Federal Acquisition Regulation; Establishing a Minimum Wage for Contractors, 74544-74553 [2014-29137]

Download as PDF 74544 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations and National Aeronautics and Space Administration (NASA). DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION Summary presentation of interim rules. ACTION: NATIONAL AERONAUTICS AND SPACE ADMINISTRATION This document summarizes the Federal Acquisition Regulation (FAR) rules agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) in this Federal Acquisition Circular (FAC) 2005–79. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. The FAC, including the SECG, is available via the Internet at http:// www.regulations.gov. SUMMARY: 48 CFR Chapter 1 [Docket No. FAR 2014–0051, Sequence No. 7] Federal Acquisition Regulation; Federal Acquisition Circular 2005–79; Introduction Department of Defense (DoD), General Services Administration (GSA), AGENCIES: For effective dates and comment dates see separate documents, which follow. DATES: The analyst whose name appears in the table below in relation to the FAR case. Please cite FAC 2005–79 and the specific FAR case number. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202–501–4755. FOR FURTHER INFORMATION CONTACT: RULES LISTED IN FAC 2005–79 Item Subject I ................... II .................. Establishing a Minimum Wage for Contractors ....................................................................................... Prohibition on Contracting with Inverted Domestic Corporations ............................................................ SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the actual revisions and/or amendments made by these rules, refer to the specific item numbers and subjects set forth in the documents following these item summaries. FAC 2005–79 amends the FAR as specified below: Item I—Establishing a Minimum Wage for Contractors (FAR Case 2015–003) emcdonald on DSK67QTVN1PROD with RULES4 DoD, GSA, and NASA are issuing an interim rule amending the FAR to implement Executive Order (E.O.) 13658 and a Department of Labor (DOL) final rule issued on October 7, 2014, both entitled Establishing a Minimum Wage for Contractors. The interim rule establishes a new minimum wage for covered service and construction contracts of $10.10 per hour, which will be adjusted annually, by the DOL. Contracting officers will include a clause in covered contracts and, if requested by the contractor and if appropriate, will adjust contract prices for the annual adjustments in the E.O. minimum wage. Contractors shall consider any subcontractor request, including requests by small businesses subcontractors, for a subcontract price adjustment due to the annual adjustment in the E.O. minimum wage. Item II—Prohibition on Contracting With Inverted Domestic Corporations (FAR Case 2014–017) This interim rule amends the provisions of the FAR that address the continuing Governmentwide statutory prohibition (in effect since fiscal year VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 FAR case (FY) 2008) on the award of contracts using appropriated funds to any foreign incorporated entity that is an inverted domestic corporation (under section 835 of the Homeland Security Act of 2002, codified at 6 U.S.C. 395) or to any subsidiary of such entity. In particular, this rule amends FAR 9.108 to revise the FAR coverage, including the language of solicitation provisions and contract clauses, so that it more clearly reflects the ongoing, continuing nature of the statutory prohibition on contracting with inverted domestic corporations and their subsidiaries. This rule is not expected to have an effect on small business because this rule will only impact an offeror that is a foreign incorporated entity that is treated as an inverted domestic corporation and wants to do business with the Government. Small business concerns are unlikely to have been incorporated in the United States and then reincorporated in a tax haven. Dated: December 5, 2014. William Clark, Acting Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy. Federal Acquisition Circular (FAC) 2005–79 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator for the National Aeronautics and Space Administration. Unless otherwise specified, all Federal Acquisition Regulation (FAR) and other directive material contained in FAC 2005–79 is effective December 15, 2014. PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 2015–003 2014–017 Analyst Loeb. Jackson. Dated: December 4, 2014. Richard Ginman, Director, Defense Procurement and Acquisition Policy. Dated: December 5, 2014. Jeffrey A. Koses, Senior Procurement Executive/Deputy CAO, Office of Acquisition Policy, U.S. General Services Administration. Dated: December 4, 2014. Ronald A. Poussard, Director, Contract and Grant Policy Division, Office of Procurement, National Aeronautics and Space Administration. [FR Doc. 2014–29139 Filed 12–12–14; 8:45 am] BILLING CODE 6820–EP–P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 1, 22, and 52 [FAC 2005–79; FAR Case 2015–003; Item I; Docket No. 2014–0050; Sequence No. 1] RIN 9000–AM82 Federal Acquisition Regulation; Establishing a Minimum Wage for Contractors Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Interim rule. AGENCIES: E:\FR\FM\15DER4.SGM 15DER4 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations DoD, GSA, and NASA are issuing an interim rule amending the Federal Acquisition Regulation (FAR) to implement the Executive Order, Establishing a Minimum Wage for Contractors, and a final rule issued by the Department of Labor. DATES: Effective: February 13, 2015. Comment Date: Interested parties should submit written comments to the Regulatory Secretariat Division on or before February 13, 2015 to be considered in the formation of the final rule. Applicability: This rule applies to solicitations issued on or after the effective date of the rule. Applicability of the clause at 52.222–55, Minimum Wages Under Executive Order 13658, to existing contracts that do not contain a class deviation clause implementing the Executive Order (E.O.), is as follows— (1) Contracting officers shall include the clause in bilateral modifications extending the contract when such modifications are individually or cumulatively longer than six months. (2) In accordance with FAR 1.108(d)(3), contracting officers are strongly encouraged to include the clause in existing indefinite-delivery indefinite-quantity contracts, if the remaining ordering period extends at least six months and the amount of remaining work or number of orders expected is substantial. ADDRESSES: Submit comments identified by FAC 2005–79, FAR Case 2015–003 by any of the following methods: • Regulations.gov: http:// www.regulations.gov. Submit comments via the Federal eRulemaking portal by searching for ‘‘FAR Case 2015–003’’. Select the link ‘‘Comment Now’’ that corresponds with ‘‘FAR Case 2015– 003’’. Follow the instructions provided at the ‘‘Comment Now’’ screen. Please include your name, company name (if any), and ‘‘FAR Case 2015–003’’ on your attached document. • Fax: 202–501–4067. • Mail: General Services Administration, Regulatory Secretariat Division (MVCB), ATTN: Ms. Hada Flowers, 1800 F Street NW., 2nd Floor, Washington, DC 20405–0001. Instructions: Please submit comments only and cite ‘‘FAR Case 2015–003’’ in all correspondence related to this case. All comments received will be posted without change to http:// www.regulations.gov, including any personal and/or business confidential information provided. FOR FURTHER INFORMATION CONTACT: Mr. Edward Loeb, Procurement Analyst, at 202–501–0650 for clarification of emcdonald on DSK67QTVN1PROD with RULES4 SUMMARY: VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202–501–4755. Please cite FAC 2005– 79, FAR Case 2015–003. SUPPLEMENTARY INFORMATION: Applicability I. Background DoD, GSA, and NASA are issuing an interim rule amending the FAR to implement E.O. 13658, Establishing a Minimum Wage for Contractors. The E.O. was signed February 12, 2014, and published in the Federal Register at 79 FR 9851, on February 20, 2014. The FAR is also implementing a final rule issued by the Wage and Hour Division of the Department of Labor (DOL), published at 79 FR 60634, on October 7, 2014, also entitled ‘‘Establishing a Minimum Wage for Contractors.’’ The DOL rule added a new 29 CFR part 10. The DOL rule covers both FAR-based contracts, and non-FAR-based contracts and contract-like instruments; this interim rule only applies to FAR-based contracts. The E.O. seeks to increase efficiency and cost savings in the work performed by parties who contract with the Federal Government by raising the hourly minimum wage paid to workers on specified Federal contracts. Beginning January 1, 2015, the hourly rate will be $10.10, and beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of Labor. The E.O. explains that ‘‘[r]aising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and accompanying costs, and reduces supervisory costs,’’ and that ‘‘[t]hese savings and quality improvements will lead to improved economy and efficiency in Government procurement.’’ The E.O. directed DOL to issue regulations by October 1, 2014, and for the FAR Council to issue regulations within 60 days of the DOL regulations. Section 8(c) of the E.O. strongly encouraged agencies to take all reasonable and legally permissible steps to ensure individuals working on Federal contracts subject to the E.O. would be paid an hourly wage of at least $10.10 as of January 1, 2015. This paragraph intended that agencies would apply the E.O. minimum wage to contracts awarded between the issuance of the E.O. and the effective date of the FAR rule. OMB and DOL issued a joint memorandum on June 12, 2014 to the Executive Departments and Agencies providing guidance for implementing the requirements of the E.O. prior to January 1, 2015 and prior to the PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 74545 issuance of final DOL regulations. This memorandum requested that the FAR Council provide standard wording for a clause to be included in solicitations and contracts pursuant to a deviation from the FAR pending issuance of a FAR rule implementing DOL regulations. The FAR Council, in coordination with DOL, drafted matching class deviations with a contract clause to implement Section 8(c) of the E.O. DoD and NASA issued the class deviations. GSA issued CAAC Letter 2014–03 on June 25, 2014 to the Civilian Agency Acquisition Council (CAAC) agencies which constituted consultation with the CAAC Chair, as required by FAR 1.404(a)(1), for use of a model deviation clause. Discussion and Analysis A. This FAR interim rule only applies to acquisitions subject to the FAR. The DOL rule applies to FAR acquisitions as described in FAR 1.104, and actions that are not governed by the FAR such as contracts for concessions and contracts entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public. B. The DOL regulatory requirements included in the FAR rule: 1. Require that the minimum hourly wage rate paid to workers performing on, or in connection with, contracts and subcontracts covered by the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, is at least $10.10 per hour beginning January 1, 2015, and beginning January 1, 2016, and annually thereafter an amount determined by the Secretary of Labor (Secretary) (29 CFR 10.1) (FAR 22.1902 and 52.222–55(b)). 2. Define a ‘‘worker’’ to whom the rule applies (29 CFR 10.2) (FAR 22.1901 and 52.222–55(a)). 3. Apply to construction contracts covered by the Wage Rate Requirements (Construction) statute (formerly known as the Davis Bacon Act, FAR subpart 22.4), and to contracts for services covered by the Service Contract Labor Standards statute (formerly known as the Service Contract Act, FAR subpart 22.10), and workers whose wages are governed by those statutes or the Fair Labor Standards Act (FLSA) (29 CFR 10.2 and 10.3) (FAR 22.1903, 22.1906 and 52.222–55(c)). 4. Only apply to contracts with the Federal Government requiring performance in whole or in part within the United States (the 50 states and the District of Columbia) (29 CFR 10.2 and 10.3) (FAR 22.1903, 22.1906 and 52.222–55 (a), (b)(1), and (k)). E:\FR\FM\15DER4.SGM 15DER4 emcdonald on DSK67QTVN1PROD with RULES4 74546 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 5. Provide that the rule does not excuse a contractor’s noncompliance with any applicable Federal or State prevailing wage law or any applicable law or municipal ordinance establishing a minimum wage higher than the minimum established under the E.O. (29 CFR 10.5 and 10.22) (FAR 22.1902(b) and 52.222–55(b)(8)). 6. Exempt the following individuals from the requirements of the rule (29 CFR 10.2 and 10.4) (FAR 22.1901 and 22.1903(b)(2), and 52.222–55(a) and (c)): a. Employees who are not entitled to the minimum wage set forth at 29 U.S.C. 206(a)(1) of the FLSA pursuant to 29 U.S.C. 213(a) and 214(a)–(b), except for workers who are otherwise covered by the Wage Rate Requirements (Construction) statute and the Service Contract Labor Standards statute. These individuals include but are not limited to: i. Learners, apprentices, or messengers whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(a). ii. Students whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(b). iii. Individuals employed in a bona fide executive, administrative, or professional capacity as those terms are defined in 29 CFR part 541. b. FLSA-covered individuals performing in connection with covered contracts, i.e., those workers who perform work duties necessary to the performance of the contract but who are not directly engaged in performing the specific work called for by the contract, and who spend less than 20 percent of their hours worked in a particular workweek performing in connection with such contracts. 7. Prohibit any person from discriminating against any worker because the worker has filed a complaint, instituted or caused to be instituted a proceeding under the DOL rule, or has testified or is about to testify in any such proceeding (29 CFR 10.6 and 10.44) (FAR 22.1905(d) and 52.222– 55(i)). 8. Provide that the clause flows down to all covered subcontracts at any tier. The DOL rule provides that the contractor and any upper-tier subcontractor are responsible for the compliance by any subcontractor or lower-tier subcontractor with the E.O. minimum wage requirements, whether or not the contract clause was included in the subcontract (29 CFR 10.21) (52.222–55(j) and (k)). 9. Provide that the Government may withhold payment from the contractor to reimburse unpaid wages and shall VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 withhold payment for failure to comply with the recordkeeping requirement under the contract or any other Federal contract with the same contractor (29 CFR 10.11, 10.44, and Appendix A(g)(3)) (FAR 22.1905(a) and (d) and 52.222–55(e) and (g)). 10. Provide that a contracting agency is responsible for forwarding relevant information to the DOL, within 14 calendar days of receipt of a complaint alleging contractor noncompliance with the E.O. or the DOL rule or of being contacted by DOL (29 CFR 10.11) (FAR 22.1905(b)). 11. Describe the methodology for determining the new E.O. minimum wage and for notifying the public of the new applicable minimum wage rate on an annual basis at least 90 days before any new minimum wage is to take effect. (29 CFR 10.5(b) and 10.12) (FAR 22.1904 and 52.222–55(b)). 12. Prohibit a contractor from discharging any part of minimum wage obligation under the E.O. by furnishing fringe benefits or, with respect to workers whose wages are governed by the Service Contract Labor Standards statute, the cash equivalent thereof. (29 CFR 10.22(b)) (FAR 52.222–55(b)). 13. Provide that a contractor may satisfy the wage payment obligation to a tipped employee through a combination of an hourly cash wage (which, in accordance with the E.O. and DOL’s regulation, must be at least $4.90 an hour, beginning January 1, 2015, and an amount determined in accordance with the E.O. in future years) and a credit based on tips received by such employee. (29 CFR 10.24(b) and 10.28) (FAR 22.1902(c) and 52.222–55(b)). 14. Permit a contractor to make deductions that reduce a worker’s wages below the E.O. minimum wage rate only if the deduction qualifies as a deduction required by Federal, State, or local law, such as Federal or State withholding of income taxes, or in other limited circumstances specified in the DOL rule. (29 CFR 10.23) (FAR 52.222–55(b)). 15. Establish that wage payments to workers are to be made no later than one pay period following the end of the regular pay period in which the wages were earned, and that a pay period under the E.O. may not be longer than semi-monthly. (29 CFR 10.25) (FAR 52.222–55(b)). 16. Delineate the records to be kept by contractors. These requirements are consistent with existing requirements under the Service Contract Labor Standards statute and the Wage Rate Requirements (Construction) statute. (29 CFR 10.26) (FAR 52.222–55(e)). 17. Require the contractor to notify all workers performing work on, or in PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 connection with, a covered contract of the applicable minimum wage rate under the E.O. The rule details the authorized means of doing so. (29 CFR 10.29) (FAR 52.222–55(d)). 18. Address enforcement of the E.O. requirements and details the process for filing complaints, investigating complaints, and the remedies and sanctions available for violations. (29 CFR 10.41–10.44) (FAR 22.1905 and 52.222–55(f) and (g)). 19. Address the handling of disputes concerning contractor compliance and identifies the DOL procedures for adjudication. (29 CFR 10.51–10.58) (FAR 52.222–55(h)). C. FAR implementation of the DOL rule by DoD, GSA, and NASA is discussed below, as well as those instances where the FAR rule differs from the DOL rule, and the rationale for those differences: 1. A new part 22 subpart, FAR 22.19, Establishing a Minimum Wage for Contractors, is added to include the following sections: a. Scope of subpart. FAR 22.1900 gives the authority citations for the E.O. and DOL regulation. b. Definition of ‘‘Worker’’. FAR 22.1901 incorporates the DOL definition, updating the statutory references to reflect the recodification of Titles 40 and 41 of the United States Code (see FAR 1.110). c. Policy. FAR 22.1902 describes the E.O. minimum wage requirements and the relationship to other wage rates, including other Federal or State prevailing wage rates and collective bargaining agreements that provide a higher wage rate, and to wages of tipped workers. The DOL preamble discussed the relationship of the E.O. minimum wage to minimum wages required in collective bargaining agreements. DoD, GSA, and NASA determined that this information is critical to both contractors and contracting officers and included this information in this policy section and in the contract clause. This issue is addressed, although not in the same manner, in the clause for Service contracts, 52.222–41, Service Contract Labor Standards, but it is not addressed in the clause for Construction contracts, 52.222–6, Construction Wage Rate Requirements. The DOL rule included a definition of ‘‘tipped employees’’ at 29 CFR 10.2 as well as a discussion of treatment of tipped employees at 29 CFR 10.28. DoD, GSA, and NASA determined that a detailed discussion of tipped employees or a definition is not needed because tipped employees are infrequently employed under FAR-based contracts, and concluded that reference to 29 CFR E:\FR\FM\15DER4.SGM 15DER4 emcdonald on DSK67QTVN1PROD with RULES4 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 10.24(b) and 10.28 in the FAR rule is adequate coverage. d. Applicability. FAR 22.1903(a) provides applicability to contracts governed by the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, and to performance in whole or in part in the United States. The FAR 2.101 definition of ‘‘United States,’’ as used in the geographic sense, is used in this rule—the 50 states and the District of Columbia. FAR 22.1903(b) delineates individuals to whom the subpart applies or does not apply. The subpart does not apply to an individual who performs solely ‘‘in connection with’’ covered contracts for less than 20% of hours worked in a given work week. DOL, in its final rule preamble (79 FR 60634 at 60661), gave helpful examples. e. Annual Executive Order Minimum Wage Rate. FAR 22.1904, describes DOL’s processes to notify the public of the annual E.O. minimum wage rates. The coverage at 22.1904 establishes FAR policy for how price adjustments will be made by contracting officers, when appropriate, after requests for such price adjustments are received from contractors. This coverage provides detail and direction, including examples of how price adjustments are calculated. The price adjustment language used in the class deviations, which were crafted prior to formal DOL rulemaking, was adequate for that purpose. However, given the fully developed DOL regulation, the price adjustment language in this rule is significantly revised from the deviation language. The language in this rule will ensure price adjustments under the E.O. minimum wage clause do not duplicate other price adjustments made under the same contract. Only those labor costs, associated labor costs, and relevant subcontract costs directly resulting from the increase in the E.O. minimum wage will be subject to adjustment. f. Enforcement of Executive Order Minimum Wage Requirements. FAR 22.1905 provides information on enforcement authority, filing complaints, reporting and investigating complaints, remedies and sanctions, and retroactive inclusion of the contract clause when an agency fails to include the clause in a contract to which the E.O. applies. g. FAR 22.1906 establishes a contract clause prescription for clause 52.222– 55, Minimum Wages under Executive Order 13658, when the contracts include 52.222–6, Construction Wage Rate Requirements, ($2,000 threshold), or 52.222–41, Service Contract Labor Standards, ($2,500 threshold) and VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 performance is in whole or in part in the United States. 2. Coverage is added to 22.403–5 and 22.1002–5 by adding new sections discussing the new minimum wage subpart. 3. Coverage is added to part 52 to— a. Revise the clause at 52.212–5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items, to include 52.222–55, Minimum Wages Under Executive Order 13658; b. Revise the clause at 52.213–4, Terms and Conditions—Simplified Acquisitions (Other than Commercial Items), to include 52.222–55, Minimum Wages Under Executive Order 13658; and c. Add 52.222–55, Minimum Wages Under Executive Order 13658. This includes coverage of the following: i. Paragraph (a) definitions of ‘‘Worker’’ and ‘‘United States’’ are provided. ii. Paragraph (b) includes particular requirements regarding payment to workers of the E.O. minimum wage. It informs contractors that the minimum wage rate may be adjusted annually, beginning January 1, 2016 and that they are required to pay workers the adjusted rate. The Contractor may request a price adjustment to reflect an increase in wages due to the annual wage rate adjustment. The Contractor must warrant that the prices in the contract do not include any allowance for contingency to cover increased costs for such adjustments. Language for warranting contract price is adapted from existing price adjustment clauses applicable to Service Contract Labor Standards and the FLSA. Other subjects covered in this paragraph (b) are: subcontractor price adjustments, length of pay period, deductions, fringe benefits, relationship to higher minimum wages imposed by other statutes, ordinances, or collective bargaining agreements, and workers who regularly receive tips. iii. Paragraph (c) informs the contractor which workers the E.O. minimum wage requirement applies to, and to which individuals it does not apply. iv. Paragraph (d) addresses the requirement for the contractor to notify employees of the E.O. minimum wage rate. v. Paragraph (e) identifies payroll recordkeeping requirements. It includes a requirement to make such records available to DOL and the contracting officer; noncompliance with this requirement will result in withholding of contract payment. PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 74547 vi. Paragraph (f) informs the contractor that it must permit access to DOL to conduct investigations. vii. Paragraphs (g), (h), and (i) provides information on enforcement of E.O. Minimum Wage requirements including withholding of payment for unpaid wages, resolution of disputes, and a prohibition on retaliation. viii. Paragraph (j) states that the contractor is responsible for subcontractor compliance with the requirements of the clause and may be held liable for unpaid wages due subcontractor workers. Although the DOL regulation, at 29 CFR 10.21(b) states that the contractor and any uppertier subcontractors are responsible for subcontractor compliance and shall be liable for any unpaid wages for its workers or its subcontractor workers, DoD, GSA, and NASA have not placed this responsibility on upper-tier subcontractors in this rule because the Government does not have privity of contract with subcontractors. ix. Paragraph (k) states that the Contractor shall include the substance of the clause, including this paragraph (k) in all subcontracts, regardless of dollar value, that are subject to Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, and are to be performed in whole or in part in the United States. The requirement to include the substance of the clause allows only for ministerial changes to the clause. The substance of the clause will be consistent with the requirements of the clause, and will not permit substantive changes such as to the rights and responsibilities of the parties. 4. DoD, GSA, and NASA reviewed the regulations at 29 CFR part 10 including the Appendix A contract clause and determined that adequate coverage for the following issues is accomplished by existing FAR coverage and clauses that are applied to contracts subject to the E.O., therefore inclusion of the following items into FAR clause 52.222– 55, Minimum Wages Under Executive Order 13658, is unnecessary: a. Appendix A, paragraph (d) Contract Suspension/Contract Termination/ Contractor Debarment. Suspension and debarment is independently covered in FAR subpart 9.4. Termination is addressed in individual applicable contract clauses. b. Appendix A, paragraph (i), Certification of Eligibility. This paragraph duplicates coverage in paragraph (p) of FAR clause 52.222–41, Service Contract Labor Standards, for service and 52.222–15, Certification of Eligibility, for construction contracts. 41 E:\FR\FM\15DER4.SGM 15DER4 74548 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations U.S.C. 1304 discourages adding certifications to the FAR. c. Waiver of Rights, states that rights under the DOL rule at 29 CFR 10.7, Waiver of rights, cannot be waived or induced to be waived. With respect to the FAR, the FAR clause requirements become contract requirements, which likewise cannot be waived, thus separate inclusion is unnecessary. d. 29 CFR 10.24, Overtime payments, restates requirements of the Fair Labor Standards Act and the Contract Work Hours and Safety Standards Acts and thus, it is unnecessary to restate existing requirements. e. Terms defined in 29 CFR 10.2, Definitions, include ‘‘new contract’’. The FAR rule did not adopt this definition as not all the elements of the definition apply to or are consistent with FAR principles. When FAR rules apply to existing contracts, application is addressed in the Effective Date/ Applicability section of the preamble, not in the Code of Federal Regulations; treatment of bilateral modifications to existing contracts is addressed in the Applicability section at the beginning of this preamble. In discussing treatment of existing contracts DOL stated in the preamble of its rule, ‘‘if parties bilaterally negotiate a modification that is outside the scope of the contract, the agency will be required to create a new contract, triggering solicitation and/or justification requirements, and thus such a modification after January 1, 2015 should be addressed as a new contract subject to the Executive Order’’. We understand this to refer to the longstanding requirement for any out-ofscope modification to be addressed as a new procurement and conducted in accordance with the requirements of FAR part 6, Competition Requirements. emcdonald on DSK67QTVN1PROD with RULES4 III. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 IV. Regulatory Flexibility Act DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. However, an Initial Regulatory Flexibility Analysis (IRFA) has been performed, and is summarized as follows: This rule revises the Federal Acquisition Regulation (FAR) to include procurement policy implementing Executive Order 13658, Establishing a Minimum Wage for Contractors, dated February 12, 2014, and associated Department of Labor regulatory requirements at 29 CFR Part 10. The Department of Labor (DOL) published an initial regulatory flexibility analysis of the minimum wage requirement in its Notice of Proposed Rulemaking (79 FR 34568 at 34602) June 17, 2014. On October 7, 2014 DOL published the final regulatory flexibility analysis in the final rule (79 FR 60634 at 60704). This rule applies to contracts awarded under FAR procedures and covered by the Service Contract Labor Standards statute (41 U.S.C. chapter 67; see FAR subpart 22.10), including contracts for the acquisition of commercial services, and the Wage Rate Requirements (Construction) statute (40 U.S.C. chapter 31 subchapter IV; see FAR subpart 22.4). The FAR rule does not apply to certain contracts, such as concession contracts, which may be covered by the DOL rule and the E.O. but are not FAR contracts. FAR 1.104 addresses the applicability of the FAR to Federal acquisitions. FAR 2.101 states ‘‘acquisition’’ means the ‘‘acquiring by contract with appropriated funds of supplies or services . . .’’. The objective of this rule is to implement Executive Order 13658, Establishing a Minimum Wage for Contractors, dated February 12, 2014, and associated Department of Labor regulatory requirements at 29 CFR part 10. The rule establishes requirements for contractors under contracts containing the clauses at 52.222–6, Construction Wage Rate Requirements, or 52.222–41, Labor Standards, i.e. ‘‘covered contracts’’, to pay no less than the applicable E.O. minimum wage to workers for all hours worked on or in connection with a covered contract. Contractors must also include a minimum wage contract clause in covered subcontracts and require covered subcontractors to include the substance of the clause in covered lower-tier contracts. This rule applies to contracts and subcontracts at all tiers covered by the Service Contract Labor Standards statute, or the Wage Rate Requirements (Construction) statute, which require performance in whole or in part within the United States. When performance is in part within and in part outside the United States, the rule applies to the part of the contract or subcontract performed within the United States. This rule applies to workers as defined at 22.1901. As provided in that definition— 1. Workers are covered regardless of the contractual relationship alleged to exist PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 between the contractor or subcontractor and the worker; 2. Workers with disabilities whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c) are covered; and 3. Workers who are registered in a bona fide apprenticeship program or training program registered with the Department of Labor’s Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship, are covered. This rule does not apply to— Fair Labor Standards Act (FLSA)-covered individuals performing in connection with covered contracts, i.e. those individuals who perform duties necessary to the performance of the contract, but who are not directly engaged in performing the specific work called for by the contract, and who spend less than 20 percent of their hours worked in a particular workweek performing in connection with such contracts; Individuals exempted from the minimum wage requirements of the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise covered by the Service Contract Labor Standards statute, or the Wage Rate Requirements (Construction) statute. These individuals include but are not limited to— a. Learners, apprentices, or messengers whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(a); b. Students whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(b); and c. Those employed in a bona fide executive, administrative, or professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541). Small businesses in the service or construction industry with FAR-based contracts or subcontracts awarded after the effective date of this rule will be impacted unless an exclusion listed above applies. The rule will require these contractors and subcontractors to raise their employees’ minimum hourly rate to $10.10 per hour, beginning January 1, 2015, then annually adjust it thereafter, if necessary, based on the annual minimum wage rate determined by the DOL. Data available through the Federal Procurement Data System (FPDS) for Fiscal Year 2013, reveals 16,264 contracts were awarded to unique small business vendors for services which contained the clause at 52.222–41, Labor Standards. Additionally, 5,211 contracts were awarded to unique small business vendors for construction which contained the clause at 52.222–6, Construction Wage Rate Requirements, for a total of 21,475 unique small businesses. Subcontract data is available from the USASpending Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS), however this system does not distinguish small businesses from other than small businesses. Data for Fiscal Year 2013 shows there were a total of 20,127 subcontracts for services and construction reported and of those 5,391 were unique DUNS. These 5,391 first tier E:\FR\FM\15DER4.SGM 15DER4 emcdonald on DSK67QTVN1PROD with RULES4 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations unique subcontracts are approximately 25% of the 21,475 unique contracts. Given that first tier subcontracts account for 25%, then for estimating purposes, 20% of subcontracts have a second-tier, 10% of second tier have a third tier, and 5% of third tier have a fourth tier. This calculation estimates the total number of subcontracts is 6,631. However, since the FSRS does not distinguish small businesses, this number is overestimated. Data from FPDS has shown that typically, approximately 60% of a contractor population is small. The DOL noted in their final rule (79 FR 60634 at 60691) that the rule did not impose any additional notice or recordkeeping requirements on contractors and therefore, the burden for complying with the recordkeeping requirements was not adjusted. However, DOL submitted a revised information collection request (ICR), to OMB to revise the existing ICR for control number 1235–0018 to incorporate the recordkeeping regulatory citations in its final rule. The rule does not duplicate, overlap, or conflict with any other Federal rules. There are no known significant alternatives to the rule that would meet the requirements of the E.O. and DOL regulation and minimize any significant economic impact of the rule on small entities. DOL, in its final rule, estimated the average wage for affected employees is $8.79; thus affected firms must raise the hourly wage for affected employees by $1.31 per hour. Additionally, contractors must adjust related payroll and unemployment taxes and fringe benefits. Under covered contracts, contractors are entitled to recover increases in labor costs resulting from the E.O. minimum wage requirements by including such costs in offers and when requesting contract price adjustment under existing and future contracts for the additional costs related to the increase in the minimum wage rate for workers performing under the contract. DOL notes increases in economy and efficiency and expects these added costs to be offset by an increase in employee morale and productivity, reduced absenteeism, reduced supervisory costs, and reduced turnover. To remind contractors of their obligation in ensuring subcontractor workers are paid in compliance with the minimum wage requirement, the following was added at the FAR clause 52.222–55: 1. The contractor is responsible for subcontractor compliance with the requirements of this subpart, and may be held liable for unpaid wages due subcontractor’s workers. 2. The rule provides that subcontractors may be entitled to adjustments due to the new minimum wage and that contractors shall consider any subcontractor(s) requests for such price adjustment. The rule does not address late payments to small business subcontractors, however pending FAR case 2014–004 implements section 1334 of the Small Business Jobs and Credit Act of 2010 (Public Law 111–240) and the Small Business Administration’s final rule at 78 FR 42391. The rule will require a contractor to self-report to the contracting officer when the contractor makes late or VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 reduced payments to small business subcontractors. The Regulatory Secretariat Division has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat Division. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities. DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C 610 (FAR Case 2015–003), in correspondence. V. Paperwork Reduction Act The Paperwork Reduction Act (44 U.S.C chapter 35) does apply; however, these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved for the DOL regulations under OMB Control Number 1235–0018, Records to be kept by Employers—Fair Labor Standards Act. VI. Determination To Issue an Interim Rule A determination has been made under the authority of the Secretary of Defense (DoD), the Administrator of General Services (GSA), and the Administrator of the National Aeronautics and Space Administration (NASA) that urgent and compelling reasons exist to promulgate this interim rule without prior opportunity for public comment. This action is necessary because the E.O. requires DoD, GSA, and NASA to issue regulations within 60 days of the DOL rule, and include a clause which specifies the new $10.10 per hour minimum wage will be paid to workers beginning January 1, 2015. The DOL final rule was published October 7, 2014. The DOL rule was published for public comment prior to publication of the final rule. However, pursuant to 41 U.S.C. 1707, DoD, GSA, and NASA will consider public comments received in response to this interim rule in the formation of the final rule. List of Subjects in 48 CFR Parts 1, 22, and 52 Government procurement. PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 74549 Dated: December 5, 2014. William Clark, Acting Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy. Therefore, the DoD, GSA, and NASA amend 48 CFR parts 1, 22, and 52 as set forth below: ■ 1. The authority citation for 48 CFR parts 1, 22, and 52 continues to read as follows: Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113. PART 1—FEDERAL AQUSITION REGULATIONS SYSTEM 1.106 [Amended] 2. Amend section 1.106, in the table following the introductory text, by— ■ a. Removing the FAR Segment ‘‘52.222–8’’ and its corresponding OMB control numbers ‘‘1215–0149 and 1215– 0017’’ and adding ‘‘52.222–8’’ and ‘‘1235–0008 and 1235–0018’’ in their places, respectively; ■ b. Removing the FAR segment ‘‘52.222–41’’ and its corresponding OMB control numbers ‘‘1215–0017 and 1215–0150’’ and adding ‘‘52.222–41’’ and ‘‘1235–0018 and 1235–0007’’ in their places, respectively; and ■ c. Adding in numerical sequence, FAR segment ‘‘52.222–55’’ and its corresponding OMB Control No. ‘‘1235– 0018’’. ■ PART 22—APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS 3. Amend section 22.001 by adding, in alphabetical order, the definition ‘‘Agency labor advisor’’ to read as follows: ■ 22.001 Definitions. * * * * * Agency labor advisor means an individual responsible for advising contracting agency officials on Federal contract labor matters. * * * * * ■ 4. Amend section 22.403 by revising the heading to read as follows: 22.403 Statutory, Executive Order, and regulatory requirements. * * * * * 5. Add section 22.403–5 to read as follows: ■ 22.403–5 Executive Order 13658. Executive Order 13658 establishes minimum wages for certain workers. The wage rate is subject to annual increases by an amount determined by the Secretary of Labor. See subpart 22.19. The clause at 52.222–55, E:\FR\FM\15DER4.SGM 15DER4 74550 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations Minimum Wages under Executive Order 13658, requires the Executive Order 13658 minimum wage rate to be paid if it is higher than other minimum wage rates, such as the subpart 22.4 statutory wage determination amount. 22.1001 [Amended] 6. Amend section 22.1001 by removing the definition ‘‘Agency labor advisor.’’ ■ 7. Amend section 22.1002 by revising the section heading to read as follows: ■ 22.1002 Statutory and Executive Order requirements. * * * * * 8. Add section 22.1002–5 to read as follows: ■ 22.1002–5 Executive Order 13658. Executive Order 13658 establishes minimum wages for certain workers. The wage rate is subject to annual increases by an amount determined by the Secretary of Labor. See subpart 22.19. The clause at 52.222–55, Minimum Wages under Executive Order 13658, requires the Executive Order 13658 minimum wage rate to be paid if it is higher than other minimum wage rates, such as the subpart 22.10 statutory wage determination amount. ■ 9. Add subpart 22.19 to read as follows: Subpart 22.19—Establishing a Minimum Wage for Contractors Sec. 22.1900 Scope of subpart. 22.1901 Definition. 22.1902 Policy. 22.1903 Applicability. 22.1904 Annual Executive Order Minimum Wage Rate. 22.1905 Enforcement of Executive Order Minimum Wage Requirements. 22.1906 Contract clause. Subpart 22.19—Establishing a Minimum Wage for Contractors 22.1900 Scope of subpart. This subpart prescribes policies and procedures to implement Executive Order (E.O.) 13658, Establishing a Minimum Wage for Contractors, dated February 12, 2014, and Department of Labor (DOL) implementing regulations at 29 CFR part 10. emcdonald on DSK67QTVN1PROD with RULES4 22.1901 Definition. Worker, as used in this subpart, (in accordance with 29 CFR 10.2)— (1) Means any person engaged in performing work on, or in connection with, a contract covered by Executive Order 13658, and (i) Whose wages under such contract are governed by the Fair Labor Standards Act (29 U.S.C. chapter 8), the VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 Service Contract Labor Standards statute (41 U.S.C. chapter 67), or the Wage Rate Requirements (Construction) statute (40 U.S.C. chapter 31, subchapter IV), (ii) Other than individuals employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in 29 CFR part 541, (iii) Regardless of the contractual relationship alleged to exist between the individual and the employer. (2) Includes workers performing on, or in connection with, the contract whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c). (3) Also includes any person working on, or in connection with, the contract and individually registered in a bona fide apprenticeship or training program registered with the Department of Labor’s Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship. 22.1902 Policy. (a) Pursuant to Executive Order 13658, the minimum hourly wage rate required to be paid to workers performing on, or in connection with, contracts and subcontracts subject to this subpart is at least $10.10 per hour beginning January 1, 2015, and beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of Labor. The Administrator of the Wage and Hour Division (the Administrator) will notify the public of the new E.O. minimum wage rate at least 90 days before it is to take effect. (See 22.1904.) (b) Relationship with other wage rates. (1) Nothing in this subpart shall excuse noncompliance with any applicable Federal or State prevailing wage law or any applicable law or municipal ordinance establishing a minimum wage higher than the E.O. minimum wage. However, wage increases under such other laws or municipal ordinances are not subject to price adjustment under this subpart. (2) The E.O. minimum wage rate applies whenever it is higher than any applicable collective bargaining agreement(s) wage rate. (c) Application to tipped workers. Policies and procedures in DOL regulations at 29 CFR 10.24(b) and 10.28 address the relationship between the E.O. minimum wage and wages of workers engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips. PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 22.1903 Applicability. (a) This subpart applies to contracts covered by the Service Contract Labor Standards statute (41 U.S.C. chapter 67, formerly known as the Service Contract Act, subpart 22.10), or the Wage Rate Requirements (Construction) statute (40 U.S.C. chapter 31, Subchapter IV, formerly known as the Davis Bacon Act, subpart 22.4), that require performance in whole or in part within the United States (the 50 states and the District of Columbia). When performance is in part within and in part outside the United States, this subpart applies to the part of the contract that is performed within the United States. (b)(1) This subpart applies to workers as defined at 22.1901. As provided in that definition— (i) Workers are covered regardless of the contractual relationship alleged to exist between the contractor or subcontractor and the worker; (ii) Workers with disabilities whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c) are covered; and (iii) Workers who are registered in a bona fide apprenticeship program or training program registered with the Department of Labor’s Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship, are covered. (2) This subpart does not apply to— (i) Fair Labor Standards Act (FLSA)covered individuals performing in connection with contracts covered by the E.O., i.e., those individuals who perform duties necessary to the performance of the contract, but who are not directly engaged in performing the specific work called for by the contract, and who spend less than 20 percent of their hours worked in a particular workweek performing in connection with such contracts; (ii) Individuals exempted from the minimum wage requirements of the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise covered by the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute. These individuals include but are not limited to— (A) Learners, apprentices, or messengers whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(a); (B) Students whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(b); and (C) Those employed in a bona fide executive, administrative, or E:\FR\FM\15DER4.SGM 15DER4 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541). (c) Agency Labor Advisors, as defined at 22.001, are listed at http://wdol.gov, and are available to provide guidance and assistance with the application of this subpart. 22.1904 Annual Executive Order Minimum Wage Rate. (a) For the E.O. minimum wage rate that becomes effective on January 1, 2016, and annually thereafter, the Administrator will— (1) Notify the public of the new E.O. minimum wage rate at least 90 days before it becomes effective by publishing a notice in the Federal Register; (2) Publish and maintain on Wage Determinations OnLine (WDOL), http:// www.wdol.gov, or any successor site, the E.O. minimum wage rate; and (3) Include a general notice on wage determinations which are issued under the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute. The notice will provide information on the E.O. minimum wage and how to obtain annual updates. (b)(1) The contractor may request a price adjustment only after the effective date of a new annual E.O. minimum wage determination published pursuant to paragraph (a). Prices will be adjusted only if labor costs increase as a result of the annual E.O. minimum wage, and for associated labor costs and relevant 74551 subcontract costs. Associated labor costs shall include increases or decreases that result from changes in social security and unemployment taxes and workers’ compensation insurance, but will not otherwise include any amount for general and administrative costs, overhead, or profit. (2) The wage rate price adjustment under this clause is the amount calculated by subtracting from the new E.O. wage rate the highest of the following: the previous E.O. minimum wage rate; the current Service or Construction wage determination rate under the contract; or the actual wage paid the worker prior to the new minimum wage. If the amount is zero or below, there will be no price adjustment for this worker. (i) Example 1—New E.O. wage rate is $11.10. Previous E.O. wage rate is $10.70 .......................................................... The current Service or Construction wage determination rate under the contract is $10.75. The actual wage paid to the worker prior the new minimum wage is $10.80. Analysis: The calculation is $11.10 ¥ $10.80 = $.30. The price adjustment for this worker is $.30. (ii) Example 2—New E.O. wage rate is $10.50. Previous E.O. wage rate is $10.10 .......................................................... The current Service or Construction wage determination rate under the contract is $10.75. The actual wage paid to the worker prior to the new minimum wage is $10.80. (3) The contracting officer shall not adjust the contract price for any costs other than those identified in paragraph (b)(1) of this section, and shall not provide duplicate price adjustments with any price adjustment under clauses implementing the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute. emcdonald on DSK67QTVN1PROD with RULES4 22.1905 Enforcement of Executive Order Minimum Wage Requirements. (a) Authority. (1) Section 5 of the E.O. grants the authority for investigating potential violations of, and obtaining compliance with, the E.O. to the Secretary of Labor. The Secretary of Labor, in promulgating the implementing regulations required by Section 4 of the E.O., has assigned this authority to the Administrator. Contracting agencies do not have authority to conduct compliance investigations under 29 CFR part 10 as implemented in this subpart. This does not limit the contracting officer’s authority to otherwise enforce the terms and conditions of the contract. (2) Contracting officers shall withhold payment at the direction of the Administrator, or upon the contracting VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 Analysis: The calculation is $10.50 ¥ $10.80 = ¥$.30. There is no price adjustment for this worker. officer’s own action, if the contractor fails to comply with the requirements in paragraph (e)(2) of 52.222–55, Minimum Wages Under Executive Order 13658, until such time as the noncompliance is corrected. (b) Complaints. (1) Complaints may be filed with the contracting officer or the Administrator by any person, entity, or organization that believes a violation of this subpart has occurred. (2) The identity of any individual who makes a written or oral statement as a complaint or in the course of an investigation, as well as portions of the statement which would reveal the individual’s identity, shall not be disclosed in any manner to anyone other than Federal officials without the prior consent of the individual, unless otherwise authorized by law. (3) Upon receipt of a complaint, or if notified that the Administrator has received a complaint, the contracting officer shall report the following information, within 14 days, if available without conducting an investigation, to the Department of Labor, Wage and Hour Division, Office of Government Contracts, 200 Constitution Avenue PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 NW., Room S3006, Washington, DC 20210. (i) The complaint or description of the alleged violation; (ii) Available statements by the worker, contractor, or any other person regarding the alleged violation; (iii) Evidence that clause 52.222–55, Minimum Wages Under Executive Order 13658, was included in the contract; (iv) Information concerning known settlement negotiations between the parties, if applicable; and (v) Any other relevant facts known to the contracting officer or other information requested by the Wage and Hour Division. (c) Investigations. Complaints will be investigated by the Administrator, if warranted, in accordance with the procedures in 29 CFR part 10.43. (d) Remedies and sanctions—(1) Unpaid wages. When the Administrator’s investigation reveals that a contractor has failed to pay the applicable E.O. minimum wage, the Administrator will notify the contractor and the contracting agency of the unpaid wage violation, and request that the contractor remedy the violation. If the contractor does not remedy the E:\FR\FM\15DER4.SGM 15DER4 74552 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations violation, the Administrator may direct withholding of payments due on the contract or any other contract between the contractor and the Federal Government. Upon final decision and direction of the Administrator, the contracting agency shall transfer the withheld funds to the Department of Labor for disbursement in accordance with the procedures at 22.406–9(c). (2) Antiretaliation. When a contractor has been found to have violated paragraph (i) of clause 52.222–55, Minimum Wages Under Executive Order 13658, the Administrator may provide for relief to the worker in accordance with 29 CFR 10.44. (3) Debarment. (i) The Department of Labor may initiate debarment proceedings under 29 CFR 10.52 whenever a contractor is found to have disregarded its obligations under 29 CFR part 10. (ii) Contracting officers shall consider notifying the agency suspending and debarring official in accordance with agency procedures when a contractor commits significant violations of contract terms and conditions related to this subpart. (4) Retroactive inclusion of contract clause. If a contracting agency fails to include the contract clause in a contract to which the E.O. applies, the contracting agency, on its own initiative or within 15 calendar days of notification by an authorized representative of the Department of Labor, shall incorporate the contract clause in the contract retroactive to commencement of performance under the contract through the exercise of any and all authority that may be needed (including, where necessary, its authority to negotiate or amend, its authority to pay any necessary additional costs, and its authority under any contract provision authorizing changes, cancellation and termination). emcdonald on DSK67QTVN1PROD with RULES4 22.1906 Contract clause. Insert the clause at 52.222–55, Minimum Wages Under Executive Order 13658, in solicitations and contracts that include the clause at 52.222–6, Construction Wage Rate Requirements, or 52.222–41, Service Contract Labor Standards, where work is to be performed, in whole or in part, in the United States (the 50 States and the District of Columbia). PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES ■ ■ ■ ■ 10. Amend 52.212–5 by— a. Revising the date of the clause; b. Adding paragraph (c)(10); c. Adding paragraph (e)(1)(xvii); and VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 d. Revising the date of Alternate II; and adding paragraph (e)(1)(ii)(O). The revisions and additions read as follows: ■ 52.212–5 Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items * * * * * Contract Terms and Conditions Required To Implement Statutes or Executive Orders—Commercial Items DEC 2014) * * * * * (c) * * * (10) 52.222–55, Minimum Wages Under Executive Order 13658 DEC 2014) (Executive Order 13658). * * * * * (e)(1) * * * (xvii) 52.222–55, Minimum Wages Under Executive Order 13658 (DEC 2014) (Executive Order 13658). * * * * * Alternate II (DEC 2014) * * * * * (e)(1)(ii) * * * (O) 52.222–55, Minimum Wages Under Executive Order 13658 (DEC 2014) Executive Order 13658). * * * * * 11. Amend 52.213–4 by revising the date of the clause; and adding paragraph (b)(1)(xv) to read as follows: ■ 52.213–4 Terms and Conditions— Simplified Acquisitions (Other than Commercial Items) * * * * * Terms and Conditions—Simplified Acquisitions (Other Than Commercial Items) (DEC 2014) * * * * * (b)(1) * * * (xv) 52.222–55, Minimum Wages Under Executive Order 13658 (DEC 2014) (Executive Order 13658) (Applies when 52.222–6 or 52.222–41 are in the contract and performance in whole or in part is in the United States (the 50 States and the District of Columbia.) * * * * * 12. Add section 52.222–55 to read as follows: ■ 52.222–55, Minimum Wages Under Executive Order 13658. As prescribed in 22.1906, insert the following clause: Minimum Wages Under Executive Order 13658 (DEC 2014) (a) Definitions. As used in this clause— ‘‘United States’’ means the 50 states and the District of Columbia. ‘‘Worker’’— (1) Means any person engaged in performing work on, or in connection with, PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 a contract covered by Executive Order 13658, and (i) Whose wages under such contract are governed by the Fair Labor Standards Act (29 U.S.C. chapter 8), the Service Contract Labor Standards statute (41 U.S.C. chapter 67), or the Wage Rate Requirements (Construction) statute (40 U.S.C. chapter 31, subchapter IV), (ii) Other than individuals employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in 29 CFR part 541, (iii) Regardless of the contractual relationship alleged to exist between the individual and the employer. (2) Includes workers performing on, or in connection with, the contract whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c). (3) Also includes any person working on, or in connection with, the contract and individually registered in a bona fide apprenticeship or training program registered with the Department of Labor’s Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship. (b) Executive Order Minimum Wage rate. (1) The Contractor shall pay to workers, while performing in the United States, and performing on, or in connection with, this contract, a minimum hourly wage rate of $10.10 per hour beginning January 1, 2015. (2) The Contractor shall adjust the minimum wage paid, if necessary, beginning January 1, 2016 and annually thereafter, to meet the Secretary of Labor’s annual E.O. minimum wage. The Administrator of the Department of Labor’s Wage and Hour Division (the Administrator) will publish annual determinations in the Federal Register no later than 90 days before the effective date of the new E.O. minimum wage rate. The Administrator will also publish the applicable E.O. minimum wage on www.wdol.gov (or any successor Web site) and on all wage determinations issued under the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute. The applicable published E.O. minimum wage is incorporated by reference into this contract. (3)(i) The Contractor may request a price adjustment only after the effective date of the new annual E.O. minimum wage determination. Prices will be adjusted only if labor costs increase as a result of an increase in the annual E.O. minimum wage, and for associated labor costs and relevant subcontract costs. Associated labor costs shall include increases or decreases that result from changes in social security and unemployment taxes and workers’ compensation insurance, but will not otherwise include any amount for general and administrative costs, overhead, or profit. (ii) Subcontractors may be entitled to adjustments due to the new minimum wage, pursuant to paragraph (b)(2). Contractors shall consider any subcontractor requests for such price adjustment. (iii) The Contracting Officer will not adjust the contract price under this clause for any costs other than those identified in paragraph (b)(3)(i) of this clause, and will not provide E:\FR\FM\15DER4.SGM 15DER4 emcdonald on DSK67QTVN1PROD with RULES4 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations duplicate price adjustments with any price adjustment under clauses implementing the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute. (4) The Contractor warrants that the prices in this contract do not include allowance for any contingency to cover increased costs for which adjustment is provided under this clause. (5) A pay period under this clause may not be longer than semi-monthly, but may be shorter to comply with any applicable law or other requirement under this contract establishing a shorter pay period. Workers shall be paid no later than one pay period following the end of the regular pay period in which such wages were earned or accrued. (6) The Contractor shall pay, unconditionally to each worker, all wages due free and clear without subsequent rebate or kickback. The Contractor may make deductions that reduce a worker’s wages below the E.O. minimum wage rate only if done in accordance with 29 CFR 10.23, Deductions. (7) The Contractor shall not discharge any part of its minimum wage obligation under this clause by furnishing fringe benefits or, with respect to workers whose wages are governed by the Service Contract Labor Standards statute, the cash equivalent thereof. (8) Nothing in this clause shall excuse the Contractor from compliance with any applicable Federal or State prevailing wage law or any applicable law or municipal ordinance establishing a minimum wage higher than the E.O. minimum wage. However, wage increases under such other laws or municipal ordinances are not subject to price adjustment under this subpart. (9) The Contractor shall pay the E.O. minimum wage rate whenever it is higher than any applicable collective bargaining agreement(s) wage rate. (10) The Contractor shall follow the policies and procedures in 29 CFR 10.24(b) and 10.28 for treatment of workers engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips. (c)(1) This clause applies to workers as defined in paragraph (a). As provided in that definition— (i) Workers are covered regardless of the contractual relationship alleged to exist between the contractor or subcontractor and the worker; (ii) Workers with disabilities whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(c) are covered; and (iii) Workers who are registered in a bona fide apprenticeship program or training program registered with the Department of Labor’s Employment and Training Administration, Office of Apprenticeship, or with a State Apprenticeship Agency recognized by the Office of Apprenticeship, are covered. (2) This clause does not apply to— (i) Fair Labor Standards Act (FLSA)covered individuals performing in connection with contracts covered by the E.O., i.e. those individuals who perform VerDate Sep<11>2014 05:02 Dec 13, 2014 Jkt 235001 duties necessary to the performance of the contract, but who are not directly engaged in performing the specific work called for by the contract, and who spend less than 20 percent of their hours worked in a particular workweek performing in connection with such contracts; (ii) Individuals exempted from the minimum wage requirements of the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise covered by the Service Contract Labor Standards statute, or the Wage Rate Requirements (Construction) statute. These individuals include but are not limited to— (A) Learners, apprentices, or messengers whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(a). (B) Students whose wages are calculated pursuant to special certificates issued under 29 U.S.C. 214(b). (C) Those employed in a bona fide executive, administrative, or professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541). (d) Notice. The Contractor shall notify all workers performing work on, or in connection with, this contract of the applicable E.O. minimum wage rate under this clause. With respect to workers covered by the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, the Contractor may meet this requirement by posting, in a prominent and accessible place at the worksite, the applicable wage determination under those statutes. With respect to workers whose wages are governed by the FLSA, the Contractor shall post notice, utilizing the poster provided by the Administrator, which can be obtained at www.dol.gov/whd/ govcontracts, in a prominent and accessible place at the worksite. Contractors that customarily post notices to workers electronically may post the notice electronically provided the electronic posting is displayed prominently on any Web site that is maintained by the contractor, whether external or internal, and customarily used for notices to workers about terms and conditions of employment. (e) Payroll Records. (1) The Contractor shall make and maintain records, for three years after completion of the work, containing the following information for each worker: (i) Name, address, and social security number; (ii) The worker’s occupation(s) or classification(s); (iii) The rate or rates of wages paid; (iv) The number of daily and weekly hours worked by each worker; (v) Any deductions made; and (vi) Total wages paid. (2) The Contractor shall make records pursuant to paragraph (e)(1) of this clause available for inspection and transcription by authorized representatives of the Administrator. The Contractor shall also make such records available upon request of the Contracting Officer. (3) The Contractor shall make a copy of the contract available, as applicable, for inspection or transcription by authorized representatives of the Administrator. PO 00000 Frm 00011 Fmt 4701 Sfmt 9990 74553 (4) Failure to comply with this paragraph (e) shall be a violation of 29 CFR 10.26 and this contract. Upon direction of the Administrator or upon the Contracting Officer’s own action, payment shall be withheld until such time as the noncompliance is corrected. (5) Nothing in this clause limits or otherwise modifies the Contractor’s payroll and recordkeeping obligations, if any, under the Service Contract Labor Standards statute, the Wage Rate Requirements (Construction) statute, the Fair Labor Standards Act, or any other applicable law. (f) Access. The Contractor shall permit authorized representatives of the Administrator to conduct investigations, including interviewing workers at the worksite during normal working hours. (g) Withholding. The Contracting Officer, upon his or her own action or upon written request of the Administrator, will withhold funds or cause funds to be withheld, from the Contractor under this or any other Federal contract with the same Contractor, sufficient to pay workers the full amount of wages required by this clause. (h) Disputes. Department of Labor has set forth in 29 CFR 10.51, Disputes concerning contractor compliance, the procedures for resolving disputes concerning a contractor’s compliance with Department of Labor regulations at 29 CFR part 10. Such disputes shall be resolved in accordance with those procedures and not the Disputes clause of this contract. These disputes include disputes between the Contractor (or any of its subcontractors) and the contracting agency, the Department of Labor, or the workers or their representatives. (i) Antiretaliation. The Contractor shall not discharge or in any other manner discriminate against any worker because such worker has filed any complaint or instituted or caused to be instituted any proceeding under or related to compliance with the E.O. or this clause, or has testified or is about to testify in any such proceeding. (j) Subcontractor compliance. The Contractor is responsible for subcontractor compliance with the requirements of this clause and may be held liable for unpaid wages due subcontractor workers. (k) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph (k) in all subcontracts, regardless of dollar value, that are subject to the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, and are to be performed in whole or in part in the United States. (End of clause) [FR Doc. 2014–29137 Filed 12–12–14; 8:45 am] BILLING CODE 6820–EP–P E:\FR\FM\15DER4.SGM 15DER4

Agencies

[Federal Register Volume 79, Number 240 (Monday, December 15, 2014)]
[Rules and Regulations]
[Pages 74544-74553]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29137]


-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 22, and 52

[FAC 2005-79; FAR Case 2015-003; Item I; Docket No. 2014-0050; Sequence 
No. 1]
RIN 9000-AM82


Federal Acquisition Regulation; Establishing a Minimum Wage for 
Contractors

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule.

-----------------------------------------------------------------------

[[Page 74545]]

SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the 
Federal Acquisition Regulation (FAR) to implement the Executive Order, 
Establishing a Minimum Wage for Contractors, and a final rule issued by 
the Department of Labor.

DATES: Effective: February 13, 2015.
    Comment Date: Interested parties should submit written comments to 
the Regulatory Secretariat Division on or before February 13, 2015 to 
be considered in the formation of the final rule.
    Applicability: This rule applies to solicitations issued on or 
after the effective date of the rule. Applicability of the clause at 
52.222-55, Minimum Wages Under Executive Order 13658, to existing 
contracts that do not contain a class deviation clause implementing the 
Executive Order (E.O.), is as follows--
    (1) Contracting officers shall include the clause in bilateral 
modifications extending the contract when such modifications are 
individually or cumulatively longer than six months.
    (2) In accordance with FAR 1.108(d)(3), contracting officers are 
strongly encouraged to include the clause in existing indefinite-
delivery indefinite-quantity contracts, if the remaining ordering 
period extends at least six months and the amount of remaining work or 
number of orders expected is substantial.

ADDRESSES: Submit comments identified by FAC 2005-79, FAR Case 2015-003 
by any of the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by searching for ``FAR Case 
2015-003''. Select the link ``Comment Now'' that corresponds with ``FAR 
Case 2015-003''. Follow the instructions provided at the ``Comment 
Now'' screen. Please include your name, company name (if any), and 
``FAR Case 2015-003'' on your attached document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat Division (MVCB), ATTN: Ms. Hada Flowers, 1800 F Street NW., 
2nd Floor, Washington, DC 20405-0001.
    Instructions: Please submit comments only and cite ``FAR Case 2015-
003'' in all correspondence related to this case. All comments received 
will be posted without change to http://www.regulations.gov, including 
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT: Mr. Edward Loeb, Procurement Analyst, 
at 202-501-0650 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat Division at 202-501-4755. Please cite FAC 2005-79, FAR Case 
2015-003.

SUPPLEMENTARY INFORMATION:

Applicability

I. Background

    DoD, GSA, and NASA are issuing an interim rule amending the FAR to 
implement E.O. 13658, Establishing a Minimum Wage for Contractors. The 
E.O. was signed February 12, 2014, and published in the Federal 
Register at 79 FR 9851, on February 20, 2014. The FAR is also 
implementing a final rule issued by the Wage and Hour Division of the 
Department of Labor (DOL), published at 79 FR 60634, on October 7, 
2014, also entitled ``Establishing a Minimum Wage for Contractors.'' 
The DOL rule added a new 29 CFR part 10. The DOL rule covers both FAR-
based contracts, and non-FAR-based contracts and contract-like 
instruments; this interim rule only applies to FAR-based contracts.
    The E.O. seeks to increase efficiency and cost savings in the work 
performed by parties who contract with the Federal Government by 
raising the hourly minimum wage paid to workers on specified Federal 
contracts. Beginning January 1, 2015, the hourly rate will be $10.10, 
and beginning January 1, 2016, and annually thereafter, an amount 
determined by the Secretary of Labor. The E.O. explains that 
``[r]aising the pay of low-wage workers increases their morale and the 
productivity and quality of their work, lowers turnover and 
accompanying costs, and reduces supervisory costs,'' and that ``[t]hese 
savings and quality improvements will lead to improved economy and 
efficiency in Government procurement.'' The E.O. directed DOL to issue 
regulations by October 1, 2014, and for the FAR Council to issue 
regulations within 60 days of the DOL regulations.
    Section 8(c) of the E.O. strongly encouraged agencies to take all 
reasonable and legally permissible steps to ensure individuals working 
on Federal contracts subject to the E.O. would be paid an hourly wage 
of at least $10.10 as of January 1, 2015. This paragraph intended that 
agencies would apply the E.O. minimum wage to contracts awarded between 
the issuance of the E.O. and the effective date of the FAR rule. OMB 
and DOL issued a joint memorandum on June 12, 2014 to the Executive 
Departments and Agencies providing guidance for implementing the 
requirements of the E.O. prior to January 1, 2015 and prior to the 
issuance of final DOL regulations. This memorandum requested that the 
FAR Council provide standard wording for a clause to be included in 
solicitations and contracts pursuant to a deviation from the FAR 
pending issuance of a FAR rule implementing DOL regulations. The FAR 
Council, in coordination with DOL, drafted matching class deviations 
with a contract clause to implement Section 8(c) of the E.O. DoD and 
NASA issued the class deviations. GSA issued CAAC Letter 2014-03 on 
June 25, 2014 to the Civilian Agency Acquisition Council (CAAC) 
agencies which constituted consultation with the CAAC Chair, as 
required by FAR 1.404(a)(1), for use of a model deviation clause.

Discussion and Analysis

    A. This FAR interim rule only applies to acquisitions subject to 
the FAR. The DOL rule applies to FAR acquisitions as described in FAR 
1.104, and actions that are not governed by the FAR such as contracts 
for concessions and contracts entered into with the Federal Government 
in connection with Federal property or lands and related to offering 
services for Federal employees, their dependents, or the general 
public.
    B. The DOL regulatory requirements included in the FAR rule:
    1. Require that the minimum hourly wage rate paid to workers 
performing on, or in connection with, contracts and subcontracts 
covered by the Service Contract Labor Standards statute or the Wage 
Rate Requirements (Construction) statute, is at least $10.10 per hour 
beginning January 1, 2015, and beginning January 1, 2016, and annually 
thereafter an amount determined by the Secretary of Labor (Secretary) 
(29 CFR 10.1) (FAR 22.1902 and 52.222-55(b)).
    2. Define a ``worker'' to whom the rule applies (29 CFR 10.2) (FAR 
22.1901 and 52.222-55(a)).
    3. Apply to construction contracts covered by the Wage Rate 
Requirements (Construction) statute (formerly known as the Davis Bacon 
Act, FAR subpart 22.4), and to contracts for services covered by the 
Service Contract Labor Standards statute (formerly known as the Service 
Contract Act, FAR subpart 22.10), and workers whose wages are governed 
by those statutes or the Fair Labor Standards Act (FLSA) (29 CFR 10.2 
and 10.3) (FAR 22.1903, 22.1906 and 52.222-55(c)).
    4. Only apply to contracts with the Federal Government requiring 
performance in whole or in part within the United States (the 50 states 
and the District of Columbia) (29 CFR 10.2 and 10.3) (FAR 22.1903, 
22.1906 and 52.222-55 (a), (b)(1), and (k)).

[[Page 74546]]

    5. Provide that the rule does not excuse a contractor's 
noncompliance with any applicable Federal or State prevailing wage law 
or any applicable law or municipal ordinance establishing a minimum 
wage higher than the minimum established under the E.O. (29 CFR 10.5 
and 10.22) (FAR 22.1902(b) and 52.222-55(b)(8)).
    6. Exempt the following individuals from the requirements of the 
rule (29 CFR 10.2 and 10.4) (FAR 22.1901 and 22.1903(b)(2), and 52.222-
55(a) and (c)):
    a. Employees who are not entitled to the minimum wage set forth at 
29 U.S.C. 206(a)(1) of the FLSA pursuant to 29 U.S.C. 213(a) and 
214(a)-(b), except for workers who are otherwise covered by the Wage 
Rate Requirements (Construction) statute and the Service Contract Labor 
Standards statute. These individuals include but are not limited to:
    i. Learners, apprentices, or messengers whose wages are calculated 
pursuant to special certificates issued under 29 U.S.C. 214(a).
    ii. Students whose wages are calculated pursuant to special 
certificates issued under 29 U.S.C. 214(b).
    iii. Individuals employed in a bona fide executive, administrative, 
or professional capacity as those terms are defined in 29 CFR part 541.
    b. FLSA-covered individuals performing in connection with covered 
contracts, i.e., those workers who perform work duties necessary to the 
performance of the contract but who are not directly engaged in 
performing the specific work called for by the contract, and who spend 
less than 20 percent of their hours worked in a particular workweek 
performing in connection with such contracts.
    7. Prohibit any person from discriminating against any worker 
because the worker has filed a complaint, instituted or caused to be 
instituted a proceeding under the DOL rule, or has testified or is 
about to testify in any such proceeding (29 CFR 10.6 and 10.44) (FAR 
22.1905(d) and 52.222-55(i)).
    8. Provide that the clause flows down to all covered subcontracts 
at any tier. The DOL rule provides that the contractor and any upper-
tier subcontractor are responsible for the compliance by any 
subcontractor or lower-tier subcontractor with the E.O. minimum wage 
requirements, whether or not the contract clause was included in the 
subcontract (29 CFR 10.21) (52.222-55(j) and (k)).
    9. Provide that the Government may withhold payment from the 
contractor to reimburse unpaid wages and shall withhold payment for 
failure to comply with the recordkeeping requirement under the contract 
or any other Federal contract with the same contractor (29 CFR 10.11, 
10.44, and Appendix A(g)(3)) (FAR 22.1905(a) and (d) and 52.222-55(e) 
and (g)).
    10. Provide that a contracting agency is responsible for forwarding 
relevant information to the DOL, within 14 calendar days of receipt of 
a complaint alleging contractor noncompliance with the E.O. or the DOL 
rule or of being contacted by DOL (29 CFR 10.11) (FAR 22.1905(b)).
    11. Describe the methodology for determining the new E.O. minimum 
wage and for notifying the public of the new applicable minimum wage 
rate on an annual basis at least 90 days before any new minimum wage is 
to take effect. (29 CFR 10.5(b) and 10.12) (FAR 22.1904 and 52.222-
55(b)).
    12. Prohibit a contractor from discharging any part of minimum wage 
obligation under the E.O. by furnishing fringe benefits or, with 
respect to workers whose wages are governed by the Service Contract 
Labor Standards statute, the cash equivalent thereof. (29 CFR 10.22(b)) 
(FAR 52.222-55(b)).
    13. Provide that a contractor may satisfy the wage payment 
obligation to a tipped employee through a combination of an hourly cash 
wage (which, in accordance with the E.O. and DOL's regulation, must be 
at least $4.90 an hour, beginning January 1, 2015, and an amount 
determined in accordance with the E.O. in future years) and a credit 
based on tips received by such employee. (29 CFR 10.24(b) and 10.28) 
(FAR 22.1902(c) and 52.222-55(b)).
    14. Permit a contractor to make deductions that reduce a worker's 
wages below the E.O. minimum wage rate only if the deduction qualifies 
as a deduction required by Federal, State, or local law, such as 
Federal or State withholding of income taxes, or in other limited 
circumstances specified in the DOL rule. (29 CFR 10.23) (FAR 52.222-
55(b)).
    15. Establish that wage payments to workers are to be made no later 
than one pay period following the end of the regular pay period in 
which the wages were earned, and that a pay period under the E.O. may 
not be longer than semi-monthly. (29 CFR 10.25) (FAR 52.222-55(b)).
    16. Delineate the records to be kept by contractors. These 
requirements are consistent with existing requirements under the 
Service Contract Labor Standards statute and the Wage Rate Requirements 
(Construction) statute. (29 CFR 10.26) (FAR 52.222-55(e)).
    17. Require the contractor to notify all workers performing work 
on, or in connection with, a covered contract of the applicable minimum 
wage rate under the E.O. The rule details the authorized means of doing 
so. (29 CFR 10.29) (FAR 52.222-55(d)).
    18. Address enforcement of the E.O. requirements and details the 
process for filing complaints, investigating complaints, and the 
remedies and sanctions available for violations. (29 CFR 10.41-10.44) 
(FAR 22.1905 and 52.222-55(f) and (g)).
    19. Address the handling of disputes concerning contractor 
compliance and identifies the DOL procedures for adjudication. (29 CFR 
10.51-10.58) (FAR 52.222-55(h)).
    C. FAR implementation of the DOL rule by DoD, GSA, and NASA is 
discussed below, as well as those instances where the FAR rule differs 
from the DOL rule, and the rationale for those differences:
    1. A new part 22 subpart, FAR 22.19, Establishing a Minimum Wage 
for Contractors, is added to include the following sections:
    a. Scope of subpart. FAR 22.1900 gives the authority citations for 
the E.O. and DOL regulation.
    b. Definition of ``Worker''. FAR 22.1901 incorporates the DOL 
definition, updating the statutory references to reflect the 
recodification of Titles 40 and 41 of the United States Code (see FAR 
1.110).
    c. Policy. FAR 22.1902 describes the E.O. minimum wage requirements 
and the relationship to other wage rates, including other Federal or 
State prevailing wage rates and collective bargaining agreements that 
provide a higher wage rate, and to wages of tipped workers. The DOL 
preamble discussed the relationship of the E.O. minimum wage to minimum 
wages required in collective bargaining agreements. DoD, GSA, and NASA 
determined that this information is critical to both contractors and 
contracting officers and included this information in this policy 
section and in the contract clause. This issue is addressed, although 
not in the same manner, in the clause for Service contracts, 52.222-41, 
Service Contract Labor Standards, but it is not addressed in the clause 
for Construction contracts, 52.222-6, Construction Wage Rate 
Requirements.
    The DOL rule included a definition of ``tipped employees'' at 29 
CFR 10.2 as well as a discussion of treatment of tipped employees at 29 
CFR 10.28. DoD, GSA, and NASA determined that a detailed discussion of 
tipped employees or a definition is not needed because tipped employees 
are infrequently employed under FAR-based contracts, and concluded that 
reference to 29 CFR

[[Page 74547]]

10.24(b) and 10.28 in the FAR rule is adequate coverage.
    d. Applicability. FAR 22.1903(a) provides applicability to 
contracts governed by the Service Contract Labor Standards statute or 
the Wage Rate Requirements (Construction) statute, and to performance 
in whole or in part in the United States. The FAR 2.101 definition of 
``United States,'' as used in the geographic sense, is used in this 
rule--the 50 states and the District of Columbia.
    FAR 22.1903(b) delineates individuals to whom the subpart applies 
or does not apply. The subpart does not apply to an individual who 
performs solely ``in connection with'' covered contracts for less than 
20% of hours worked in a given work week. DOL, in its final rule 
preamble (79 FR 60634 at 60661), gave helpful examples.
    e. Annual Executive Order Minimum Wage Rate. FAR 22.1904, describes 
DOL's processes to notify the public of the annual E.O. minimum wage 
rates. The coverage at 22.1904 establishes FAR policy for how price 
adjustments will be made by contracting officers, when appropriate, 
after requests for such price adjustments are received from 
contractors. This coverage provides detail and direction, including 
examples of how price adjustments are calculated.
    The price adjustment language used in the class deviations, which 
were crafted prior to formal DOL rulemaking, was adequate for that 
purpose. However, given the fully developed DOL regulation, the price 
adjustment language in this rule is significantly revised from the 
deviation language.
    The language in this rule will ensure price adjustments under the 
E.O. minimum wage clause do not duplicate other price adjustments made 
under the same contract. Only those labor costs, associated labor 
costs, and relevant subcontract costs directly resulting from the 
increase in the E.O. minimum wage will be subject to adjustment.
    f. Enforcement of Executive Order Minimum Wage Requirements. FAR 
22.1905 provides information on enforcement authority, filing 
complaints, reporting and investigating complaints, remedies and 
sanctions, and retroactive inclusion of the contract clause when an 
agency fails to include the clause in a contract to which the E.O. 
applies.
    g. FAR 22.1906 establishes a contract clause prescription for 
clause 52.222-55, Minimum Wages under Executive Order 13658, when the 
contracts include 52.222-6, Construction Wage Rate Requirements, 
($2,000 threshold), or 52.222-41, Service Contract Labor Standards, 
($2,500 threshold) and performance is in whole or in part in the United 
States.
    2. Coverage is added to 22.403-5 and 22.1002-5 by adding new 
sections discussing the new minimum wage subpart.
    3. Coverage is added to part 52 to--
    a. Revise the clause at 52.212-5, Contract Terms and Conditions 
Required to Implement Statutes or Executive Orders--Commercial Items, 
to include 52.222-55, Minimum Wages Under Executive Order 13658;
    b. Revise the clause at 52.213-4, Terms and Conditions--Simplified 
Acquisitions (Other than Commercial Items), to include 52.222-55, 
Minimum Wages Under Executive Order 13658; and
    c. Add 52.222-55, Minimum Wages Under Executive Order 13658. This 
includes coverage of the following:
    i. Paragraph (a) definitions of ``Worker'' and ``United States'' 
are provided.
    ii. Paragraph (b) includes particular requirements regarding 
payment to workers of the E.O. minimum wage. It informs contractors 
that the minimum wage rate may be adjusted annually, beginning January 
1, 2016 and that they are required to pay workers the adjusted rate. 
The Contractor may request a price adjustment to reflect an increase in 
wages due to the annual wage rate adjustment. The Contractor must 
warrant that the prices in the contract do not include any allowance 
for contingency to cover increased costs for such adjustments. Language 
for warranting contract price is adapted from existing price adjustment 
clauses applicable to Service Contract Labor Standards and the FLSA. 
Other subjects covered in this paragraph (b) are: subcontractor price 
adjustments, length of pay period, deductions, fringe benefits, 
relationship to higher minimum wages imposed by other statutes, 
ordinances, or collective bargaining agreements, and workers who 
regularly receive tips.
    iii. Paragraph (c) informs the contractor which workers the E.O. 
minimum wage requirement applies to, and to which individuals it does 
not apply.
    iv. Paragraph (d) addresses the requirement for the contractor to 
notify employees of the E.O. minimum wage rate.
    v. Paragraph (e) identifies payroll recordkeeping requirements. It 
includes a requirement to make such records available to DOL and the 
contracting officer; noncompliance with this requirement will result in 
withholding of contract payment.
    vi. Paragraph (f) informs the contractor that it must permit access 
to DOL to conduct investigations.
    vii. Paragraphs (g), (h), and (i) provides information on 
enforcement of E.O. Minimum Wage requirements including withholding of 
payment for unpaid wages, resolution of disputes, and a prohibition on 
retaliation.
    viii. Paragraph (j) states that the contractor is responsible for 
subcontractor compliance with the requirements of the clause and may be 
held liable for unpaid wages due subcontractor workers. Although the 
DOL regulation, at 29 CFR 10.21(b) states that the contractor and any 
upper-tier subcontractors are responsible for subcontractor compliance 
and shall be liable for any unpaid wages for its workers or its 
subcontractor workers, DoD, GSA, and NASA have not placed this 
responsibility on upper-tier subcontractors in this rule because the 
Government does not have privity of contract with subcontractors.
    ix. Paragraph (k) states that the Contractor shall include the 
substance of the clause, including this paragraph (k) in all 
subcontracts, regardless of dollar value, that are subject to Service 
Contract Labor Standards statute or the Wage Rate Requirements 
(Construction) statute, and are to be performed in whole or in part in 
the United States. The requirement to include the substance of the 
clause allows only for ministerial changes to the clause. The substance 
of the clause will be consistent with the requirements of the clause, 
and will not permit substantive changes such as to the rights and 
responsibilities of the parties.
    4. DoD, GSA, and NASA reviewed the regulations at 29 CFR part 10 
including the Appendix A contract clause and determined that adequate 
coverage for the following issues is accomplished by existing FAR 
coverage and clauses that are applied to contracts subject to the E.O., 
therefore inclusion of the following items into FAR clause 52.222-55, 
Minimum Wages Under Executive Order 13658, is unnecessary:
    a. Appendix A, paragraph (d) Contract Suspension/Contract 
Termination/Contractor Debarment. Suspension and debarment is 
independently covered in FAR subpart 9.4. Termination is addressed in 
individual applicable contract clauses.
    b. Appendix A, paragraph (i), Certification of Eligibility. This 
paragraph duplicates coverage in paragraph (p) of FAR clause 52.222-41, 
Service Contract Labor Standards, for service and 52.222-15, 
Certification of Eligibility, for construction contracts. 41

[[Page 74548]]

U.S.C. 1304 discourages adding certifications to the FAR.
    c. Waiver of Rights, states that rights under the DOL rule at 29 
CFR 10.7, Waiver of rights, cannot be waived or induced to be waived. 
With respect to the FAR, the FAR clause requirements become contract 
requirements, which likewise cannot be waived, thus separate inclusion 
is unnecessary.
    d. 29 CFR 10.24, Overtime payments, restates requirements of the 
Fair Labor Standards Act and the Contract Work Hours and Safety 
Standards Acts and thus, it is unnecessary to restate existing 
requirements.
    e. Terms defined in 29 CFR 10.2, Definitions, include ``new 
contract''. The FAR rule did not adopt this definition as not all the 
elements of the definition apply to or are consistent with FAR 
principles. When FAR rules apply to existing contracts, application is 
addressed in the Effective Date/Applicability section of the preamble, 
not in the Code of Federal Regulations; treatment of bilateral 
modifications to existing contracts is addressed in the Applicability 
section at the beginning of this preamble. In discussing treatment of 
existing contracts DOL stated in the preamble of its rule, ``if parties 
bilaterally negotiate a modification that is outside the scope of the 
contract, the agency will be required to create a new contract, 
triggering solicitation and/or justification requirements, and thus 
such a modification after January 1, 2015 should be addressed as a new 
contract subject to the Executive Order''. We understand this to refer 
to the long-standing requirement for any out-of-scope modification to 
be addressed as a new procurement and conducted in accordance with the 
requirements of FAR part 6, Competition Requirements.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
However, an Initial Regulatory Flexibility Analysis (IRFA) has been 
performed, and is summarized as follows:

    This rule revises the Federal Acquisition Regulation (FAR) to 
include procurement policy implementing Executive Order 13658, 
Establishing a Minimum Wage for Contractors, dated February 12, 
2014, and associated Department of Labor regulatory requirements at 
29 CFR Part 10. The Department of Labor (DOL) published an initial 
regulatory flexibility analysis of the minimum wage requirement in 
its Notice of Proposed Rulemaking (79 FR 34568 at 34602) June 17, 
2014. On October 7, 2014 DOL published the final regulatory 
flexibility analysis in the final rule (79 FR 60634 at 60704).
    This rule applies to contracts awarded under FAR procedures and 
covered by the Service Contract Labor Standards statute (41 U.S.C. 
chapter 67; see FAR subpart 22.10), including contracts for the 
acquisition of commercial services, and the Wage Rate Requirements 
(Construction) statute (40 U.S.C. chapter 31 subchapter IV; see FAR 
subpart 22.4). The FAR rule does not apply to certain contracts, 
such as concession contracts, which may be covered by the DOL rule 
and the E.O. but are not FAR contracts. FAR 1.104 addresses the 
applicability of the FAR to Federal acquisitions. FAR 2.101 states 
``acquisition'' means the ``acquiring by contract with appropriated 
funds of supplies or services . . .''.
    The objective of this rule is to implement Executive Order 
13658, Establishing a Minimum Wage for Contractors, dated February 
12, 2014, and associated Department of Labor regulatory requirements 
at 29 CFR part 10.
    The rule establishes requirements for contractors under 
contracts containing the clauses at 52.222-6, Construction Wage Rate 
Requirements, or 52.222-41, Labor Standards, i.e. ``covered 
contracts'', to pay no less than the applicable E.O. minimum wage to 
workers for all hours worked on or in connection with a covered 
contract. Contractors must also include a minimum wage contract 
clause in covered subcontracts and require covered subcontractors to 
include the substance of the clause in covered lower-tier contracts.
    This rule applies to contracts and subcontracts at all tiers 
covered by the Service Contract Labor Standards statute, or the Wage 
Rate Requirements (Construction) statute, which require performance 
in whole or in part within the United States. When performance is in 
part within and in part outside the United States, the rule applies 
to the part of the contract or subcontract performed within the 
United States.
    This rule applies to workers as defined at 22.1901. As provided 
in that definition--
    1. Workers are covered regardless of the contractual 
relationship alleged to exist between the contractor or 
subcontractor and the worker;
    2. Workers with disabilities whose wages are calculated pursuant 
to special certificates issued under 29 U.S.C. 214(c) are covered; 
and
    3. Workers who are registered in a bona fide apprenticeship 
program or training program registered with the Department of 
Labor's Employment and Training Administration, Office of 
Apprenticeship, or with a State Apprenticeship Agency recognized by 
the Office of Apprenticeship, are covered.

This rule does not apply to--

    Fair Labor Standards Act (FLSA)-covered individuals performing 
in connection with covered contracts, i.e. those individuals who 
perform duties necessary to the performance of the contract, but who 
are not directly engaged in performing the specific work called for 
by the contract, and who spend less than 20 percent of their hours 
worked in a particular workweek performing in connection with such 
contracts;
    Individuals exempted from the minimum wage requirements of the 
FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise 
covered by the Service Contract Labor Standards statute, or the Wage 
Rate Requirements (Construction) statute. These individuals include 
but are not limited to--
    a. Learners, apprentices, or messengers whose wages are 
calculated pursuant to special certificates issued under 29 U.S.C. 
214(a);
    b. Students whose wages are calculated pursuant to special 
certificates issued under 29 U.S.C. 214(b); and
    c. Those employed in a bona fide executive, administrative, or 
professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541).
    Small businesses in the service or construction industry with 
FAR-based contracts or subcontracts awarded after the effective date 
of this rule will be impacted unless an exclusion listed above 
applies. The rule will require these contractors and subcontractors 
to raise their employees' minimum hourly rate to $10.10 per hour, 
beginning January 1, 2015, then annually adjust it thereafter, if 
necessary, based on the annual minimum wage rate determined by the 
DOL.
    Data available through the Federal Procurement Data System 
(FPDS) for Fiscal Year 2013, reveals 16,264 contracts were awarded 
to unique small business vendors for services which contained the 
clause at 52.222-41, Labor Standards. Additionally, 5,211 contracts 
were awarded to unique small business vendors for construction which 
contained the clause at 52.222-6, Construction Wage Rate 
Requirements, for a total of 21,475 unique small businesses. 
Subcontract data is available from the USASpending Federal Funding 
Accountability and Transparency Act Subaward Reporting System 
(FSRS), however this system does not distinguish small businesses 
from other than small businesses. Data for Fiscal Year 2013 shows 
there were a total of 20,127 subcontracts for services and 
construction reported and of those 5,391 were unique DUNS. These 
5,391 first tier

[[Page 74549]]

unique subcontracts are approximately 25% of the 21,475 unique 
contracts. Given that first tier subcontracts account for 25%, then 
for estimating purposes, 20% of subcontracts have a second-tier, 10% 
of second tier have a third tier, and 5% of third tier have a fourth 
tier. This calculation estimates the total number of subcontracts is 
6,631. However, since the FSRS does not distinguish small 
businesses, this number is overestimated. Data from FPDS has shown 
that typically, approximately 60% of a contractor population is 
small.
    The DOL noted in their final rule (79 FR 60634 at 60691) that 
the rule did not impose any additional notice or recordkeeping 
requirements on contractors and therefore, the burden for complying 
with the recordkeeping requirements was not adjusted. However, DOL 
submitted a revised information collection request (ICR), to OMB to 
revise the existing ICR for control number 1235-0018 to incorporate 
the recordkeeping regulatory citations in its final rule.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no known significant alternatives to the rule that 
would meet the requirements of the E.O. and DOL regulation and 
minimize any significant economic impact of the rule on small 
entities.
    DOL, in its final rule, estimated the average wage for affected 
employees is $8.79; thus affected firms must raise the hourly wage 
for affected employees by $1.31 per hour. Additionally, contractors 
must adjust related payroll and unemployment taxes and fringe 
benefits. Under covered contracts, contractors are entitled to 
recover increases in labor costs resulting from the E.O. minimum 
wage requirements by including such costs in offers and when 
requesting contract price adjustment under existing and future 
contracts for the additional costs related to the increase in the 
minimum wage rate for workers performing under the contract. DOL 
notes increases in economy and efficiency and expects these added 
costs to be offset by an increase in employee morale and 
productivity, reduced absenteeism, reduced supervisory costs, and 
reduced turnover.
    To remind contractors of their obligation in ensuring 
subcontractor workers are paid in compliance with the minimum wage 
requirement, the following was added at the FAR clause 52.222-55:
    1. The contractor is responsible for subcontractor compliance 
with the requirements of this subpart, and may be held liable for 
unpaid wages due subcontractor's workers.
    2. The rule provides that subcontractors may be entitled to 
adjustments due to the new minimum wage and that contractors shall 
consider any subcontractor(s) requests for such price adjustment.
    The rule does not address late payments to small business 
subcontractors, however pending FAR case 2014-004 implements section 
1334 of the Small Business Jobs and Credit Act of 2010 (Public Law 
111-240) and the Small Business Administration's final rule at 78 FR 
42391. The rule will require a contractor to self-report to the 
contracting officer when the contractor makes late or reduced 
payments to small business subcontractors.

    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the IRFA may be obtained from the Regulatory 
Secretariat Division. DoD, GSA, and NASA invite comments from small 
business concerns and other interested parties on the expected impact 
of this rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C 610 (FAR Case 2015-003), in 
correspondence.

V. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C chapter 35) does apply; 
however, these changes to the FAR do not impose additional information 
collection requirements to the paperwork burden previously approved for 
the DOL regulations under OMB Control Number 1235-0018, Records to be 
kept by Employers--Fair Labor Standards Act.

VI. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary because the E.O. requires DoD, GSA, and NASA to issue 
regulations within 60 days of the DOL rule, and include a clause which 
specifies the new $10.10 per hour minimum wage will be paid to workers 
beginning January 1, 2015. The DOL final rule was published October 7, 
2014. The DOL rule was published for public comment prior to 
publication of the final rule. However, pursuant to 41 U.S.C. 1707, 
DoD, GSA, and NASA will consider public comments received in response 
to this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 1, 22, and 52

    Government procurement.

    Dated: December 5, 2014.
William Clark,
Acting Director, Office of Government-wide Acquisition Policy, Office 
of Acquisition Policy, Office of Government-wide Policy.

    Therefore, the DoD, GSA, and NASA amend 48 CFR parts 1, 22, and 52 
as set forth below:

0
1. The authority citation for 48 CFR parts 1, 22, and 52 continues to 
read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 1--FEDERAL AQUSITION REGULATIONS SYSTEM


1.106  [Amended]

0
2. Amend section 1.106, in the table following the introductory text, 
by--
0
a. Removing the FAR Segment ``52.222-8'' and its corresponding OMB 
control numbers ``1215-0149 and 1215-0017'' and adding ``52.222-8'' and 
``1235-0008 and 1235-0018'' in their places, respectively;
0
b. Removing the FAR segment ``52.222-41'' and its corresponding OMB 
control numbers ``1215-0017 and 1215-0150'' and adding ``52.222-41'' 
and ``1235-0018 and 1235-0007'' in their places, respectively; and
0
c. Adding in numerical sequence, FAR segment ``52.222-55'' and its 
corresponding OMB Control No. ``1235-0018''.

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

0
3. Amend section 22.001 by adding, in alphabetical order, the 
definition ``Agency labor advisor'' to read as follows:


22.001  Definitions.

* * * * *
    Agency labor advisor means an individual responsible for advising 
contracting agency officials on Federal contract labor matters.
* * * * *

0
4. Amend section 22.403 by revising the heading to read as follows:


22.403  Statutory, Executive Order, and regulatory requirements.

* * * * *

0
5. Add section 22.403-5 to read as follows:


22.403-5  Executive Order 13658.

    Executive Order 13658 establishes minimum wages for certain 
workers. The wage rate is subject to annual increases by an amount 
determined by the Secretary of Labor. See subpart 22.19. The clause at 
52.222-55,

[[Page 74550]]

Minimum Wages under Executive Order 13658, requires the Executive Order 
13658 minimum wage rate to be paid if it is higher than other minimum 
wage rates, such as the subpart 22.4 statutory wage determination 
amount.


22.1001  [Amended]

0
6. Amend section 22.1001 by removing the definition ``Agency labor 
advisor.''

0
7. Amend section 22.1002 by revising the section heading to read as 
follows:


22.1002  Statutory and Executive Order requirements.

* * * * *

0
8. Add section 22.1002-5 to read as follows:


22.1002-5  Executive Order 13658.

    Executive Order 13658 establishes minimum wages for certain 
workers. The wage rate is subject to annual increases by an amount 
determined by the Secretary of Labor. See subpart 22.19. The clause at 
52.222-55, Minimum Wages under Executive Order 13658, requires the 
Executive Order 13658 minimum wage rate to be paid if it is higher than 
other minimum wage rates, such as the subpart 22.10 statutory wage 
determination amount.

0
9. Add subpart 22.19 to read as follows:
Subpart 22.19--Establishing a Minimum Wage for Contractors
Sec.
22.1900 Scope of subpart.
22.1901 Definition.
22.1902 Policy.
22.1903 Applicability.
22.1904 Annual Executive Order Minimum Wage Rate.
22.1905 Enforcement of Executive Order Minimum Wage Requirements.
22.1906 Contract clause.

Subpart 22.19--Establishing a Minimum Wage for Contractors


22.1900  Scope of subpart.

    This subpart prescribes policies and procedures to implement 
Executive Order (E.O.) 13658, Establishing a Minimum Wage for 
Contractors, dated February 12, 2014, and Department of Labor (DOL) 
implementing regulations at 29 CFR part 10.


22.1901  Definition.

    Worker, as used in this subpart, (in accordance with 29 CFR 10.2)--
    (1) Means any person engaged in performing work on, or in 
connection with, a contract covered by Executive Order 13658, and
    (i) Whose wages under such contract are governed by the Fair Labor 
Standards Act (29 U.S.C. chapter 8), the Service Contract Labor 
Standards statute (41 U.S.C. chapter 67), or the Wage Rate Requirements 
(Construction) statute (40 U.S.C. chapter 31, subchapter IV),
    (ii) Other than individuals employed in a bona fide executive, 
administrative, or professional capacity, as those terms are defined in 
29 CFR part 541,
    (iii) Regardless of the contractual relationship alleged to exist 
between the individual and the employer.
    (2) Includes workers performing on, or in connection with, the 
contract whose wages are calculated pursuant to special certificates 
issued under 29 U.S.C. 214(c).
    (3) Also includes any person working on, or in connection with, the 
contract and individually registered in a bona fide apprenticeship or 
training program registered with the Department of Labor's Employment 
and Training Administration, Office of Apprenticeship, or with a State 
Apprenticeship Agency recognized by the Office of Apprenticeship.


22.1902  Policy.

    (a) Pursuant to Executive Order 13658, the minimum hourly wage rate 
required to be paid to workers performing on, or in connection with, 
contracts and subcontracts subject to this subpart is at least $10.10 
per hour beginning January 1, 2015, and beginning January 1, 2016, and 
annually thereafter, an amount determined by the Secretary of Labor. 
The Administrator of the Wage and Hour Division (the Administrator) 
will notify the public of the new E.O. minimum wage rate at least 90 
days before it is to take effect. (See 22.1904.)
    (b) Relationship with other wage rates. (1) Nothing in this subpart 
shall excuse noncompliance with any applicable Federal or State 
prevailing wage law or any applicable law or municipal ordinance 
establishing a minimum wage higher than the E.O. minimum wage. However, 
wage increases under such other laws or municipal ordinances are not 
subject to price adjustment under this subpart.
    (2) The E.O. minimum wage rate applies whenever it is higher than 
any applicable collective bargaining agreement(s) wage rate.
    (c) Application to tipped workers. Policies and procedures in DOL 
regulations at 29 CFR 10.24(b) and 10.28 address the relationship 
between the E.O. minimum wage and wages of workers engaged in an 
occupation in which they customarily and regularly receive more than 
$30 a month in tips.


22.1903  Applicability.

    (a) This subpart applies to contracts covered by the Service 
Contract Labor Standards statute (41 U.S.C. chapter 67, formerly known 
as the Service Contract Act, subpart 22.10), or the Wage Rate 
Requirements (Construction) statute (40 U.S.C. chapter 31, Subchapter 
IV, formerly known as the Davis Bacon Act, subpart 22.4), that require 
performance in whole or in part within the United States (the 50 states 
and the District of Columbia). When performance is in part within and 
in part outside the United States, this subpart applies to the part of 
the contract that is performed within the United States.
    (b)(1) This subpart applies to workers as defined at 22.1901. As 
provided in that definition--
    (i) Workers are covered regardless of the contractual relationship 
alleged to exist between the contractor or subcontractor and the 
worker;
    (ii) Workers with disabilities whose wages are calculated pursuant 
to special certificates issued under 29 U.S.C. 214(c) are covered; and
    (iii) Workers who are registered in a bona fide apprenticeship 
program or training program registered with the Department of Labor's 
Employment and Training Administration, Office of Apprenticeship, or 
with a State Apprenticeship Agency recognized by the Office of 
Apprenticeship, are covered.
    (2) This subpart does not apply to--
    (i) Fair Labor Standards Act (FLSA)-covered individuals performing 
in connection with contracts covered by the E.O., i.e., those 
individuals who perform duties necessary to the performance of the 
contract, but who are not directly engaged in performing the specific 
work called for by the contract, and who spend less than 20 percent of 
their hours worked in a particular workweek performing in connection 
with such contracts;
    (ii) Individuals exempted from the minimum wage requirements of the 
FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise 
covered by the Service Contract Labor Standards statute or the Wage 
Rate Requirements (Construction) statute. These individuals include but 
are not limited to--
    (A) Learners, apprentices, or messengers whose wages are calculated 
pursuant to special certificates issued under 29 U.S.C. 214(a);
    (B) Students whose wages are calculated pursuant to special 
certificates issued under 29 U.S.C. 214(b); and
    (C) Those employed in a bona fide executive, administrative, or

[[Page 74551]]

professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541).
    (c) Agency Labor Advisors, as defined at 22.001, are listed at 
http://wdol.gov, and are available to provide guidance and assistance 
with the application of this subpart.


22.1904  Annual Executive Order Minimum Wage Rate.

    (a) For the E.O. minimum wage rate that becomes effective on 
January 1, 2016, and annually thereafter, the Administrator will--
    (1) Notify the public of the new E.O. minimum wage rate at least 90 
days before it becomes effective by publishing a notice in the Federal 
Register;
    (2) Publish and maintain on Wage Determinations OnLine (WDOL), 
http://www.wdol.gov, or any successor site, the E.O. minimum wage rate; 
and
    (3) Include a general notice on wage determinations which are 
issued under the Service Contract Labor Standards statute or the Wage 
Rate Requirements (Construction) statute. The notice will provide 
information on the E.O. minimum wage and how to obtain annual updates.
    (b)(1) The contractor may request a price adjustment only after the 
effective date of a new annual E.O. minimum wage determination 
published pursuant to paragraph (a). Prices will be adjusted only if 
labor costs increase as a result of the annual E.O. minimum wage, and 
for associated labor costs and relevant subcontract costs. Associated 
labor costs shall include increases or decreases that result from 
changes in social security and unemployment taxes and workers' 
compensation insurance, but will not otherwise include any amount for 
general and administrative costs, overhead, or profit.
    (2) The wage rate price adjustment under this clause is the amount 
calculated by subtracting from the new E.O. wage rate the highest of 
the following: the previous E.O. minimum wage rate; the current Service 
or Construction wage determination rate under the contract; or the 
actual wage paid the worker prior to the new minimum wage. If the 
amount is zero or below, there will be no price adjustment for this 
worker.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
               (i) Example 1_New E.O. wage rate is $11.10.
------------------------------------------------------------------------
Previous E.O. wage rate is $10.70......  Analysis: The calculation is
The current Service or Construction       $11.10 - $10.80 = $.30. The
 wage determination rate under the        price adjustment for this
 contract is $10.75..                     worker is $.30.
The actual wage paid to the worker
 prior the new minimum wage is $10.80..
------------------------------------------------------------------------
              (ii) Example 2_New E.O. wage rate is $10.50.
------------------------------------------------------------------------
Previous E.O. wage rate is $10.10......  Analysis: The calculation is
The current Service or Construction       $10.50 - $10.80 = -$.30. There
 wage determination rate under the        is no price adjustment for
 contract is $10.75..                     this worker.
The actual wage paid to the worker
 prior to the new minimum wage is
 $10.80..
------------------------------------------------------------------------

    (3) The contracting officer shall not adjust the contract price for 
any costs other than those identified in paragraph (b)(1) of this 
section, and shall not provide duplicate price adjustments with any 
price adjustment under clauses implementing the Service Contract Labor 
Standards statute or the Wage Rate Requirements (Construction) statute.


22.1905  Enforcement of Executive Order Minimum Wage Requirements.

    (a) Authority. (1) Section 5 of the E.O. grants the authority for 
investigating potential violations of, and obtaining compliance with, 
the E.O. to the Secretary of Labor. The Secretary of Labor, in 
promulgating the implementing regulations required by Section 4 of the 
E.O., has assigned this authority to the Administrator. Contracting 
agencies do not have authority to conduct compliance investigations 
under 29 CFR part 10 as implemented in this subpart. This does not 
limit the contracting officer's authority to otherwise enforce the 
terms and conditions of the contract.
    (2) Contracting officers shall withhold payment at the direction of 
the Administrator, or upon the contracting officer's own action, if the 
contractor fails to comply with the requirements in paragraph (e)(2) of 
52.222-55, Minimum Wages Under Executive Order 13658, until such time 
as the noncompliance is corrected.
    (b) Complaints. (1) Complaints may be filed with the contracting 
officer or the Administrator by any person, entity, or organization 
that believes a violation of this subpart has occurred.
    (2) The identity of any individual who makes a written or oral 
statement as a complaint or in the course of an investigation, as well 
as portions of the statement which would reveal the individual's 
identity, shall not be disclosed in any manner to anyone other than 
Federal officials without the prior consent of the individual, unless 
otherwise authorized by law.
    (3) Upon receipt of a complaint, or if notified that the 
Administrator has received a complaint, the contracting officer shall 
report the following information, within 14 days, if available without 
conducting an investigation, to the Department of Labor, Wage and Hour 
Division, Office of Government Contracts, 200 Constitution Avenue NW., 
Room S3006, Washington, DC 20210.
    (i) The complaint or description of the alleged violation;
    (ii) Available statements by the worker, contractor, or any other 
person regarding the alleged violation;
    (iii) Evidence that clause 52.222-55, Minimum Wages Under Executive 
Order 13658, was included in the contract;
    (iv) Information concerning known settlement negotiations between 
the parties, if applicable; and
    (v) Any other relevant facts known to the contracting officer or 
other information requested by the Wage and Hour Division.
    (c) Investigations. Complaints will be investigated by the 
Administrator, if warranted, in accordance with the procedures in 29 
CFR part 10.43.
    (d) Remedies and sanctions--(1) Unpaid wages. When the 
Administrator's investigation reveals that a contractor has failed to 
pay the applicable E.O. minimum wage, the Administrator will notify the 
contractor and the contracting agency of the unpaid wage violation, and 
request that the contractor remedy the violation. If the contractor 
does not remedy the

[[Page 74552]]

violation, the Administrator may direct withholding of payments due on 
the contract or any other contract between the contractor and the 
Federal Government. Upon final decision and direction of the 
Administrator, the contracting agency shall transfer the withheld funds 
to the Department of Labor for disbursement in accordance with the 
procedures at 22.406-9(c).
    (2) Antiretaliation. When a contractor has been found to have 
violated paragraph (i) of clause 52.222-55, Minimum Wages Under 
Executive Order 13658, the Administrator may provide for relief to the 
worker in accordance with 29 CFR 10.44.
    (3) Debarment. (i) The Department of Labor may initiate debarment 
proceedings under 29 CFR 10.52 whenever a contractor is found to have 
disregarded its obligations under 29 CFR part 10.
    (ii) Contracting officers shall consider notifying the agency 
suspending and debarring official in accordance with agency procedures 
when a contractor commits significant violations of contract terms and 
conditions related to this subpart.
    (4) Retroactive inclusion of contract clause. If a contracting 
agency fails to include the contract clause in a contract to which the 
E.O. applies, the contracting agency, on its own initiative or within 
15 calendar days of notification by an authorized representative of the 
Department of Labor, shall incorporate the contract clause in the 
contract retroactive to commencement of performance under the contract 
through the exercise of any and all authority that may be needed 
(including, where necessary, its authority to negotiate or amend, its 
authority to pay any necessary additional costs, and its authority 
under any contract provision authorizing changes, cancellation and 
termination).


22.1906  Contract clause.

    Insert the clause at 52.222-55, Minimum Wages Under Executive Order 
13658, in solicitations and contracts that include the clause at 
52.222-6, Construction Wage Rate Requirements, or 52.222-41, Service 
Contract Labor Standards, where work is to be performed, in whole or in 
part, in the United States (the 50 States and the District of 
Columbia).

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
10. Amend 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Adding paragraph (c)(10);
0
c. Adding paragraph (e)(1)(xvii); and
0
d. Revising the date of Alternate II; and adding paragraph 
(e)(1)(ii)(O).
    The revisions and additions read as follows:


52.212-5  Contract Terms and Conditions Required to Implement Statutes 
or Executive Orders--Commercial Items

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items DEC 2014)

* * * * *
    (c) * * *
    (10) 52.222-55, Minimum Wages Under Executive Order 13658 DEC 
2014) (Executive Order 13658).
* * * * *
    (e)(1) * * *
    (xvii) 52.222-55, Minimum Wages Under Executive Order 13658 (DEC 
2014) (Executive Order 13658).
* * * * *

Alternate II (DEC 2014)

* * * * *
    (e)(1)(ii) * * *
    (O) 52.222-55, Minimum Wages Under Executive Order 13658 (DEC 
2014) Executive Order 13658).
* * * * *

0
11. Amend 52.213-4 by revising the date of the clause; and adding 
paragraph (b)(1)(xv) to read as follows:


52.213-4  Terms and Conditions--Simplified Acquisitions (Other than 
Commercial Items)

* * * * *

Terms and Conditions--Simplified Acquisitions (Other Than Commercial 
Items) (DEC 2014)

* * * * *
    (b)(1) * * *
    (xv) 52.222-55, Minimum Wages Under Executive Order 13658 (DEC 
2014) (Executive Order 13658) (Applies when 52.222-6 or 52.222-41 
are in the contract and performance in whole or in part is in the 
United States (the 50 States and the District of Columbia.)
* * * * *

0
12. Add section 52.222-55 to read as follows:


52.222-55,  Minimum Wages Under Executive Order 13658.

    As prescribed in 22.1906, insert the following clause:

Minimum Wages Under Executive Order 13658 (DEC 2014)

    (a) Definitions. As used in this clause--
    ``United States'' means the 50 states and the District of 
Columbia.
    ``Worker''--
    (1) Means any person engaged in performing work on, or in 
connection with, a contract covered by Executive Order 13658, and
    (i) Whose wages under such contract are governed by the Fair 
Labor Standards Act (29 U.S.C. chapter 8), the Service Contract 
Labor Standards statute (41 U.S.C. chapter 67), or the Wage Rate 
Requirements (Construction) statute (40 U.S.C. chapter 31, 
subchapter IV),
    (ii) Other than individuals employed in a bona fide executive, 
administrative, or professional capacity, as those terms are defined 
in 29 CFR part 541,
    (iii) Regardless of the contractual relationship alleged to 
exist between the individual and the employer.
    (2) Includes workers performing on, or in connection with, the 
contract whose wages are calculated pursuant to special certificates 
issued under 29 U.S.C. 214(c).
    (3) Also includes any person working on, or in connection with, 
the contract and individually registered in a bona fide 
apprenticeship or training program registered with the Department of 
Labor's Employment and Training Administration, Office of 
Apprenticeship, or with a State Apprenticeship Agency recognized by 
the Office of Apprenticeship.
    (b) Executive Order Minimum Wage rate. (1) The Contractor shall 
pay to workers, while performing in the United States, and 
performing on, or in connection with, this contract, a minimum 
hourly wage rate of $10.10 per hour beginning January 1, 2015.
    (2) The Contractor shall adjust the minimum wage paid, if 
necessary, beginning January 1, 2016 and annually thereafter, to 
meet the Secretary of Labor's annual E.O. minimum wage. The 
Administrator of the Department of Labor's Wage and Hour Division 
(the Administrator) will publish annual determinations in the 
Federal Register no later than 90 days before the effective date of 
the new E.O. minimum wage rate. The Administrator will also publish 
the applicable E.O. minimum wage on www.wdol.gov (or any successor 
Web site) and on all wage determinations issued under the Service 
Contract Labor Standards statute or the Wage Rate Requirements 
(Construction) statute. The applicable published E.O. minimum wage 
is incorporated by reference into this contract.
    (3)(i) The Contractor may request a price adjustment only after 
the effective date of the new annual E.O. minimum wage 
determination. Prices will be adjusted only if labor costs increase 
as a result of an increase in the annual E.O. minimum wage, and for 
associated labor costs and relevant subcontract costs. Associated 
labor costs shall include increases or decreases that result from 
changes in social security and unemployment taxes and workers' 
compensation insurance, but will not otherwise include any amount 
for general and administrative costs, overhead, or profit.
    (ii) Subcontractors may be entitled to adjustments due to the 
new minimum wage, pursuant to paragraph (b)(2). Contractors shall 
consider any subcontractor requests for such price adjustment.
    (iii) The Contracting Officer will not adjust the contract price 
under this clause for any costs other than those identified in 
paragraph (b)(3)(i) of this clause, and will not provide

[[Page 74553]]

duplicate price adjustments with any price adjustment under clauses 
implementing the Service Contract Labor Standards statute or the 
Wage Rate Requirements (Construction) statute.
    (4) The Contractor warrants that the prices in this contract do 
not include allowance for any contingency to cover increased costs 
for which adjustment is provided under this clause.
    (5) A pay period under this clause may not be longer than semi-
monthly, but may be shorter to comply with any applicable law or 
other requirement under this contract establishing a shorter pay 
period. Workers shall be paid no later than one pay period following 
the end of the regular pay period in which such wages were earned or 
accrued.
    (6) The Contractor shall pay, unconditionally to each worker, 
all wages due free and clear without subsequent rebate or kickback. 
The Contractor may make deductions that reduce a worker's wages 
below the E.O. minimum wage rate only if done in accordance with 29 
CFR 10.23, Deductions.
    (7) The Contractor shall not discharge any part of its minimum 
wage obligation under this clause by furnishing fringe benefits or, 
with respect to workers whose wages are governed by the Service 
Contract Labor Standards statute, the cash equivalent thereof.
    (8) Nothing in this clause shall excuse the Contractor from 
compliance with any applicable Federal or State prevailing wage law 
or any applicable law or municipal ordinance establishing a minimum 
wage higher than the E.O. minimum wage. However, wage increases 
under such other laws or municipal ordinances are not subject to 
price adjustment under this subpart.
    (9) The Contractor shall pay the E.O. minimum wage rate whenever 
it is higher than any applicable collective bargaining agreement(s) 
wage rate.
    (10) The Contractor shall follow the policies and procedures in 
29 CFR 10.24(b) and 10.28 for treatment of workers engaged in an 
occupation in which they customarily and regularly receive more than 
$30 a month in tips.
    (c)(1) This clause applies to workers as defined in paragraph 
(a). As provided in that definition--
    (i) Workers are covered regardless of the contractual 
relationship alleged to exist between the contractor or 
subcontractor and the worker;
    (ii) Workers with disabilities whose wages are calculated 
pursuant to special certificates issued under 29 U.S.C. 214(c) are 
covered; and
    (iii) Workers who are registered in a bona fide apprenticeship 
program or training program registered with the Department of 
Labor's Employment and Training Administration, Office of 
Apprenticeship, or with a State Apprenticeship Agency recognized by 
the Office of Apprenticeship, are covered.
    (2) This clause does not apply to--
    (i) Fair Labor Standards Act (FLSA)-covered individuals 
performing in connection with contracts covered by the E.O., i.e. 
those individuals who perform duties necessary to the performance of 
the contract, but who are not directly engaged in performing the 
specific work called for by the contract, and who spend less than 20 
percent of their hours worked in a particular workweek performing in 
connection with such contracts;
    (ii) Individuals exempted from the minimum wage requirements of 
the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise 
covered by the Service Contract Labor Standards statute, or the Wage 
Rate Requirements (Construction) statute. These individuals include 
but are not limited to--
    (A) Learners, apprentices, or messengers whose wages are 
calculated pursuant to special certificates issued under 29 U.S.C. 
214(a).
    (B) Students whose wages are calculated pursuant to special 
certificates issued under 29 U.S.C. 214(b).
    (C) Those employed in a bona fide executive, administrative, or 
professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541).
    (d) Notice. The Contractor shall notify all workers performing 
work on, or in connection with, this contract of the applicable E.O. 
minimum wage rate under this clause. With respect to workers covered 
by the Service Contract Labor Standards statute or the Wage Rate 
Requirements (Construction) statute, the Contractor may meet this 
requirement by posting, in a prominent and accessible place at the 
worksite, the applicable wage determination under those statutes. 
With respect to workers whose wages are governed by the FLSA, the 
Contractor shall post notice, utilizing the poster provided by the 
Administrator, which can be obtained at www.dol.gov/whd/govcontracts, in a prominent and accessible place at the worksite. 
Contractors that customarily post notices to workers electronically 
may post the notice electronically provided the electronic posting 
is displayed prominently on any Web site that is maintained by the 
contractor, whether external or internal, and customarily used for 
notices to workers about terms and conditions of employment.
    (e) Payroll Records. (1) The Contractor shall make and maintain 
records, for three years after completion of the work, containing 
the following information for each worker:
    (i) Name, address, and social security number;
    (ii) The worker's occupation(s) or classification(s);
    (iii) The rate or rates of wages paid;
    (iv) The number of daily and weekly hours worked by each worker;
    (v) Any deductions made; and
    (vi) Total wages paid.
    (2) The Contractor shall make records pursuant to paragraph 
(e)(1) of this clause available for inspection and transcription by 
authorized representatives of the Administrator. The Contractor 
shall also make such records available upon request of the 
Contracting Officer.
    (3) The Contractor shall make a copy of the contract available, 
as applicable, for inspection or transcription by authorized 
representatives of the Administrator.
    (4) Failure to comply with this paragraph (e) shall be a 
violation of 29 CFR 10.26 and this contract. Upon direction of the 
Administrator or upon the Contracting Officer's own action, payment 
shall be withheld until such time as the noncompliance is corrected.
    (5) Nothing in this clause limits or otherwise modifies the 
Contractor's payroll and recordkeeping obligations, if any, under 
the Service Contract Labor Standards statute, the Wage Rate 
Requirements (Construction) statute, the Fair Labor Standards Act, 
or any other applicable law.
    (f) Access. The Contractor shall permit authorized 
representatives of the Administrator to conduct investigations, 
including interviewing workers at the worksite during normal working 
hours.
    (g) Withholding. The Contracting Officer, upon his or her own 
action or upon written request of the Administrator, will withhold 
funds or cause funds to be withheld, from the Contractor under this 
or any other Federal contract with the same Contractor, sufficient 
to pay workers the full amount of wages required by this clause.
    (h) Disputes. Department of Labor has set forth in 29 CFR 10.51, 
Disputes concerning contractor compliance, the procedures for 
resolving disputes concerning a contractor's compliance with 
Department of Labor regulations at 29 CFR part 10. Such disputes 
shall be resolved in accordance with those procedures and not the 
Disputes clause of this contract. These disputes include disputes 
between the Contractor (or any of its subcontractors) and the 
contracting agency, the Department of Labor, or the workers or their 
representatives.
    (i) Antiretaliation. The Contractor shall not discharge or in 
any other manner discriminate against any worker because such worker 
has filed any complaint or instituted or caused to be instituted any 
proceeding under or related to compliance with the E.O. or this 
clause, or has testified or is about to testify in any such 
proceeding.
    (j) Subcontractor compliance. The Contractor is responsible for 
subcontractor compliance with the requirements of this clause and 
may be held liable for unpaid wages due subcontractor workers.
    (k) Subcontracts. The Contractor shall include the substance of 
this clause, including this paragraph (k) in all subcontracts, 
regardless of dollar value, that are subject to the Service Contract 
Labor Standards statute or the Wage Rate Requirements (Construction) 
statute, and are to be performed in whole or in part in the United 
States.


(End of clause)
[FR Doc. 2014-29137 Filed 12-12-14; 8:45 am]
BILLING CODE 6820-EP-P