Notice2022-20905
Minimum Wage for Federal Contracts Covered by Executive Order 13658, Notice of Rate Change in Effect as of January 1, 2023
Primary source
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Published
September 30, 2022
Effective
January 1, 2023
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, 2023. 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 $12.15 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 $8.50 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, are generally subject to a higher 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 87 Issue 189 (Friday, September 30, 2022)</title>
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[Federal Register Volume 87, Number 189 (Friday, September 30, 2022)]
[Notices]
[Pages 59468-59472]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20905]
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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, 2023
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, 2023. 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 $12.15 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 $8.50 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, are generally subject to a higher 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, 2023.
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). Alternative formats are available upon request by calling
1-866-487-9243. If you are deaf, hard of hearing, or have a speech
disability, please dial 7-1-1 to access telecommunications relay
services.
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 the final rule
implementing the Executive Order to compare such CPI-W for the most
recent year available with the CPI-W for the preceding year. See 29 CFR
10.5(b)(2)(iii). In the 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> has since moved to <a href="https://sam.gov/content/wage-determinations">https://sam.gov/content/wage-determinations</a>. This website is the authoritative and single website
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
[[Page 59469]]
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 $11.25 and $7.90 per hour,
respectively. The Department announced these rates on September 15,
2021, and the rates took effect on January 1, 2022. 86 FR 51683
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. Executive Order 14026 establishes a higher hourly minimum wage
of $15.00 per hour, beginning on January 30, 2022, and, beginning
January 1, 2023, and annually thereafter, an amount determined by the
Secretary in accordance with the order. This higher hourly minimum wage
applies to 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.
Accordingly, the Department will continue announcing annual updates to
Executive Order 13658's minimum wage rates for existing contracts still
covered by Executive Order 13658.\2\
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\2\ Based on an order issued by the U.S. Court of Appeals for
the Tenth Circuit on February 17, 2022, the minimum wage
requirements of the final rule implementing Executive Order 14026
are not currently being enforced as to ``contracts or contract-like
instruments entered into with the federal government in connection
with seasonal recreational services or seasonal recreational
equipment rental for the general public on federal lands.'' The
final rule's requirements remain in effect for all other contracts
subject to the rule.
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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, 2023, the Department 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 2022 and the last
two quarters of 2021 (i.e., July 2021 through June 2022). This produced
an average index level of 277.2779.\3\ The Department then compared
that data to the average CPI-W for the preceding year--257.0463--which
consists of the first two quarters of 2021 and the last two quarters of
2020 (i.e., July 2020 through June 2021). 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 7.871 percent ((277.2779 / 257.0463)--1). The Department then
applied that annual percentage increase of 7.871 percent to the current
Executive Order hourly minimum wage rate of $11.25, which resulted in a
wage rate of $12.135 (($11.25 x 0.07871) + $11.25); however, pursuant
to the Executive Order, that rate must be rounded to the nearest
multiple of $0.05.
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\3\ In 1988, the reference base for the CPI-W was changed from
1967=100 to 1982-84=100. The 1982-84 period was chosen to coincide
with the updated expenditure weights which were based on the
Consumer Expenditure Surveys for the years 1982, 1983 and 1984.
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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, 2023 is therefore $12.15 per hour. A
poster reflecting this new Executive Order 13658 minimum wage rate is
set forth at Appendix B.
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 Executive Order 13658 minimum
wage. Seventy percent of the new Executive Order 13658 minimum wage
rate of $12.15 is $8.505 ($12.15 x 0.70). 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, 2023, is
therefore $8.50 per hour.
V. Appendix
The Appendix to this notice provides a chart of the CPI-W data
published by BLS that the Department used to calculate the new
Executive Order
[[Page 59470]]
13658 minimum wage rate based on the methodology explained herein.
Martin J. Walsh,
Secretary of Labor.
Appendix A: Data Used to Determine Executive Order 13658 Minimum Wage
Rate Effective January 1, 2023
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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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
2021Q3 to 2022Q2..... 267.789 268.387 269.086 271.552 273.042 273.925 276.296 278.943 283.176 284.575 288.022 292.542 277.2779
Annual Percentage ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 7.871%
Increase............
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Appendix B: Updated Version of the Executive Order 13658 Poster
BILLING CODE 4510-27-P
[[Page 59471]]
[GRAPHIC] [TIFF OMITTED] TN30SE22.001
[[Page 59472]]
[FR Doc. 2022-20905 Filed 9-29-22; 8:45 am]
BILLING CODE 4510-27-C
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</html>Indexed from Federal Register on September 30, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.