Philadelphia Mayor Michael Nutter recently signed an executive order that will increase the minimum wage to $12 per hour for individuals working for employers who contract with the City, where the individual’s work arises directly out of a public agency funding agreement, City contract, lease, concession, or franchise, or the grant of financial aid. The new wage rate will be effective on January 1, 2015.

The executive order applies to the following “contractors,” provided they employ five or more individuals:

• Public agencies that receive contracts of $10,000 or more from the City in a 12-month period
• For-profit contractors with annual gross receipts of more than $1 million that receive a contract for $10,000 or more in a 12-month period
• Nonprofit contractors that receive contracts for more than $100,000 in a 12-month period
• Recipients of City leases, concessions, or franchises
• City financial aid recipients

The executive order also has an immediate effect on subcontractors that have a contract with a City contractor by raising the minimum wage for these first-tier subcontractors to $10.88 per hour, effective May 20, 2014. The minimum wage is required for subcontractor employees whose work arises from a City contract. On January 1, 2015, such subcontractors will be required to pay employees $12 per hour. The entities subject to these provisions of the order are:

• For-profit subcontractors with five or more employees that have gross annual receipts of more than $1 million and receive payment of $10,000 or more in a 12-month period under the subcontract
• Nonprofit subcontractors with five or more employees that receive payment for more than $100,000 in a 12-month period under the subcontract