Applicability to Sub-Contractors of President's Plan to Raise Minimum Wage For Federal Contractors' Workers is Unclear

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Last week, President Barack Obama announced his plan to raise the minimum wage paid to workers of federal contractors from $7.25 to $10.10 per hour by executive order. President Obama has stated that the new minimum wage would only apply to workers performing services under contracts executed after he signs the executive order. Until the executive order is signed and released, it is not clear if the wage hike will also apply to workers employed by subcontractors on federal contracts. President Obama's decision is part of a larger effort by Democrats to raise the national minimum wage for all employees. Democrats have introduced legislation in the Senate and the House of Representatives that would raise the minimum wage of all employees nationwide to $10.10 per hour and index it to inflation, as well as to raise the minimum wage for tipped workers. Whether the legislation will be passed by Congress is an open question and is expected to be a hot issue in the run-up to the mid-term elections in 2014.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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