Health Law Blog: President Obama Raises Minimum Wage for Federal Contractors


On February 12, 2014 President Obama signed Executive Order 13658 requiring federal contractors to pay a minimum rate of pay of $10.10 per hour.  The new rate goes into effect for new contracts or “contract-like instruments” and replacement contracts entered into on or after January 1, 2015; however, the Order “strongly encourages” agencies to begin including the requirements in contracts entered into prior to January.  The new rate also applies to subcontractors but does not apply to grant recipients.  Several unanswered questions remain including what constitutes a “contract-like instrument” and whether federal contractors must apply the new minimum wage rate to all of its employees or only those working on a federal contract.   These and other questions will hopefully be answered in regulations to be issued by the Department of Labor by October 1, 2014.    
Health care providers who participate in Medicare or Medicaid are generally not considered “federal contractors” and should not be subject to the new minimum wage requirements.  However, other types of care or reimbursement contracts with the federal government or with entities who contract with a federal contractor may subject the provider to the new requirements. These include contracts with the Department of Veterans’ Affairs and Federal Bureau of Prisons, and certain Medicare Advantage or federal employee health plan agreements.

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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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