Construction contractors and subcontractors with contracts covered by the Wage Rate Requirements (Construction) Statute (formerly known as the Davis-Bacon Act) will be required to pay employees no less than $10.10 per hour.  The Federal Acquisition Regulatory Council on December 15, 2014 published an Interim Final Rule and request for comments on a proposed rule to implement Executive Order 13658, which President Obama issued on February 12, 2014.  The Rule establishes a new minimum wage covering services in construction contracts of $10.10 per hour, which will be adjusted annually by the Department of Labor.  The Rule does not excuse a contractor’s non-compliance with any applicable federal or state prevailing law or any applicable or municipal ordinance establishing a minimum wage higher than the minimum wage established by the Executive Order. 

In addition to raising the minimum wage for federal contractors, the Rule also does the following:

  • Prohibits a contractor from making deductions that reduce a worker’s wages below the Executive Ordered minimum wage rate unless the deduction qualifies as a deduction required by federal, state or local laws, such as federal or state withholding of income taxes;
  • Prohibits a contractor from discharging any part of the minimum wage obligation under the Executive Order by furnishing fringe benefits;
  • Delineates the records that are to be kept by contractors;
  • Establishes that wage payments to workers are to be made no later than one (1) pay period following the end of the regular pay period in which the wages were earned and that a paid period under the Executive Order may not be longer than semi-monthly;
  • Requires the contractor to notify all workers performing work on or in connection with a covered contract of the applicable minimum wage under the Executive Order;
  • Addresses the handling of disputes concerning contractor compliance and identifies the Department of Labor procedures for adjudication;
  • Provides that the contractor and any upper-tier subcontractor are responsible for the compliance of any subcontractor or lower-tier subcontractor with the Executive Order minimum wage requirements, whether or not the contract clause was included in the subcontract;
  • Addresses the enforcement of the Executive Order requirements and details the process for filing complaints, investigating complaints, and the remedies and sanctions for violations.

Comment:  This Executive Order/FAR Final Rule should have little effect on construction activities in the Pacific Northwest because the prevailing wages in our area are substantially higher than $10.10.  However, it may be a factor in off-site fabrications, such as structural steel, prefabricated concrete units, etc. which may have factory rates that are less than the federal minimum wage.  If it is determined that the off-site fabrication does come within the purview of the prevailing wage statutes, the minimum wage may come into play.

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