HR Compliance

President Obama Reveals Increase in Minimum Wage for Federal Contract Workers

By

Robert Barclay

| Jan 29, 2014

If you are an employer with federal government contracts, prepare to pay your employees a higher minimum wage on new contracts soon. President Barack Obama announced in a Jan. 28 White House fact sheet ― and again in that night’s State of the Union address ― that he intends to issue an executive order in coming weeks requiring employers to pay contract workers at least $10.10 an hour, so price your future bids accordingly and anticipate additional guidance to ensure compliance.

As examples of direct beneficiaries of Obama’s executive order, the fact sheet mentioned individuals who work in construction; those who perform service jobs, such as janitors; or military base workers who wash dishes, serve food or do laundry.

The wages and hours of federally contracted employees typically are governed by the Fair Labor Standards Act and other laws that generally set a minimum wage rate at an amount no lower than the $7.25 federal minimum hourly wage rate for nongovernment workers.

That rate will remain at $7.25 for the time being, although Obama plans to encourage Congress to pass the legislation known as the Fair Minimum Wage Act of 2013, which would increase the minimum wage for all other employers in increments until it, too, reaches $10.10. This legislation also would increase the minimum wage for tipped employees to $3 an hour and provide a formula for subsequent annual adjustments of wage increases.

While there is no indication of when the House of Representatives will discuss the proposal, some expect the Senate to consider the bill sometime in February.

About the Author

Robert Barclay

Robert Barclay has been the Tax Research Team Lead at Paycom since 2012, and has been instrumental in such company projects as the development of its Affordable Care Act compliance product, implementation of geolocation services and redesign of Form W-2. He joined Paycom in 2011, bringing more than 20 years of experience with the capital markets consulting practices of Ernst & Young in Memphis, Tenn., and Birmingham, Ala.; and Causey Demgen & Moore in Denver, Colo. A native Oklahoman, Barclay is a graduate of Rhodes College in Memphis, where he played football as linebacker.

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