Establishing a Minimum Wage for Contractors, Notice of Rate Change in Effect as of January 1, 2020
| Published date | 19 September 2019 |
| Citation | 84 FR 49345 |
| Record Number | 2019-19673 |
| Section | Notices |
| Court | Wage And Hour Division |
Federal Register, Volume 84 Issue 182 (Thursday, September 19, 2019)
[Federal Register Volume 84, Number 182 (Thursday, September 19, 2019)]
[Notices]
[Pages 49345-49348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19673]
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DEPARTMENT OF LABOR
Wage and Hour Division
Establishing a Minimum Wage for Contractors, Notice of Rate
Change in Effect as of January 1, 2020
AGENCY: Wage and Hour Division, Department of Labor.
ACTION: Notice.
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SUMMARY: The Wage and Hour Division (WHD) of the U.S. Department of
Labor (the Department) is issuing this notice to announce the
applicable minimum wage rate for workers performing work on or in
connection with federal contracts covered by Executive Order 13658,
Establishing a Minimum Wage for Contractors (the Executive Order or the
Order), beginning January 1, 2020. Beginning on that date, the
Executive Order minimum wage rate that generally must be paid to
workers performing work on or in connection with covered contracts will
increase to $10.80 per hour, while the required minimum cash wage that
generally must be paid to
[[Page 49346]]
tipped employees performing work on or in connection with covered
contracts will increase to $7.55 per hour.
DATES: These new rates shall take effect on January 1, 2020.
FOR FURTHER INFORMATION CONTACT: Amy DeBisschop, Acting Director,
Division of Regulations, Legislation, and Interpretation, Wage and Hour
Division, U.S. Department of Labor, Room S-3502, 200 Constitution
Avenue NW, Washington, DC 20210; telephone: (202) 693-0406 (this is not
a toll-free number). Copies of this notice may be obtained in
alternative formats (Large Print, Braille, Audio Tape, or Disc), upon
request, by calling (202) 693-0023 (not a toll-free number). TTY/TTD
callers may dial toll-free (877) 889-5627 to obtain information or
request materials in alternative formats.
SUPPLEMENTARY INFORMATION:
I. Executive Order 13658 Background and Requirements for Determining
Annual Increases to the Minimum Wage Rate
The Executive Order was signed on February 12, 2014, and raised the
hourly minimum wage for workers performing work on or in connection
with covered federal contracts to $10.10 per hour, beginning January 1,
2015, with annual adjustments thereafter in an amount determined by the
Secretary pursuant to the Order. See 79 FR 9851. The Executive Order
directed the Secretary to issue regulations to implement the Order's
requirements. See 79 FR 9852. Accordingly, after engaging in notice-
and-comment rulemaking, the Department published a Final Rule on
October 7, 2014 to implement the Executive Order. See 79 FR 60634. The
final regulations, set forth at 29 CFR part 10, established standards
and procedures for implementing and enforcing the minimum wage
protections of the Order.
The Executive Order and its implementing regulations require the
Secretary to determine the applicable minimum wage rate for workers
performing work on or in connection with covered contracts on an annual
basis, beginning January 1, 2016. See 79 FR 9851; 29 CFR 10.1(a)(2),
10.5(a)(2), 10.12(a). Sections 2(a) and (b) of the Order establish the
methodology that the Secretary must use to determine the annual
inflation-based increases to the minimum wage rate. See 79 FR 9851.
These provisions, which are implemented in 29 CFR 10.5(b)(2), explain
that the applicable minimum wage determined by the Secretary for each
calendar year shall be:
Not less than the amount in effect on the date of such
determination;
Increased from such amount by the annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) (United States city average, all items, not
seasonally adjusted), or its successor publication, as determined by
the Bureau of Labor Statistics (BLS); and
Rounded to the nearest multiple of $0.05.
Section 2(b) of the Executive Order further provides that, in
calculating the annual percentage increase in the CPI-W for purposes of
determining the new minimum wage rate, the Secretary shall compare such
CPI-W for the most recent month, quarter, or year available (as
selected by the Secretary prior to the first year for which a minimum
wage is in effect) with the CPI-W for the same month in the preceding
year, the same quarter in the preceding year, or the preceding year,
respectively. See 79 FR 9851. To calculate the annual percentage
increase in the CPI-W, the Department elected in its Final Rule
implementing the Executive Order to compare such CPI-W for the most
recent year available with the CPI-W for the preceding year. See 29 CFR
10.5(b)(2)(iii). In its Final Rule, the Department explained that it
decided to compare the CPI-W for the most recent year available
(instead of using the most recent month or quarter, as allowed by the
Order) with the CPI-W for the preceding year, ``to minimize the impact
of seasonal fluctuations on the Executive Order minimum wage rate.'' 79
FR 60666.
Once a determination has been made with respect to the new minimum
wage rate, the Executive Order and its implementing regulations require
the Secretary to notify the public of the applicable minimum wage rate
on an annual basis at least 90 days before any new minimum wage takes
effect. See 79 FR 9851; 29 CFR 10.5(a)(2), 10.12(c)(1). The regulations
explain that the Administrator of the Department's Wage and Hour
Division (the Administrator) will publish an annual notice in the
Federal Register stating the applicable minimum wage rate at least 90
days before any new minimum wage takes effect. See 29 CFR
10.12(c)(2)(i). Additionally, the regulations state that the
Administrator will provide notice of the Executive Order minimum wage
rate on Wage Determinations OnLine (WDOL), http://www.wdol.gov, or any
successor site; \1\ on all wage determinations issued under the Davis-
Bacon Act (DBA), 40 U.S.C. 3141 et seq., and the Service Contract Act
(SCA), 41 U.S.C. 6701 et seq.; and by other means the Administrator
deems appropriate. See 29 CFR 10.12(c)(2)(ii)-(iv).
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\1\ Earlier this year, WDOL.gov moved to beta.SAM.gov and is now
known as Wage Determinations. The beta.SAM.gov website is the
authoritative and single location for obtaining appropriate Service
Contract Act and Davis-Bacon Act wage determinations for each
official contract action.
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Section 3 of the Executive Order requires contractors to pay tipped
employees covered by the Order performing on or in connection with
covered contracts an hourly cash wage of at least $4.90, beginning on
January 1, 2015, provided the employees receive sufficient tips to
equal the Executive Order minimum wage rate under section 2 of the
Order when combined with the cash wage. See 79 FR 9851-52; 29 CFR
10.28(a). The Order further provides that, in each succeeding year,
beginning January 1, 2016, the required cash wage must increase by
$0.95 (or a lesser amount if necessary) until it reaches 70 percent of
the Executive Order minimum wage. Id. For subsequent years, the cash
wage for tipped employees will be 70 percent of the Executive Order
minimum wage rounded to the nearest $0.05. Id. At all times, the amount
of tips received by the employee must equal at least the difference
between the cash wage paid and the Executive Order minimum wage; if the
employee does not receive sufficient tips, the contractor must increase
the cash wage paid so that the cash wage in combination with the tips
received equals the Executive Order minimum wage. Id.
The Executive Order minimum wage and the cash wage required for
tipped employees are currently $10.60 and $7.40 per hour, respectively.
The Department announced these rates on September 4, 2018, 83 FR 44906,
and the rates took effect on January 1, 2019.
II. The 2020 Executive Order Minimum Wage Rate
Using the methodology set forth in the Executive Order and
summarized above, the Department must first determine the annual
percentage increase in the CPI-W (United States city average, all
items, not seasonally adjusted), as published by BLS, to determine the
new Executive Order minimum wage rate. In calculating the annual
percentage increase in the CPI-W, the Department must compare the CPI-W
for the most recent year available with the CPI-W for the preceding
year. The Department therefore compares the percentage change in the
CPI-W between the most recent year (i.e., the most recent four
[[Page 49347]]
quarters) and the prior year (i.e., the four quarters preceding the
most recent year). The Department then increases the current Executive
Order minimum wage rate by the resulting annual percentage change and
rounds to the nearest multiple of $0.05.
In order to determine the Executive Order minimum wage rate
beginning January 1, 2020, the Department therefore calculated the CPI-
W for the most recent year by averaging the CPI-W for the four most
recent quarters, which consist of the first two quarters of 2019 and
the last two quarters of 2018 (i.e., July 2018 through June 2019). The
Department then compared that data to the average CPI-W for the
preceding year, which consists of the first two quarters of 2018 and
the last two quarters of 2017 (i.e., July 2017 through June 2018).
Based on this methodology, the Department determined that the annual
percentage increase in the CPI-W (United States city average, all
items, not seasonally adjusted) was 2.036 percent. The Department then
applied that annual percentage increase of 2.036 percent to the current
Executive Order hourly minimum wage rate of $10.60, which resulted in a
wage rate of $10.816 (($10.60 x 0.02036) + $10.60); however, pursuant
to the Executive Order, that rate must be rounded to the nearest
multiple of $0.05.
The new Executive Order minimum wage rate that must generally be
paid to workers performing on or in connection with covered contracts
beginning January 1, 2020 is therefore $10.80 per hour.
III. The 2020 Executive Order Minimum Cash Wage For Tipped Employees
As noted above, section 3 of the Executive Order provides a
methodology to determine the amount of the minimum hourly cash wage
that must be paid to tipped employees performing on or in connection
with covered contracts. Because the cash wage for tipped employees
reached 70 percent of the Executive Order minimum wage beginning on
January 1, 2018 (i.e., $7.25 per hour compared to $10.35 per hour),
future updates to the cash wage for tipped employees must continue to
set the rate at 70 percent of the full Executive Order minimum wage.
Seventy percent of the new Executive Order minimum wage rate of $10.80
is $7.56. Because the Executive Order provides that the rate must be
rounded to the nearest $0.05, the new minimum hourly cash wage for
tipped workers performing on or in connection with covered contracts
beginning January 1, 2020 is therefore $7.55 per hour.
IV. Appendices
Appendix A to this notice provides a comprehensive chart of the
CPI-W data published by BLS that the Department used to calculate the
new Executive Order minimum wage rate based on the methodology
explained herein. Appendix B to this notice sets forth an updated
version of the Executive Order poster that the Department published
with its Final Rule, reflecting the updated wage rates that will be in
effect beginning January 1, 2020. See 79 FR 60732-33. Pursuant to 29
CFR 10.29, contractors are required to notify all workers performing on
or in connection with a covered contract of the applicable minimum wage
rate under the Executive Order. Contractors with employees covered by
the Fair Labor Standards Act who are performing on or in connection
with a covered contract may satisfy the notice requirement by
displaying the poster set forth in Appendix B in a prominent or
accessible place at the worksite.
Dated: September 4, 2019.
Cheryl M. Stanton,
Administrator, Wage and Hour Division.
Appendix A: Data Used To Determine Executive Order 13658 Minimum Wage
Rate Effective January 1, 2020
Data Source: Consumer Price Index for Urban wage Earners and
Clerical Workers (CPI-W) (United States city average, all items, not
seasonally adjusted)
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Quarter 3
Quarter 4
Quarter 1
Quarter 2 Annual
average
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2017Q3 to 2018Q2............................................ 238.617 239.448 240.939 240.573 240.666 240.526 241.919 242.988 243.463 244.607 245.770 246.196 242.1427
2018Q3 to 2019Q2............................................ 246.155 246.336 246.565 247.038 245.933 244.786 245.133 246.218 247.768 249.332 249.871 249.747 247.0735
Annual Percentage Increase.................................. ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 2.036%
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Appendix B: Updated Version of the Executive Order 13658 Poster
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[FR Doc. 2019-19673 Filed 9-18-19; 8:45 am]
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