Establishing a Minimum Wage for Contractors, Notice of Rate Change in Effect as of January 1, 2016, 55646-55648 [2015-23235]

Agencies

• DEPARTMENT OF LABOR
• Office of the Secretary

[Federal Register Volume 80, Number 179 (Wednesday, September 16, 2015)]
[Notices]
[Pages 55646-55648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23235]


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DEPARTMENT OF LABOR

Office of the Secretary


Establishing a Minimum Wage for Contractors, Notice of Rate 
Change in Effect as of January 1, 2016

AGENCY: Wage and Hour Division, Department of Labor.

ACTION: Notice.

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SUMMARY: The Wage and Hour Division (WHD) of the U.S. Department of 
Labor (the Department) is issuing this notice to announce the 
applicable minimum wage rate to be paid to workers performing work on 
or in connection with Federal contracts covered by Executive Order 
13658, beginning January 1, 2016.
    Executive Order 13658, Establishing a Minimum Wage for Contractors 
(the Executive Order or the Order), was signed by President Barack 
Obama on February 12, 2014, and raised the hourly minimum wage paid by 
contractors to workers performing work on covered Federal contracts to: 
$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 Secretary) in accordance with the methodology set forth in 
the Order. See 79 FR 9851. The Secretary's determination of the 
Executive Order minimum wage rate also affects the minimum hourly cash 
wage that must be paid to tipped employees performing work on or in 
connection with covered contracts beginning January 1, 2016. See 79 FR 
9851-52. The Secretary is required to provide notice to the public of 
the new minimum wage rate at least 90 days before such rate is to take 
effect. See 79 FR 9851.
    Pursuant to Executive Order 13658 and its implementing regulations 
at 29 CFR part 10, notice is hereby given that beginning January 1, 
2016, the Executive Order minimum wage rate that generally must be paid 
to workers performing work on or in connection with covered contracts 
is $10.15 per hour. Notice is also hereby given that, beginning January 
1, 2016, the required minimum cash wage that generally must be paid to 
tipped employees performing work on or in connection with covered 
contracts is $5.85 per hour.

DATES: This notice is effective on September 16, 2015.

FOR FURTHER INFORMATION CONTACT: Robert Waterman, Acting Director, 
Division of Regulations, Legislation, and Interpretation, Wage and Hour 
Division, U.S. Department of Labor, Room S-3502, 200 Constitution 
Avenue NW., Washington, DC 20210; telephone: (202) 693-0406 (this is 
not a toll-free number). Copies of this notice may be obtained in 
alternative formats (Large Print, Braille, Audio Tape, or Disc), upon 
request, by calling (202) 693-0023 (not a toll-free number). TTY/TTD 
callers may dial toll-free (877) 889-5627 to obtain information or 
request materials in alternative formats.

SUPPLEMENTARY INFORMATION:

I. Executive Order 13658 Background and Requirements for Determining 
Annual Increases to the Minimum Wage Rate

    Executive Order 13658 was signed by President Barack Obama on 
February 12, 2014, and raised the hourly minimum wage paid by 
contractors to workers performing work on or in connection with covered 
Federal contracts to $10.10 per hour, beginning January 1, 2015; and 
beginning January 1, 2016, and annually thereafter, an amount 
determined by the Secretary pursuant to the Order. See 79 FR 9851. The 
Executive Order directed the Secretary to issue regulations to 
implement the Order's requirements. See 79 FR 9852. Accordingly, after 
engaging in notice-and-comment rulemaking, the Department published a 
Final Rule on October 7, 2014 to implement the Executive Order. See 79 
FR 60634. The final regulations, set forth at 29 CFR part 10, 
established standards and procedures for implementing and enforcing the 
minimum wage protections of the Order.
    The Executive Order and its implementing regulations require the 
Secretary to determine the applicable minimum wage rate to be paid to 
workers performing work on or in connection with covered contracts on 
an annual basis, beginning January 1, 2016. See 79 FR 9851; 29 CFR 
10.1(a)(2), 10.5(a)(2), 10.12(a). Sections 2(a) and (b) of the Order 
establish the methodology that the Secretary must use to determine the 
annual inflation-based increases to the minimum wage rate. See 79 FR 
9851. These provisions, which are implemented in 29 CFR 10.5(b), 
explain that the applicable minimum wage determined by the Secretary 
for each calendar year shall be:
    (i) Not less than the amount in effect on the date of such 
determination;
    (ii) Increased from such amount by the annual percentage increase 
in the Consumer Price Index for Urban Wage Earners and Clerical Workers 
(CPI-W) (United States city average, all items, not seasonally 
adjusted), or its successor publication, as determined by the Bureau of 
Labor Statistics (BLS); and
    (iii) Rounded to the nearest multiple of $0.05.
    Section 2(b) of the Executive Order further provides that, in 
calculating the annual percentage increase in the CPI for purposes of 
determining the new minimum wage rate, the Secretary shall compare such 
CPI for the most recent month, quarter, or year available (as selected 
by the Secretary prior to the first year for which a minimum wage is in 
effect) with the CPI for the same month in the preceding year, the same 
quarter in the preceding year, or the preceding year, respectively. See 
79 FR 9851. In order to calculate the annual percentage increase in the 
CPI, the Department elected in its Final Rule

[[Page 55647]]

implementing the Executive Order to compare such CPI for the most 
recent year available with the CPI for the preceding year. See 29 CFR 
10.5(b)(2)(iii). In its Final Rule, the Department explained that it 
decided to compare the CPI-W for the most recent year available 
(instead of using the most recent month or quarter, as allowed by the 
Order) with the CPI-W for the preceding year, in order ``to minimize 
the impact of seasonal fluctuations on the Executive Order minimum wage 
rate.'' 79 FR 60666.
    Once a determination has been made with respect to the new minimum 
wage rate to be paid to workers performing work on or in connection 
with covered contracts, the Executive Order and its implementing 
regulations require the Secretary to notify the public of the 
applicable minimum wage rate on an annual basis at least 90 days before 
any new minimum wage is to take effect. See 79 FR 9851; 29 CFR 
10.5(a)(2), 10.12(c)(1). The regulations explain that the Administrator 
of the Department's Wage and Hour Division (the Administrator) will 
publish an annual notice in the Federal Register stating the applicable 
minimum wage rate at least 90 days before any new minimum wage is to 
take effect. See 29 CFR 10.12(c)(2)(i). Additionally, the regulations 
state that the Administrator will provide notice of the Executive Order 
minimum wage rate on Wage Determinations OnLine (WDOL), https://www.wdol.gov, or any successor site; on all wage determinations issued 
under the Davis-Bacon Act (DBA), 40 U.S.C. 3141 et seq., and the 
Service Contract Act (SCA), 41 U.S.C. 6701 et seq.; and by other means 
the Administrator deems appropriate. See 29 CFR 10.12(c)(2)(ii)-(iv).
    Section 3 of the Executive Order requires contractors to pay tipped 
employees covered by the Order performing on or in connection with 
covered contracts an hourly cash wage of at least $4.90, beginning on 
January 1, 2015, provided the employees receive sufficient tips to 
equal the Executive Order minimum wage rate under section 2 of the 
Order when combined with the cash wage. See 79 FR 9851-52; 29 CFR 
10.28(a). The Order further provides that, in each succeeding year, 
beginning January 1, 2016, the required cash wage must increase by 
$0.95 (or a lesser amount if necessary) until it reaches 70 percent of 
the Executive Order minimum wage. Id. For subsequent years, the cash 
wage for tipped employees will be 70 percent of the Executive Order 
minimum wage rounded to the nearest $0.05. Id. At all times, the amount 
of tips received by the employee must equal at least the difference 
between the cash wage paid and the Executive Order minimum wage; if the 
employee does not receive sufficient tips, the contractor must increase 
the cash wage paid so that the cash wage in combination with the tips 
received equals the Executive Order minimum wage. Id.

II. The 2016 Executive Order Minimum Wage Rate

    In accordance with the methodology set forth in the Executive Order 
and summarized above, the Department must first determine the annual 
percentage increase in the CPI-W (United States city average, all 
items, not seasonally adjusted) as published by BLS in order to 
determine the new Executive Order minimum wage rate. In calculating the 
annual percentage increase in the CPI, the Department must compare the 
CPI-W for the most recent year available with the CPI-W for the 
preceding year. The Department therefore compares the percentage change 
in the CPI-W between the most recent year (i.e., the most recent four 
quarters) and the prior year (i.e., the four quarters preceding the 
most recent year). The current Executive Order minimum wage rate must 
then be increased by the resulting annual percentage change and rounded 
to the nearest multiple of $0.05.
    In order to determine the Executive Order minimum wage rate 
beginning January 1, 2016, the Department therefore calculated the CPI-
W for the most recent year by averaging the CPI-W for the four most 
recent quarters, which consist of the first two quarters of 2015 and 
the last two quarters of 2014 (i.e., July 2014 through June 2015). The 
Department then compared that data to the average CPI-W for the 
preceding year, which consists of the first two quarters of 2014 and 
the last two quarters of 2013 (i.e., July 2013 through June 2014). 
Based on this methodology, the Department determined that the annual 
percentage increase in the CPI-W (United States city average, all 
items, not seasonally adjusted) was 0.345%. The Department then applied 
that annual percentage increase of 0.345% to the current Executive 
Order hourly minimum wage rate of $10.10, which resulted in a wage rate 
of $10.13 (($10.10 x .00345) + $10.10); however, pursuant to the 
Executive Order, that rate must be rounded to the nearest multiple of 
$0.05. The new Executive Order minimum wage rate that must generally be 
paid to workers performing on or in connection with covered contracts 
beginning January 1, 2016 is therefore $10.15 per hour.

III. The 2016 Executive Order Minimum Cash Wage for Tipped Employees

    As noted above, section 3 of the Executive Order requires 
contractors to pay tipped employees covered by the Order performing on 
or in connection with covered contracts an hourly cash wage of at least 
$4.90, beginning January 1, 2015, provided the employees receive 
sufficient tips to equal the Executive Order minimum wage rate under 
section 2 of the Order when combined with the cash wage. See 79 FR 
9851-52; 29 CFR 10.28(a). Section 3 of the Executive Order also 
provides a methodology to be utilized each year in determining the 
amount of the minimum hourly cash wage that must be paid to tipped 
employees performing on or in connection with covered contracts. 
Pursuant to the Order, in each succeeding year, beginning January 1, 
2016, the required cash wage increases by $0.95 (or a lesser amount if 
necessary) until it reaches 70 percent of the Executive Order minimum 
wage rate. For subsequent years, the cash wage for tipped employees 
will be 70 percent of the Executive Order minimum wage rate rounded to 
the nearest $0.05.
    In order to determine the minimum hourly cash wage that must be 
paid to tipped employees performing on or in connection with covered 
contracts beginning January 1, 2016, the Department first calculated 
that 70 percent of the new Executive Order minimum wage rate of $10.15 
is $7.11. The Executive Order provides that the current minimum hourly 
cash wage of $4.90 must increase by the lesser of $0.95 or the amount 
necessary for the hourly cash wage to equal 70 percent of the 
applicable Executive Order minimum wage. Because $0.95 is less than 
$2.21 (the amount necessary for the hourly cash wage to reach 70 
percent of $10.15), the hourly cash wage must increase by $0.95.
    The new minimum hourly cash wage that must generally be paid to 
tipped workers performing on or in connection with covered contracts 
beginning January 1, 2016 is therefore $5.85 per hour.

IV. Appendices

    Appendix A to this notice provides a comprehensive chart of the 
CPI-W data published by BLS that the Department utilized to calculate 
the new Executive Order minimum wage rate based on the methodology 
explained herein. Appendix B to this notice sets forth an updated 
version of the Executive Order 13658 poster that the Department

[[Page 55648]]

published with its Final Rule, reflecting the updated wage rates that 
will be in effect beginning January 1, 2016. See 79 FR 60732-33. 
Pursuant to 29 CFR 10.29, contractors are required to notify all 
workers performing on or in connection with a covered contract of the 
applicable minimum wage rate under the Executive Order. Contractors 
with employees covered by the Fair Labor Standards Act who are 
performing on or in connection with a covered contract may satisfy the 
notice requirement by displaying the poster set forth in Appendix B in 
a prominent or accessible place at the worksite.

    Dated: September 9, 2015.
David Weil,
Wage and Hour Administrator.

Appendix A
Appendix B
[FR Doc. 2015-23235 Filed 9-15-15; 8:45 am]
 BILLING CODE 4510-27-P