executive order 14026

The Department proposed in 23.420 to establish an informal complaint resolution process for complaints filed with the WHD. Sec. Exclusion for employees who are exempt from the minimum wage requirements of the FLSA under 29 U.S.C. The Department appreciates such information and notes that EPI's findings are consistent with the Department's analysis and conclusions. Thus, when the Department refers to potentially affected employees in this analysis, the Department is referring to this illustrative number of employees who work exclusively on covered Federal Government contracts. 86 FR 38828. Tipped employees. 83 FR 48537. The Center for Workplace Compliance noted that it supports such consistency because compliance with the new E.O. A few commenters, such as ABC and the Chamber, argued that the Department lacks the authority to issue or enforce this rule because it impermissibly conflicts with congressional enactments by establishing a minimum wage that overrides or conflicts with the statutory wage requirements and methodologies set forth in the DBA, FLSA, and SCA. It accordingly provided that disputes related to the application of the Executive order to the contract will not be subject to the contract's general disputes clause. [41] OEWS May 2020 reports a median base wage of $32.30 for compensation, benefits, and job analysis specialist. FACT SHEET: President Biden Signs Executive Order to Boost Quality of As explained above, the Department has concluded that the holders of CUAs issued by the NPS, and permits issued by the Forest Service, BLM and USFWS, are operating under a contract with the Secretary of the Interior or the Secretary of Agriculture. Proposed 23.550, which the Department primarily derived from 29 CFR 6.19 and 6.33, addressed the ALJ's proceedings and decision. 29 CFR 5.12(c). First, the Department defined tipped workers as those in occupations of Waiters and waitresses or Bartenders and in the Restaurants and other food services or Drinking places, alcoholic beverages industries. Companies with larger payroll costs, or more low-wage workers, would have larger impacts. The Department distributed the weights of the non-hourly workers with missing hourly rates to non-hourly workers with valid hourly wage rates, then dropped the workers with missing hourly rates. This interpretation is consistent with the discussion of procurement contracts for construction set forth in the Department's final rule implementing Executive Order 13658. See 3710a); 203(d), (e)(1), (g) (FLSA); 41 U.S.C. (C) rounded to the nearest multiple of $0.05. Paragraph (i)(2) constituted a certification that no part of the contract will be subcontracted to any person or firm ineligible to receive Federal contracts. Moreover, the flow-down provisions of Executive Order 14026 are identical to the flow-down obligations that currently exist under Executive Order 13658. An official website of the United States government. If the rulemaking increases employers' costs (beyond offsetting productivity gains and cost-savings), and contractors pass along part or all of the increased cost to the government in the form of higher contract prices, then Government expenditures may rise. Section 10(c) of the Executive order states that the order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. 86 FR 22838. See The National Automatic Merchandising Association commented that the Department needs to conduct an impact analysis for small businesses in the convenience services industry. The analysis below outlines the impacts that the Department anticipates may result from this final rule and was prepared pursuant to the above-mentioned Executive orders. It also authorized the ALJ to grant a continuance in the hearing, or leave the record open, to enable the new allegations to be addressed. Proposed 23.520(a) provided that whenever any contractor is found by the Administrator to have disregarded its obligations to workers or subcontractors under Executive Order 14026 or part 23, such contractor and its responsible officers, and/or any firm, corporation, partnership, or association in which such contractor or responsible officers have an interest, will be ineligible for a period of up to three years to receive any contracts or subcontracts subject to the Executive order from the date of publication of the name or names of the contractor or persons on the ineligible list. Private sector, businesses or other for-profits and Individuals or Households. Section 8(a)(i)(A) of the Executive order extends coverage to procurement contract[s] for construction. 86 FR 22837. contract 29 CFR 4.170. In the proposed rule, the Department also reaffirmed that the protections of the order do not extend to workers who are not engaged in working on or in connection with a covered contract. Method for determining the applicable Executive Order minimum wage for workers. 214(c), whether hourly or piece rate, is less than the Executive Order 14026 minimum wage, the contractor must pay the Executive Order 14026 minimum wage rate to achieve compliance with the order. There are seven types of contracts included in this analysis of nonprocurement contracts (Table 3): 1. for services and a contract or contract-like instrument for services covered by the Service Contract Act, 86 FR 22837, by providing that the requirements of the order apply to all service contracts covered by the SCA. As part of the investigation, the Administrator may conduct interviews with the relevant contractor, as well as the contractor's workers at the worksite during normal work hours; inspect the relevant contractor's records (including contract documents and payrolls, if applicable); make copies and transcriptions of such records; and require the production of any documentary or other evidence the Administrator deems necessary to determine whether a violation, including conduct warranting imposition of debarment, has occurred. 41 U.S.C. For longer-run projected transfers, the Department employed the same method used for Year 1 but used the projected number of employees. Accordingly, the exclusions discussed below incorporate existing applicable statutory and regulatory exclusions and exemptions set forth in the FLSA, SCA, DBA, and Executive Order 13658. 23.280(a)(1)(iii). With respect to commenter concerns regarding use of the purportedly unfamiliar term contract-like instrument, the Department acknowledges that the term contract-like instrument is not used in the FLSA, SCA, DBA, or FAR. Department noted that such workers would be covered by the plain language of section 8(a) of the Executive order because they are performing in connection with a contract covered by the order and their wages are governed by the FLSA. Proposed paragraph (g) set forth recordkeeping and related obligations that were consistent with the Secretary's authority under section 5 of the order to obtain compliance with the order, and that the Department viewed as essential to determining whether the contractor has paid the Executive order minimum wage to covered workers. United States The Center for Workplace Compliance expressed support for this proposed interpretation of procurement contracts for construction because it is consistent with the approach set forth in the regulations implementing Executive Order 13658, 14026 for the hours spent performing work in support of the covered contract, even though the payroll clerk may not qualify as a service employee entitled to SCA prevailing wages. 2. In using the CPS MORG data to estimate the percentage of workers earning a wage rate in the affected range, the Department did not drop workers reporting wages that were less than the state minimum wage. For example, a payroll clerk who is covered by the FLSA and is responsible for maintaining payroll records for service employees employed on an SCA-covered contract for janitorial services would generally be covered by E.O. Unless otherwise excluded by 23.40, workers performing on or in connection with a covered new contract, as defined in 23.20, must be paid at least the minimum hourly wage rate established by Executive Order 14026 and this part rather than the lower hourly minimum wage rate established by Executive Order 13658 and its implementing regulations in 29 CFR part 10. The Department notes that many commenters strongly urged the Department to align its definitions and coverage provisions with those set forth in the SCA, the DBA, Executive Order 13658, and the FAR to ensure compliance and to minimize confusion. 29 CFR 10.2. 29 CFR 531.29. The minimum wage requirements of E.O. 93. The Department did not receive comments specifically addressing paragraph (b)(5) of the proposed contract clause and therefore adopts the paragraph as proposed. 14026 minimum wage rate to be paid if it is higher than other minimum wage rates, such as the subpart 22.10 statutory wage determination amount. ARB Case No. 105. (b) 14026, "Increasing the Minimum Wage for Federal Contractors." E.O. Certain criteria must be satisfied for the exemption to apply to a contract, including that each service employee spend only a small portion of his or her time servicing the contract. The term IRS Working Papers, Report No. 6701 In the proposed rule, the Department noted that contracts with independent regulatory agencies and contracts performed in the territories ( Executive Order 14026 will also apply to recreational service contracts that were entered into prior to January 30, 2022, if, on or after January 30, 2022: (1) The contract is renewed; (2) the contract is extended; or (3) an option on the contract is exercised. The term The Department therefore amends 23.50(c) by adding or any applicable contract to the provision, such that it reads as follows: Nothing in the Executive Order or this part shall excuse noncompliance with any applicable Federal or state prevailing wage law or any applicable law or municipal ordinance, or any applicable contract, establishing a minimum wage higher than the minimum wage established under the Executive Order and this part. Other than this clarification, the Department adopts 23.50 as proposed. Kasten See Proposed paragraph (g)(4) required the contractor to permit authorized representatives of the WHD to conduct the investigation, including interviewing workers at the worksite during normal working hours. Therefore, total Year 1 implementation costs were estimated to equal $1.1 million ([$52.65 5 minutes 97,900 employees] + [$86.02 5 minutes 97,900 employees]). However, assuming the time spent by the cook preparing meals for, and the janitor cleaning the rooms of, the five veterans is less than 20% of their work hours performing in connection with the SCA contract in a given workweek, the cook and janitor are not entitled to the E.O. 301; section 4, E.O. This includes 121,200 contractors from USASpending and 45,500 contractors operating on Federal properties or lands. To the extent that such comments object to or challenge specific conclusions made by the Department in its regulatory impact analysis and regulatory flexibility analysis set forth in the NPRM, those comments are addressed in sections IV and V of the preamble to this final rule. Additionally, the Department believes that having different requirements for small businesses would undermine the benefits of improved government services and increased productivity. The Chamber, on the other hand, urged the Department to permit the payment of a wage rate lower than the applicable Executive order minimum wage where reflected in a CBA. 86 FR 22835. Id. Federal Register The Department estimated average annualized direct employer costs of $2.4 million and transfer payments of $1.8 billion. and appropriately implements the coverage principles explicitly required by sections 8(a) and 9(a) of Executive Order 14026, e.g., to estimate the percentage of workers in the fifty states and Washington, DC earning between the applicable 2019 minimum wage for federal contractors and $15. 86 FR 22837. DOL Opinion Letter, WH-449, 1978 WL 51447 (Jan. 26, 1978) (Forest Service SUP was a contract for purposes of FLSA section 13(a)(3)); DOL Opinion Letter, 1995 WL 1032476 (March 24, 1995) (Department of Agriculture license to operate amusement rides constituted a contract for purposes of FLSA section 13(a)(3)). The Department proposed to define the term For example, a study by Reich, Hall, and Jacobs (2003) found that increased wages paid to workers at the San Francisco airport increased productivity and shortened airport lines. To determine the share of all output associated with Government contracts, the Department divided industry-level contracting expenditures by that industry's gross output. 102, independent establishments within the meaning of 5 U.S.C. 63. This results in 1,536 entities holding BLM special recreation permits. 6701 They cite a study showing that, [A]fter Maryland implemented a contractor living wage standard, the average number of bids for contracts in the state increased by 27 percent.[111]. How will the Secretary determine the amount of the minimum wage under E.O. The Department estimated the number of employees who work on Federal contracts that will be covered by Executive Order 14026, representing the number of potentially affected employees (1.8 million). Similarly, a worker performing any work on or in connection with the covered contract in a workweek shall be presumed to have continued to perform such work throughout the workweek, unless affirmative proof establishing the contrary is presented. and subcontracts of any tier. Employers who respond to the Executive order by paying affected employees at least the Executive order wage rate for all work the employee performs will not have to distinguish between work that is or is not covered by the order. Such instruments create obligations that are enforceable or otherwise recognizable at law and hence constitute contracts for purposes of Executive Order 14026 and this part. (c) see For example, SBA Office of Advocacy noted an apparent disconnect between the size of the per-firm transfer estimate and the approximately 37 percent increase in the minimum wage. see (g) 84 FR 51257 (Figure 1). to the courts under 44 U.S.C. The Department believes firms will incur costs associated with implementing this rule. The Department received many comments, such as those submitted by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and Communications Workers of America, AFL-CIO (CWA), the National Women's Law Center, the National Employment Law Project (NELP), Restaurant Opportunities Centers (ROC) United, and the Shriver Center on Poverty Law, expressing strong support for Executive Order 14026 and for raising the minimum wage paid to workers performing on or in connection with federal contracts. 203(m)(1) and part 531 of this title. If the applicable DBA or SCA rate is higher than rate under E.O. 86 FR 22838. Moreover, section 8(a) of the Executive order expressly extends its minimum wage requirements to all DBA- and SCA-covered contracts where the wages of workers under such contract . Some commenters stated that the Department did not fulfill the requirements of the RFA because it did not provide alternatives such as excluding small businesses from the regulation or a phasing-in of the requirements for small businesses. Executive Order 14026 is prescriptive and does not authorize the Department to consider less burdensome alternatives for small businesses. While every effort has been made to ensure that 2019 transfers were inflated to 2020 dollars using the GDP deflator.[90]. [3] et seq., See As discussed earlier in the preamble to 23.110(d), the Department declines to adopt this limitation. will apply to that extension, renewal, or option. In this regard, an arbitrary assignment of time on the basis of a formula, as between covered and non-covered work, is not sufficient. 9. In addition to bilateral instruments, contracts include, but are not limited to, awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; exercised contract options; and bilateral contract modifications. 13658 and its lower minimum wage requirement until they are renewed or extended. [71] For the reasons discussed in the preamble to 23.290, the Department adopts paragraph (m) of the contract clause as proposed. such contract must also fall within one of the four specifically enumerated types of contracts set forth in section 8(a) of the order and 23.30, and must qualify as a 29 CFR 10.41 through 10.44, and incorporates FLSA, SCA, and DBA remedies, procedures, and enforcement processes that the Department believes will facilitate investigations of potential violations of the order, address and remedy violations of the order, and promote compliance with the order. It shall be unlawful for any person to discharge or in any other manner discriminate against any worker because such worker has filed any complaint or instituted or caused to be instituted any proceeding under or related to Executive Order 14026 or 29 CFR part 23, or has testified or is about to testify in any such proceeding. There is no indication in the Executive order that the Department has authority to modify the amount or timing of the minimum wage requirement, except where the Department is expressly required to implement the future annual inflation-based adjustments to the wage rate pursuant to the methodology set forth in the order. Such assertions of economic hardship fail to account for the economy and efficiency benefits that the Department expects contractors will realize by paying their workers, including students and seasonal workers, the Executive order minimum wage rate. contract This part contains the Department of Labor's rules relating to the administration of Executive Order 14026 (Executive Order or the Order), Increasing the Minimum Wage for Federal Contractors, and implements the enforcement provisions of the Executive Order. A review of 27 case studies found that the median cost of replacing an employee was 21 percent of the employee's annual salary. section IV.B.2. The Department will, however, continue to provide technical assistance to stakeholders and, where appropriate, work with Congress and other federal partners to support the transition of workers with disabilities away from subminimum wage employment and towards competitive integrated employment. .manual-search ul.usa-list li {max-width:100%;} Start Printed Page 67182 Flow-down requirement. These transfers may ultimately be passed on to the Federal Government and other entities, as discussed in section IV.C.2.c.ii. 29 CFR 10.2, the Department noted in the NPRM that Executive Order 14026 directs the Department to establish definitions of relevant terms in its regulations. transfers in the regulatory impact analysis, the estimate of per business cost also represents an average. These impacts were projected for 10 years. Amend 10.2 by revising the definition of New contract to read as follows: New contract During informal discussions, NPS officials estimated that it issued 33,735 special use permits in FY 2015. 29 U.S.C. contractor Whereas most affected contractors are already required to pay $10.95 per hour (as of January 1, 2021), some firms not presently subject to Executive Order 13658 may pay lower wages, et seq., Finally, proposed 23.290(c) provided that contractors that customarily post notices to workers electronically may post the notice required by this section electronically, provided that such electronic posting is displayed prominently on any website that is maintained by the contractor, whether external or internal, and is customarily used for notices to workers about terms and conditions of employment. The AOA correctly notes that Executive Order 13838 is not rescinded until January 30, 2022, and thus it presently exempts such contracts from the Executive Order 13658 minimum wage requirement. Executive Order 14026 Sets Contractor Minimum Wage at $15.00 May 18, 2021 On April 27, 2021, President Biden issued Executive Order 14026 - Increasing the Minimum Wage for Federal Contractors ("EO 14026"), which sets the minimum wage for federal contractors at $15.00 starting in 2022. Executive Order 14026Increasing the Minimum Wage for Federal Proposed 23.250 described how frequently the contractor must pay its workers. and IV.C.3.e.). The Department recognized that the mechanics of providing such an adjustment may differ between covered procurement contracts and the non-procurement contracts that the Department's contract clause covers. The Department of Labor (DOL) has published its Final Rule implementing President Biden's April 27, 2021, Executive Order 14026 raising the minimum wage from $10.95 an hour to $15 an hour (with. For example, an FLSA-covered worker processes payroll and handles invoices for a construction contractor; each week, that worker performs work pertaining to one DBA-covered contract for that contractor and three non-federal contracts. Using this methodology, the industry where costs and transfers are estimated to be the largest share of contracting revenue is the accommodation and food services industry, where employer costs are 3.8 percent of Federal contracting revenues. The Department received many comments regarding Executive Order 14026's rescission of Executive Order 13838 and the Department's proposed interpretation of such rescission. 48 CFR 22.1002-5 - Executive Orders 13658 and 14026. The records required to be kept by contractors pursuant to proposed paragraph (g)(1) are coextensive with recordkeeping requirements that already exist under, and are consistent across, the FLSA, DBA, and SCA; as a result, compliance by a covered contractor with the proposed payroll records obligations would not impose any obligations to which the contractor is not already subject under the FLSA, DBA, and SCA. Proposed paragraph (g)(2) required the contractor to make available a copy of the contract for inspection or transcription by authorized representatives of the WHD. Average annualized transfers over these ten years, using both the 3 percent and 7 percent discount rates, are $1.8 billion. Thus, in order to apply this exclusion correctly, contractors must accurately distinguish between workers performing on a covered contract and those workers performing in connection with a covered contract based on the guidance provided in this section. United States 79 FR 60659-62, the Department proposed to interpret these terms in a manner consistent with SCA regulations, The Department did not receive any comments on this proposed provision. Moreover, in the event that a Thus, the Department believes that this provision is consistent with the Executive order's directive to incorporate existing procedures and enforcement processes under the DBA, FLSA, SCA, and Executive Order 13658. 6702(a)(3); 29 Proposed 23.50 sets forth the minimum wage rate requirement for Federal contractors and subcontractors established in Executive Order 14026. Contractors must ensure that their workers are being paid no less than the E.O. proposed 23.30(a)(1)(ii). At the same time, the Department recognizes and agrees that the interpretation of the term concessions for purposes of Executive Order 14026 and this final rule, and the resulting determination that many concessionaires are federal contractors for purposes of this Executive order and rule, does not mean that such entities and contracts are covered by other laws pertaining to federal contractors; the Department's interpretation here is limited to Executive Order 14026.
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