Associated Builders and Contractors Inc.

Effects of Minimum Wage Proposal on Federal Contractors Raise Concerns

The Department of Labor's (DOL) proposal  to implement Executive Order 13658, which establishes a minimum wage for federal contractors, raised concerns that ABC outlined in comments submitted July 28. Beginning Jan. 1, 2015, the hourly minimum wage paid by contractors to workers performing on covered federal contracts would be $10.10 per hour. In the comments, ABC states the proposal should be withdrawn or substantially modified.

A major issue with the proposed rule goes beyond the matter of the wage rate and addresses the idea that the president and the DOL went beyond their authority to override acts of Congress by setting a new minimum wage.

“The primary concern in these comments is not the wage rate itself, but rather the unlawful and unprecedented arrogation of power by the Executive Branch to set a new minimum wage in direct contravention of the above-referenced acts of Congress,” ABC wrote. 

The rule itself also poses an issue because part of it would extend coverage beyond laborers and mechanics performing on construction contracts covered by the Davis Bacon Act (DBA) to employees whose wages are governed by the Fair Labor Standards Act. ABC goes on to state that, besides the question surrounding the DOL’s legal authority to implement the proposed rule, it would be administratively prudent for the department to modify the proposal to achieve greater conformity with the Davis-Bacon Act and the Service Contract Act. 

In addition, ABC’s comments ask for greater clarity on whether or not apprentices are included or excluded in the proposed rulemaking. 

ABC offers the solution to exclude apprentices stating that, “Their wages are tied to the journeyman rate on government contracts and there is no need for their wages to be affected by a new minimum wage.”

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