Executive Summary: The Department of Labor (DOL) has announced that the minimum wage for certain federal contracts will increase to $10.15 per hour beginning January 1, 2016. Additionally, the minimum cash wage that generally must be paid to tipped employees of covered federal contractors will increase to $5.85 per hour effective January 1, 2016.

The current minimum wage for federal contractors who are subject to the minimum wage Executive Order is $10.10 per hour. In addition to establishing an increased minimum wage rate for certain federal contracts that took effect January 1, 2015, the Executive Order authorized the DOL to make an annual determination of the minimum wage rate for subsequent years, beginning January 1, 2016.

As discussed in our October 28, 2014 alert, the minimum wage requirements apply to procurement contracts for construction covered by the Davis-Bacon Act (DBA); service contracts covered by the Service Contract Act (SCA); concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor's regulations at 29 CFR § 4.133(b); and contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public. The wages of workers under such contracts must be governed by the DBA, the SCA, or the Fair Labor Standards Act (FLSA).