Notice2021-19995
Minimum Wage for Federal Contracts Covered by Executive Order 13658, Notice of Rate Change in Effect as of January 1, 2022
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 16, 2021
Effective
January 1, 2022
Issuing agencies
Labor DepartmentWage and Hour Division
Abstract
The Wage and Hour Division (WHD) of the U.S. Department of Labor (the Department) is issuing this notice to announce the applicable minimum wage rate for workers performing work on or in connection with federal contracts covered by Executive Order 13658, Establishing a Minimum Wage for Contractors (the Executive Order or the Order), beginning January 1, 2022. Beginning on that date, the Executive Order 13658 minimum wage rate that generally must be paid to workers performing work on or in connection with covered contracts will increase to $11.25 per hour, while the required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $7.90 per hour. Covered contracts that are entered into on or after January 30, 2022, or that are renewed or extended (pursuant to an option or otherwise) on or after January 30, 2022, will be generally subject to a higher $15.00 minimum wage rate established by Executive Order 14026 of April 27, 2021, Increasing the Minimum Wage for Federal Contractors.
Full Text
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<title>Federal Register, Volume 86 Issue 177 (Thursday, September 16, 2021)</title>
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[Federal Register Volume 86, Number 177 (Thursday, September 16, 2021)]
[Notices]
[Pages 51683-51685]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-19995]
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DEPARTMENT OF LABOR
Wage and Hour Division
Minimum Wage for Federal Contracts Covered by Executive Order
13658, Notice of Rate Change in Effect as of January 1, 2022
AGENCY: Wage and Hour Division, Department of Labor.
ACTION: Notice.
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SUMMARY: The Wage and Hour Division (WHD) of the U.S. Department of
Labor (the Department) is issuing this notice to announce the
applicable minimum wage rate for workers performing work on or in
connection with federal contracts covered by Executive Order 13658,
Establishing a Minimum Wage for Contractors (the Executive Order or the
Order), beginning January 1, 2022. Beginning on that date, the
Executive Order 13658 minimum wage rate that generally must be paid to
workers performing work on or in connection with covered contracts will
increase to $11.25 per hour, while the required minimum cash wage that
generally must be paid to tipped employees performing work on or in
connection with covered contracts will increase to $7.90 per hour.
Covered contracts that are entered into on or after January 30, 2022,
or that are renewed or extended (pursuant to an option or otherwise) on
or after January 30, 2022, will be generally subject to a higher $15.00
minimum wage rate established by Executive Order 14026 of April 27,
2021, Increasing the Minimum Wage for Federal Contractors.
DATES: These new Executive Order 13658 rates shall take effect on
January 1, 2022.
FOR FURTHER INFORMATION CONTACT: Amy DeBisschop, Director, Division of
Regulations, Legislation, and Interpretation, Wage and Hour Division,
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW,
Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-
free number). Copies of this notice may be obtained in alternative
formats (Large Print, Braille, Audio Tape, or Disc), upon request, by
calling (202) 693-0023 (not a toll-free number). TTY/TTD callers may
dial toll-free (877) 889-5627 to obtain information or request
materials in alternative formats.
SUPPLEMENTARY INFORMATION:
I. Executive Order 13658 Background and Requirements for Determining
Annual Increases to the Minimum Wage Rate
Executive Order 13658 was signed on February 12, 2014, and raised
the hourly minimum wage for workers performing work on or in connection
with covered federal contracts to $10.10 per hour, beginning January 1,
2015, with annual adjustments thereafter in an amount determined by the
Secretary pursuant to the Order. See 79 FR 9851. The Executive Order
directed the Secretary to issue regulations to implement the Order's
requirements. See 79 FR 9852. Accordingly, after engaging in notice-
and-comment rulemaking, the Department published a Final Rule on
October 7, 2014 to implement the Executive Order. See 79 FR 60634. The
final regulations, set forth at 29 CFR part 10, established standards
and procedures for implementing and enforcing the minimum wage
protections of the Order.
Executive Order 13658 and its implementing regulations require the
Secretary to determine the applicable minimum wage rate for workers
performing work on or in connection with covered contracts on an annual
basis, beginning January 1, 2016. See 79 FR 9851; 29 CFR 10.1(a)(2),
10.5(a)(2), 10.12(a). Sections 2(a) and (b) of the Order establish the
methodology that the Secretary must use to determine the annual
inflation-based increases to the minimum wage rate. See 79 FR 9851.
These provisions, which are implemented in 29 CFR 10.5(b)(2), explain
that the applicable minimum wage determined by the Secretary for each
calendar year shall be:
<bullet> Not less than the amount in effect on the date of such
determination;
<bullet> Increased from such amount by the annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) (United States city average, all items, not
seasonally adjusted), or its successor publication, as determined by
the Bureau of Labor Statistics (BLS); and
<bullet> Rounded to the nearest multiple of $0.05.
Section 2(b) of Executive Order 13658 further provides that, in
calculating the annual percentage increase in the CPI-W for purposes of
determining the new minimum wage rate, the Secretary shall compare such
CPI-W for the most recent month, quarter, or year available (as
selected by the Secretary prior to the first year for which a minimum
wage is in effect) with the CPI-W for the same month in the preceding
year, the same quarter in the preceding year, or the preceding year,
respectively. See 79 FR 9851. To calculate the annual percentage
increase in the CPI-W, the Department elected in its Final Rule
implementing the Executive Order to compare such CPI-W for the most
recent year available with the CPI-W for
[[Page 51684]]
the preceding year. See 29 CFR 10.5(b)(2)(iii). In its Final Rule, the
Department explained that it decided to compare the CPI-W for the most
recent year available (instead of using the most recent month or
quarter, as allowed by the Order) with the CPI-W for the preceding
year, ``to minimize the impact of seasonal fluctuations on the
Executive Order minimum wage rate.'' 79 FR 60666.
Once a determination has been made with respect to the new minimum
wage rate, Executive Order 13658 and its implementing regulations
require the Secretary to notify the public of the applicable minimum
wage rate on an annual basis at least 90 days before any new minimum
wage takes effect. See 79 FR 9851; 29 CFR 10.5(a)(2), 10.12(c)(1). The
regulations explain that the Administrator of the Department's Wage and
Hour Division (the Administrator) will publish an annual notice in the
Federal Register stating the applicable minimum wage rate at least 90
days before any new minimum wage takes effect. See 29 CFR
10.12(c)(2)(i). Additionally, the regulations state that the
Administrator will provide notice of the Executive Order minimum wage
rate on Wage Determinations OnLine (WDOL), <a href="http://www.wdol.gov">http://www.wdol.gov</a>, or any
successor site; \1\ on all wage determinations issued under the Davis-
Bacon Act (DBA), 40 U.S.C. 3141 et seq., and the Service Contract Act
(SCA), 41 U.S.C. 6701 et seq.; and by other means the Administrator
deems appropriate. See 29 CFR 10.12(c)(2)(ii)-(iv).
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\1\ <a href="http://WDOL.gov">WDOL.gov</a> moved to <a href="https://alpha.sam.gov/content/wage-determinations">https://alpha.sam.gov/content/wage-determinations</a>. This website is the authoritative and single
location for obtaining appropriate Service Contract Act and Davis-
Bacon Act wage determinations for each official contract action.
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Section 3 of Executive Order 13658 requires contractors to pay
tipped employees covered by the Order performing on or in connection
with covered contracts an hourly cash wage of at least $4.90, beginning
on January 1, 2015, provided the employees receive sufficient tips to
equal the Executive Order minimum wage rate under section 2 of the
Order when combined with the cash wage. See 79 FR 9851-52; 29 CFR
10.28(a). The Order further provides that, in each succeeding year,
beginning January 1, 2016, the required cash wage must increase by
$0.95 (or a lesser amount if necessary) until it reaches 70 percent of
the Executive Order minimum wage. Id. For subsequent years, the cash
wage for tipped employees will be 70 percent of the Executive Order
minimum wage rounded to the nearest $0.05. Id. When a contractor is
using a tip credit to meet a portion of its wage obligations under the
Executive Order, the amount of tips received by the employee must equal
at least the difference between the cash wage paid and the Executive
Order minimum wage; if the employee does not receive sufficient tips,
the contractor must increase the cash wage paid so that the cash wage
in combination with the tips received equals the Executive Order
minimum wage. Id.
The Executive Order 13658 minimum wage and the cash wage required
for tipped employees are currently $10.95 and $7.65 per hour,
respectively. The Department announced these rates on August 31, 2020,
85 FR 53850, and the rates took effect on January 1, 2021.
II. Effect of Executive Order 14026
On April 27, 2021, President Joseph R. Biden, Jr. signed Executive
Order 14026, Increasing the Minimum Wage for Federal Contractors. 86 FR
22835. Beginning January 30, 2022, Executive Order 14026 establishes a
$15.00 hourly minimum wage for the same types of contracts with the
Federal Government that are covered by Executive Order 13658. However,
Executive Order 14026 only applies to contracts with the Federal
Government that are entered into on or after January 30, 2022, or that
are renewed or extended (pursuant to an exercised option or otherwise)
on or after January 30, 2022. For some amount of time, the Department
therefore anticipates that there will be some existing contracts with
the Federal Government that do not qualify as a covered ``new
contract'' for purposes of Executive Order 14026 and thus will remain
subject to the minimum wage requirements of Executive Order 13658.
The Department anticipates that, in the relatively near future,
essentially all covered contracts with the Federal Government will
qualify as ``new'' contracts under Executive Order 14026 and be subject
to its higher minimum wage rate. Until such time, however, Executive
Order 13658 and its regulations at 29 CFR part 10 must remain in place.
The Department will continue announcing annual updates to Executive
Order 13658's minimum wage rates for existing contracts still covered
by Executive Order 13658.
III. The 2022 Executive Order 13658 Minimum Wage Rate
Using the methodology set forth in Executive Order 13658 and
summarized above, the Department must first determine the annual
percentage increase in the CPI-W (United States city average, all
items, not seasonally adjusted), as published by BLS, to determine the
new Executive Order 13658 minimum wage rate. In calculating the annual
percentage increase in the CPI-W, the Department must compare the CPI-W
for the most recent year available with the CPI-W for the preceding
year. The Department therefore compares the percentage change in the
CPI-W between the most recent year (i.e., the most recent four
quarters) and the prior year (i.e., the four quarters preceding the
most recent year). The Department then increases the current Executive
Order minimum wage rate by the resulting annual percentage change and
rounds to the nearest multiple of $0.05.
In order to determine the Executive Order 13658 minimum wage rate
beginning January 1, 2022, the Department therefore calculated the CPI-
W for the most recent year by averaging the CPI-W for the four most
recent quarters, which consist of the first two quarters of 2021 and
the last two quarters of 2020 (i.e., July 2020 through June 2021). The
Department then compared that data to the average CPI-W for the
preceding year, which consists of the first two quarters of 2020 and
the last two quarters of 2019 (i.e., July 2019 through June 2020).
Based on this methodology, the Department determined that the annual
percentage increase in the CPI-W (United States city average, all
items, not seasonally adjusted) was 2.567 percent. The Department then
applied that annual percentage increase of 2.567 percent to the current
Executive Order hourly minimum wage rate of $10.95, which resulted in a
wage rate of $11.231 (($10.95 x 0.02567) + $10.95); however, pursuant
to the Executive Order, that rate must be rounded to the nearest
multiple of $0.05.
The new Executive Order 13658 minimum wage rate that must generally
be paid to workers performing on or in connection with covered
contracts beginning January 1, 2022 is therefore $11.25 per hour.
IV. The 2022 Executive Order 13658 Minimum Cash Wage for Tipped
Employees
As noted above, section 3 of Executive Order 13658 provides a
methodology to determine the amount of the minimum hourly cash wage
that must be paid to tipped employees performing on or in connection
with covered contracts. Because the cash wage for tipped employees
reached 70 percent of the Executive Order 13658 minimum wage beginning
on January 1, 2018 (i.e., $7.25 per hour compared to $10.35 per hour),
future updates to the cash wage for tipped employees must continue to
set the rate at 70 percent of the full
[[Page 51685]]
Executive Order 13658 minimum wage. Seventy percent of the new
Executive Order 13658 minimum wage rate of $11.25 is $7.875. Because
the Executive Order provides that the rate must be rounded to the
nearest $0.05, the new minimum hourly cash wage for tipped workers
performing on or in connection with covered contracts beginning January
1, 2022 is therefore $7.90 per hour.
V. Appendix
The Appendix to this notice provides a comprehensive chart of the
CPI-W data published by BLS that the Department used to calculate the
new Executive Order 13658 minimum wage rate based on the methodology
explained herein.
Dated: September 9, 2021.
Jessica Looman,
Acting Administrator, Wage and Hour Division.
Appendix: Data Used To Determine Executive Order 13658 Minimum Wage
Rate Effective January 1, 2022
Data Source: Consumer Price Index for Urban wage Earners and
Clerical Workers (CPI-W) (United States city average, all items, not
seasonally adjusted).
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Quarter 3
Quarter 4
Quarter 1
Quarter 2 Annual
average
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2019Q3 to 2020Q2............................................. 250.236 250.112 250.251 250.894 250.644 250.452 251.361 251.935 251.375 249.515 249.521 251.054 250.6125
2020Q3 to 2021Q2............................................. 252.636 253.597 254.004 254.076 253.826 254.081 255.296 256.843 258.935 261.237 263.612 266.412 257.0463
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Annual Percentage Increase................................. ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 2.567%
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[FR Doc. 2021-19995 Filed 9-15-21; 8:45 am]
BILLING CODE 4510-27-P
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</html>Indexed from Federal Register on September 16, 2021.
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