity, or national origin.”  Notably, the Final Rule does not define sexual orientation or gender identity, which means the definitions of those terms will likely be taken from judicial decisions and agency guidance—much of which has developed under various states’ laws.

Federal contractors should recognize that the Final Rule does not require contractors to collect information about applicants’ or employees’ sexual orientations or gender identities.  In that same vein, the new Final Rule does not require employers to undertake any data analysis based on applicants’ or employees’ sexual orientations or gender identities.  However, nothing in the Final Rule, itself, prohibits asking applicants or employees to identify their sexual orientation or gender identity.  That said, state and local laws may prevent such questioning, and we generally advise against asking employees and especially applicants to identify their membership in protected classes as doing so may make discrimination claims more difficult to defend.

The requirements of the Final Rule will apply only to contracts that are entered into or modified after the effective date of the Final Rule.  Contracts entered into prior to April 8, 2015, and which are not modified after that date, are not required to include the sexual orientation and gender identity language.

But this is more than just a paper change.  To the extent federal contractors had not already done so, they must now train their managers to recognize and properly address potential instances or complaints of sexual orientation or gender identity-based discrimination.  Additionally, all employees of covered federal contractors and applicable subcontractors must be clearly advised that discrimination and harassment based on sexual orientation or gender identity is prohibited, and that there are complaint mechanisms in place in the event discrimination or harassment occurs.

The federal government has made a clear commitment to LGBT equality in employment under federal contracts, so federal contractors and subcontractors would do well to make efforts to transition seamlessly to compliance with the Final Rule’s sexual orientation and gender identity EEO requirements.