Executive Order Raises Minimum Wage for Government Contractor Employees

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On February 12, 2014, President Barack Obama signed an Executive Order establishing a new minimum wage for certain government contractors. Acting pursuant to the Federal Property and Administrative Services Act, 40 U.S.C. 101 et seq., President Obama signed the Executive Order to “promote economy and efficiency in procurement by contracting with sources who adequately compensate their workers.” The Executive Order reads that, “Raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs. These savings and quality improvements will lead to improved economy and efficiency in Government procurement.”

Specifically, the Executive Order raises wages paid by federal contractors with service and construction contracts to $10.10 per hour. The Executive Order also includes subcontractors to federal contractors, specifically stating that the minimum wage requirements shall be flowed-down to all lower tier subcontracts.

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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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