Contractor Minimum Wage (E.O. 13658)

Summary

Makes sure people working for companies with government contracts get paid at least a certain amount per hour, which increases over time.

What problem does this solve?

The government found that low pay for contract workers can lead to poor work and high turnover, costing more in the long run. This order raises the minimum wage for these workers to improve their work quality and save the government money.

What does this order do?

Establishes a new minimum wage for contract workers

Sets the minimum pay at $10.10 per hour for people working on new federal contracts, starting January 1, 2015.

Requires annual wage increases

Starting in 2016, the minimum wage for contractors will be adjusted each year based on the cost of living, as measured by the Consumer Price Index.

Sets a minimum cash wage for tipped workers

Creates a special minimum cash wage for tipped employees, starting at $4.90 per hour in 2015. This amount will increase annually until it reaches 70% of the regular contractor minimum wage.

Assigns enforcement to the Secretary of Labor

Gives the Secretary of Labor the power to create rules, investigate possible violations, and make sure companies follow this order.

Defines which contracts are covered

Applies to new contracts for services, construction, and concessions, as well as contracts related to services on federal property.

Who does this affect?

Low-wage federal contract workers
Companies with federal government contracts
Federal government agencies

What is the real world impact?

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Improves government efficiency

Aims to save the government money and get better quality work by paying contract workers more. The idea is that happier, better-paid workers are more productive and less likely to quit, reducing training and hiring costs.

When does this start?

This order has several key dates, with the new minimum wage rules applying to new contracts starting in 2015.

New minimum wage for contractors

The minimum wage of $10.10 per hour begins on January 1, 2015.

New minimum cash wage for tipped workers

The minimum cash wage for tipped employees starts at $4.90 per hour on January 1, 2015.

Annual wage adjustments

Starting January 1, 2016, the minimum wage will be adjusted for inflation each year.

Deadline for new regulations

The Secretary of Labor must issue rules to carry out this order by October 1, 2014.