Here It Comes: Minimum Wage Increases to $10.80 an Hour for Federal Contractors Effective January 1, 2020
“America’s Greatest Discovery Was – That a millionaire cannot wear 10,000 pairs of $10 shoes. But a hundred thousand others can if they’ve got $10 to pay for them, and the leisure to show them off.”
--President’s Research Committee on Social Trends, Recent Special Trends in the United States, 2 vols., at xxxvi -vii (New York , 1933), cited in M. Klein, Rainbow’s End: The Crash of 1929 at 108 (Oxford Univ. Press 2001).
The Department of Labor (“DOL”) has announced that the minimum wage for federal contractors will increase to $10.80 per hour beginning on January 1, 2020. Certain federal contracts (mainly those covered by the Service Contract Act or the Davis-Bacon Act, but NOT those engaged in supply/manufacturing work) are covered by the Executive Order (“E.O.”) 13658, Establishing a Minimum Wage for Contractors. The E.O. was originally issued on February 12, 2014, and it permits DOL to adjust the amount each year based on wage inflation indexes. The current federal contractor minimum wage is $10.60 per hour, but it is set to rise by 20 cents an hour on the first of the year. https://www.awrcounsel.com/blog/2018/9/6/24-increase-in-the-contractor-minimum-wage-a-comment-on-inequality?rq=Contractor%20Minimum .
Other states and local governments have taken the opportunity to have even higher minimum wages. In California, for example, the minimum wage for workers is slated to increase by $1 each year. This started back in 2017, with the then minimum wage being $10. Now it is $12 an hour for employers with more than 26 employees covered. It is a dollar less for employers with less than 26 employees. The large employer minimum wage is set to go to $13 an hour on January 1, 2020. Note that that wage amount is higher than the Contractor Minimum Wage, and unless contractors are working in a federal enclave in California, the contractors have to comply with both federal and state wage laws. https://www.awrcounsel.com/blog/2019/7/3/californias-wage-laws-do-not-apply-to-offshore-oil-rigs?rq=enclave. The workers get the benefit of whichever is more favorable.
In Washington, D.C., Mayor Muriel Bowser signed The Fair Shot Minimum Wage Amendment Act of 2016 which will raise the minimum wage to $15 an hour by July 1, 2020. DC also has a so-called “Living Wage” for city service contractors which is currently $14.50 an hour and presumably will increase from there in 2020. https://does.dc.gov/sites/default/files/dc/sites/does/page_content/attachments/2019%20Living%20Wage%20Fact%20Sheet.pdf . The DC Living Wage applies to District Government contractors, but not federal contractors. Again, however, most contractors in the District generally are required to pay more than the Contractor Minimum Wage.
Finally, it is worth a caution that even the Service Contract Act (“SCA”) prevailing wages are sometimes less than these state or local minimum wages. DOL surveys from prevailing wages through the Bureau of Labor Statistics. These are thus backward looking wage surveys, and as a result they tend to lag the market. If the local or state minimum wages are pressing ahead aggressively, which is the case in much of the so-called “Blue” states or local jurisdictions dominated by the Democratic Party, then the Contractor Minimum Wage may be irrelevant. That creates a trap for the unwary. The employees usually get whichever wage requirement is the highest, and that may mean even the SCA prevailing wage is insufficient.