Wednesday, September 21, 2016

Mandatory Pay Raises for Many Contractor Minimum-Wage Employees

Yesterday, the Wage and Hour Division of the Department of Labor (DOL) issued a notice announcing the applicable minimum wage rate to be paid to contractor employees performing work on or in connection with Government contracts.

That rate which becomes effective on January 1, 2017 will increase by $0.10 per hour from $10.10 to $10.20 per hour.

This minimum wage for Government contractor employees was based on a Presidential executive order from 2014 and became effective on January 1, 2015. The executive order and related regulations call for automatic annual increases based on the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rounded to the nearest nickle.

Contractors affected by this minimum wage increase need to factor it into their forward pricing proposals and, to the extent impacted, their forward pricing indirect expense rates and provisional billing rates.

The full text of the new rules can be found here.

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