AGC of America has submitted comments to the U.S. Department of Labor’s Wage and Hour Division (WHD) asking the agency to clarify its proposed rule implementing Executive Order 13658 (EO), which establishes a minimum wage of $10.10 per hour for direct federal contractors and subcontractors. The new minimum wage impacts covered contracts entered into on or after January 1, 2015. Federally assisted contractors are not affected. The order also mandates that the Secretary of Labor determine a new minimum wage for federal contractors in 2016, and each year thereafter, based on the annual percentage increase in the Consumer Price Index for urban wage and clerical workers.
The proposed regulations cover workers whose wages are governed by the Davis-Bacon Act and the Service Contract Act. The rule would also cover other workers whose wages are governed by the Fair Labor Standards Act (FLSA) for all time spent directly supporting a covered contract. This includes workers who are non-exempt under the FLSA, are not laborers or mechanics as defined by the Davis-Bacon Act, and may or may not work on the site of the covered project. It includes a broad contract clause flow-down requirement and a broad debarment.
AGC’s comments urge WHD to:
- Provide additional clarification and examples of covered contracts and contract-like instruments, including explicit exclusion of subcontracts for materials supplied to construction contractors;
- Provide additional clarification and examples of covered workers and covered work, including the application of a 20 percent de minimis rule for workers who are not covered by the Davis-Bacon Act;
- Institute a safe harbor for compliant prime contractors and higher-tier subcontractors instead of holding such contractors responsible for all lower-tier subcontractor violations;
- Freeze wage rate mandates for the duration of multi-year contracts, or, at the very least, include an adjustments clause in contracts for minimum wage increases;
- Add outreach efforts to notify contractors of minimum wage increases to the passive notice methods proposed;
- Clarify how the EO applies to “indefinite delivery, indefinite quantity” contracts; and
- Restrict use of the debarment process to contractors that willfully or recklessly violate the law.
The EO instructs the Secretary of Labor to issue final regulations by Oct. 1, 2014. AGC will continue to monitor for any new developments and will notify members once final regulations are issued.