Notice2022-20906
Minimum Wage for Federal Contracts Covered by Executive Order 14026, Notice of Rate Change in Effect as of January 1, 2023
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 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 14026, Increasing the Minimum Wage for Federal Contractors (the Executive Order or the order). Beginning on January 1, 2023, the Executive Order 14026 minimum wage rate that generally must be paid to workers performing work on or in connection with covered contracts will increase to $16.20 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 $13.75 per hour. Similar contracts that were entered into, renewed, or extended prior to January 30, 2022, are generally subject to a lower minimum wage rate established by Executive Order 13658 of February 12, 2014, Establishing a Minimum Wage for 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 59464-59468]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20906]
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DEPARTMENT OF LABOR
Wage and Hour Division
Minimum Wage for Federal Contracts Covered by Executive Order
14026, 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 14026,
Increasing the Minimum Wage for Federal Contractors (the Executive
Order or the order). Beginning on January 1, 2023, the Executive Order
14026 minimum wage rate that generally must be paid to workers
performing work on or in connection with covered contracts will
increase to $16.20 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 $13.75 per hour.
Similar contracts that were entered into, renewed, or extended prior to
January 30, 2022, are generally subject to a lower minimum wage rate
established by Executive Order 13658 of February 12, 2014, Establishing
a Minimum Wage for Contractors.
DATES: These new Executive Order 14026 wage 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 14026 Background and Requirements for Determining
Annual Increases to the Minimum Wage Rate
On April 27, 2021, President Joseph R. Biden, Jr. signed Executive
Order 14026, ``Increasing the Minimum Wage for Federal Contractors.''
86 FR 22835. In relevant part, Executive Order 14026 raised the hourly
minimum wage paid by federal contractors to workers performing work on
or in connection with certain covered Federal contracts to $15.00 per
hour, beginning January 30, 2022, with annual adjustments for inflation
thereafter in amounts determined by the Secretary of Labor. Id.
Executive Order 14026 directed the Secretary to issue regulations
to implement the order's requirements. See 86 FR 22836. Accordingly,
after engaging in notice-and-comment rulemaking, the Department
published a final rule on November 24, 2021, implementing Executive
Order 14026. See 86 FR 67126. The final regulations, set forth at 29
CFR part 23, established standards and procedures for implementing and
enforcing the minimum wage protections of Executive Order 14026.\1\
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\1\ 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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Executive Order 14026 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, 2023. See 86 FR 22835-36; see also 29 CFR
23.10(b)(2), 23.50(a)(2), 23.120(a). Sections 2(a) and (b) of Executive
Order 14026 establish the methodology that the Secretary must use to
determine the annual inflation-based increases to the minimum wage
rate. See 86 FR 22835-36. These provisions, which are implemented in 29
CFR 23.50(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 14026 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 86 FR 22835-36. To calculate the annual percentage
increase in the CPI-W, the Department elected in its final rule
implementing Executive Order 14026 to compare such CPI-W for the most
recent year available with the CPI-W for the preceding year. See 29 CFR
23.50(b)(2)(iii). Consistent with the regulations implementing
Executive Order 13658, see 29 CFR 10.5, 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.'' 86
FR 67167.
Once a determination has been made with respect to the new minimum
wage rate, Executive Order 14026 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 86 FR 22835; 29 CFR 23.50(a)(2), 23.120(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
[[Page 59465]]
23.120(c)(2)(i). Additionally, the regulations state that the
Administrator will provide notice of the Executive Order minimum wage
rate on <a href="https://sam.gov/content/wage-determinations">https://sam.gov/content/wage-determinations</a>, or any successor
site; 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 23.120(c)(2)(ii)-(iv).
Section 3 of Executive Order 14026 explains the application of the
order to tipped workers. 86 FR 22836. It provides that for workers
covered by section 2 of the order who are tipped employees pursuant to
section 3(t) of the FLSA, 29 U.S.C. 203(t), the cash wage that must be
paid by an employer to such workers shall be at least: (i) $10.50 an
hour, beginning on January 30, 2022; (ii) beginning January 1, 2023, 85
percent of the wage in effect under section 2 of the order, rounded to
the nearest multiple of $0.05; and (iii) beginning January 1, 2024, and
for each subsequent year, 100 percent of the wage in effect under
section 2 of the order. 86 FR 22836. Where workers do not receive a
sufficient additional amount of tips, when combined with the hourly
cash wage paid by the employer, such that their total earnings are
equal to the minimum wage under section 2 of the order, section 3
requires that the cash wage paid by the employer be increased such that
the workers' total earnings equal the section 2 minimum wage. Id.
Consistent with applicable law, if the wage required to be paid under
the SCA, 41 U.S.C. 6701 et seq., or any other applicable law or
regulation is higher than the wage required by section 2 of the order,
the employer must pay additional cash wages sufficient to meet the
highest wage required to be paid. 86 FR 22836.
Because Executive Order 14026 is still in its first year of
implementation, the Executive Order 14026 minimum wage and the cash
wage required for tipped employees are currently at their initial
amounts of $15.00 and $10.50 per hour, respectively.\2\
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\2\ Contracts of the same kind as are covered by Executive Order
14026 and that were entered into, renewed, or extended prior to
January 30, 2022, are generally subject to Executive Order 13658 and
its lower minimum wage requirements. The Executive Order 13658
minimum wage and the cash wage required for tipped employees are
currently $11.25 and $7.90 per hour, respectively. See 86 FR 51683.
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II. The 2023 Executive Order 14026 Minimum Wage Rate
Using the methodology set forth in Executive Order 14026 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 14026 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.
To determine the Executive Order 14026 minimum wage rate beginning
January 1, 2023, 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 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 14026 minimum wage ($15.00 per hour), which resulted in
an hourly wage rate of $16.181 (($15.00 x 0.07871) + $15.00); however,
pursuant to Executive Order 14026, the updated minimum wage 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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Accordingly, effective January 1, 2023, the new minimum wage rate
that must generally be paid to workers performing on or in connection
with contracts covered by Executive Order 14026 will be $16.20 per
hour. A poster reflecting this new Executive Order 14026 minimum wage
rate is set forth at Appendix B.
III. The 2023 Executive Order 14026 Minimum Cash Wage for Tipped
Employees
As noted above, section 3 of Executive Order 14026 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. In relevant part, section 3(a)(ii) of the
Executive order specifies that, for calendar year 2023, the minimum
hourly cash wage for tipped employees shall increase to 85 percent of
the wage in effect under section 2 of the order, rounded to the nearest
multiple of $0.05. See 86 FR 22836; see also 29 CFR 23.280(a)(1)(ii).
Eighty-five percent of the new Executive Order 14026 minimum wage rate
of $16.20 is $13.77 ($16.20 x 0.85). 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 will--effective on January 1, 2023--
be $13.75 per hour.
IV. 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 14026 minimum wage rate based on the methodology
explained herein.
Martin J. Walsh,
Secretary of Labor.
Appendix A: Data Used To Determine Executive Order 14026 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)
[[Page 59466]]
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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 14026 Poster
BILLING CODE 4510-27-C
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[GRAPHIC] [TIFF OMITTED] TN30SE22.000
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[FR Doc. 2022-20906 Filed 9-29-22; 8:45 am]
BILLING CODE 4510-27-P
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</html>Indexed from Federal Register on September 30, 2022.
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