As we reported was likely to occur, President Obama signed an Executive Order yesterday requiring federal contractors to pay their employees at least $10.10 per hour beginning January 1, 2015.  The minimum wage only applies to new federal contracts and contracts renewed by the federal government after January 1, 2015.  However, the Executive Order states that “for all new contracts . . . negotiated between the date of this order and the effective date[] . . . , agencies are strongly encouraged to take all steps that are reasonable and legally permissible to ensure that individuals working pursuant to those contracts . . . are paid an hourly wage of at least $10.10.”

Federal contractors subject to this Executive Order are required to include a minimum wage clause in any subcontracts related to the federal contract.

The Executive Order also includes detailed provisions regarding tipped employees who must be paid base wages of $4.90 per hour for new contracts entered into after January 1, 2015, increasing by $0.95 per year until the base wages reach 70 percent of the regular minimum wage.  Tipped employees total hourly wages (including tips) must equal $10.10 per hour.

Each year, beginning January 1, 2016, the Secretary of Labor will set a new minimum wage for federal contractors and subcontractors based on the consumer price index, rounded to the nearest $0.05.

Regulations implementing this Executive Order will be issued before October 1, 2014.

Link to the Executive Order signed yesterday.