Executive Summary: President Obama announced in his State of the Union address on January 28 that he plans to sign an Executive Order requiring that workers on new federal contracts be paid at least $10.10 per hour, well above the current federal minimum wage of $7.25 per hour.
The White House issued a press release that stated: "Hardworking Americans – including janitors and construction workers – working on new federal contracts will benefit from the Executive Order. This action will cover workers who are performing services or construction and are getting paid less than $10.10 an hour. Some examples of the hardworking people who would benefit from an EO include military base workers who wash dishes, serve food and do laundry." According to the press release, the increase will take effect for new contracts after the effective date of the Executive Order, so contractors will have time to prepare and price their bids accordingly.
Many questions are unanswered. It is unclear which federal contractors will be covered by the proposed Executive Order. It is also not clear whether federal subcontractors will be covered by the Executive Order. Additionally, the effective date of this Executive Order remains to be seen.
Employers' Bottom Line
Until the Executive Order is issued, we will not be able to evaluate its content or the implications for federal contractors and subcontractors. We will monitor developments on this issue and keep you posted.