Minimum Wage for Contractors; Updating Regulations To Reflect Executive Order 13838, 48537-48542 [2018-20757]

Download as PDF 48537 Federal Register / Vol. 83, No. 187 / Wednesday, September 26, 2018 / Rules and Regulations SUPPLEMENT NO. 4 TO PART 744—ENTITY LIST—Continued Entity License requirement License review policy Federal Register citation AdCom Systems, a.k.a. the following two aliases: —Sky Global Communications; and —Sky Global Communication Systems. Industrial City of Abu Dhabi—ICAD1, Mussafah, Abu Dhabi, UAE; and #2 Mezzanine Level, Block 19, Sharq 40 Al Morour Street, Abu Dhabi Island, Abu Dhabi, UAE. * * For all items subject to the EAR. (See § 744.11 of the EAR.) Presumption of denial ...... 81 FR 14958, 3/21/16. 83 FR [INSERT FR PAGE NUMBER 9/26/2018]. Country * * * Dated: September 21, 2018. Richard E. Ashooh, Assistant Secretary for Export Administration. BILLING CODE 3510–33–P DEPARTMENT OF LABOR Office of the Secretary 29 CFR Part 10 RIN 1235–AA27 Minimum Wage for Contractors; Updating Regulations To Reflect Executive Order 13838 Wage and Hour Division, Department of Labor. ACTION: Final rule. AGENCY: In this final rule, the Department of Labor (the Department) implements Executive Order (E.O.) 13838, issued on May 25, 2018. E.O. 13838 exempts certain contracts with the Federal Government from the requirements of E.O. 13658. In particular, the E.O. exempts contracts in connection with both seasonal recreational services and also seasonal recreational equipment rental when such services and equipment are offered to the general public on Federal lands. E.O. 13838 amends E.O. 13658 by inserting two sentences into that order and also directs executive departments and agencies to promptly implement the exemption. In order to carry out that directive, this rule inserts the same two sentences into the Department’s regulations. DATES: Effective September 26, 2018. FOR FURTHER INFORMATION CONTACT: Melissa Smith, Director, Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, daltland on DSKBBV9HB2PROD with RULES SUMMARY: 17:04 Sep 25, 2018 Jkt 244001 * * * I. Background E.O. 13658, titled ‘‘Establishing a Minimum Wage for Contractors,’’ was issued on February 12, 2014. See 79 FR 9849. E.O. 13658 raised the hourly minimum wage for certain workers performing work on covered Federal contracts to $10.10 per hour in 2015, with annual inflation-based adjustments thereafter as determined by the Secretary of Labor (Secretary). Id. As of January 1, 2018, the E.O. 13658 minimum wage rate is $10.35 per hour. As of January 1, 2019, the E.O. 13658 minimum wage will be $10.60 per hour. See 83 FR 44906.1 E.O. 13658 and its implementing regulations established that this minimum wage requirement applies only to a ‘‘new contract’’ that qualifies as: (A) A procurement contract for construction covered under the DavisBacon Act (DBA); (B) a contract for services covered under the McNamaraO’Hara Service Contract Act (SCA); (C) a contract for concessions, including any concessions contract that the Department’s regulations at 29 CFR 4.133(b) exclude from the SCA; or (D) a contract 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. Further, this minimum wage requirement applies only when the Fair Labor Standards Act (FLSA), the SCA, or the DBA governs 1 For tipped employees performing work on or in connection with covered contracts, E.O. 13658 established a different minimum wage, which is currently $7.25 per hour and will increase to $7.40 per hour beginning January 1, 2019. Id. PO 00000 Frm 00017 Fmt 4700 * * 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) or email: WHDPRAComments@dol.gov. SUPPLEMENTARY INFORMATION: [FR Doc. 2018–20954 Filed 9–25–18; 8:45 am] VerDate Sep<11>2014 * Sfmt 4700 * * the workers’ wages. The October 7, 2014 final rule implementing E.O. 13658 applied to covered workers of contractors providing seasonal recreational services or seasonal recreational equipment rental on Federal lands under covered contracts. On May 25, 2018, President Donald J. Trump issued E.O. 13838, titled ‘‘Exemption from Executive Order 13658 for Recreational Services on Federal Lands.’’ See 83 FR 25341. Section 2 of E.O. 13838 amended E.O. 13658 to add language providing that the provisions of E.O. 13658 do ‘‘not apply to federal contracts or contractlike instruments’’ entered into ‘‘in connection with seasonal recreational services or seasonal recreational equipment rental.’’ The E.O. additionally stated that seasonal recreational services include ‘‘river running, hunting, fishing, horseback riding, camping, mountaineering activities, recreational ski services, and youth camps.’’ E.O. 13838 further specified that this exemption does not apply to ‘‘lodging and food services associated with seasonal recreational activities.’’ E.O. 13838 explained that because of the nature of the industry, seasonal recreational workers have ‘‘irregular work schedules, a high incidence of overtime pay, and an unusually high turnover rate.’’ The order further explained that implementing E.O. 13658, therefore, threatened to significantly increase the cost of seasonal recreational services on Federal lands, while limiting the hours that recreational-service workers would be available to work. Thus, exempting these services from E.O. 13658 would help prevent job losses and ensure affordable guided tours for visitors to Federal lands. E.O. 13838 requires executive departments and agencies to ‘‘promptly E:\FR\FM\26SER1.SGM 26SER1 48538 Federal Register / Vol. 83, No. 187 / Wednesday, September 26, 2018 / Rules and Regulations take appropriate action to implement this exemption and to ensure that [their] regulations and agency guidance are consistent’’ with the E.O. II. Basis and Purpose A. Basis The Department is updating 29 CFR 10.4 to conform to the requirements of E.O. 13838. The President issued E.O. 13838 pursuant to his authority under the Constitution and the Federal Property and Administrative Services Act (Procurement Act). 83 FR 25341. The Procurement Act authorizes the President to ‘‘prescribe policies and directives that [the President] considers necessary to carry out’’ the statutory purposes of ensuring ‘‘economical and efficient’’ government procurement and administration of government property. 40 U.S.C. 101, 121(a). The Secretary has delegated his authority to implement E.O. 13658, and hence E.O. 13838, to the Administrator of the WHD. See Secretary’s Order 01– 2014 (Dec. 19, 2014), 79 FR 77527 (published Dec. 24, 2014). B. Purpose The Department is promulgating this final rule to implement E.O. 13838’s exemption for seasonal recreational services and equipment rental. This action makes no substantive changes to E.O. 13658 or its implementing regulations beyond what E.O. 13838 addresses, as E.O. 13838 itself modified E.O. 13658 and directed Federal agencies and departments to implement that exemption. This action conforms E.O. 13658’s implementing regulations with the requirements of E.O. 13838. This will help ensure that parties contracting with the Federal Government are aware of the scope of coverage under E.O. 13658, as amended by E.O. 13838. daltland on DSKBBV9HB2PROD with RULES III. Discussion of the Final Rule To incorporate E.O. 13838 into existing regulations, the Department is amending 29 CFR 10.4 to add a new subsection (g), containing language identical to that which E.O. 13838 inserted into E.O. 13658. New 29 CFR 10.4(g) will reflect that the requirements of E.O. 13658 no longer apply to specialuse permits or similar instruments issued by the U.S. Forest Service or other Federal agencies for seasonal recreational outfitter services, seasonal recreational guide services, and other seasonal recreational services, or to permits or instruments issued for seasonal recreational equipment rental. Consistent with the instruction in E.O. 13838, new 29 CFR 10.4(g) does not VerDate Sep<11>2014 17:04 Sep 25, 2018 Jkt 244001 limit E.O. 13658’s coverage of lodging and food services associated with seasonal recreational services, even when seasonal recreational services or seasonal recreational equipment rental are also provided under the same contract. Thus, when a contract contains both exempt and covered services—say, services for equipment rental and also services for food and lodging—E.O. 13658 will continue to apply to the covered services (i.e. the contractor minimum wage would apply to the positions in food service and lodging, but not to the positions in equipment rental). In such circumstances, the E.O. minimum wage contract-clause in appendix A of 29 CFR part 10 should therefore be included in all covered contracts and solicitations for such contracts, as described in 29 CFR 10.3. In these instances, the contracting agency, in consultation with the contractor and WHD as needed, shall identify which services are covered and which are exempt from the requirements of E.O. 13658. E.O. 13838 and new 29 CFR 10.4(g) do not affect the Department’s implementation, administration, or enforcement of the Final Rule implementing E.O. 13658 with respect to any contracts other than those exempted in whole or in part from coverage under E.O. 13838 and 29 CFR 10.4(g). They likewise do not affect contracting agencies’ implementation and administration of E.O. 13658 and its implementing regulations with respect to any contract other than those specifically described in E.O. 13838. E.O. 13838 and new 29 CFR 10.4(g) also do not limit or otherwise modify a contractor’s obligations under the FLSA, SCA, DBA, or any other law. For example, as reflected in 29 CFR 10.26(c), the requirements of E.O. 13658 do not limit or otherwise modify a contractor’s payroll and recordkeeping obligations, if any, under the FLSA, SCA, or DBA, or their implementing regulations. E.O. 13838 and 29 CFR 10.4(g) therefore do not exempt a contractor who is subject to the exemption, established by E.O. 13838 and by 29 CFR 10.4(g), from the requirements of the FLSA, SCA, DBA, or any other applicable law. IV. Administrative Procedure Act The Department promulgates this final rule without notice or an opportunity for public comment because this action is limited to implementing E.O. 13838 by inserting into the Department’s regulations the identical language that E.O. 13838 inserted into E.O. 13658. The Administrative Procedure Act (APA) PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 provides that the notice-and-comment procedure does not apply when an agency for good cause finds that it is ‘‘impracticable, unnecessary, or contrary to the public interest.’’ 5 U.S.C. 553(b)(3)(B). Notice and comment are ‘‘unnecessary,’’ within the meaning of the APA, when changes to regulations ‘‘merely restate’’ the changes in the enabling authority that they implement.2 Gray Panthers Advocacy Cmt. v. Sullivan, 936 F.2d 1284, 1291 (D.C. Cir. 1991). In other words, the normal ‘‘notice-and-comment procedures’’ are not required when an agency ‘‘reiterates’’ an existing requirement by ‘‘reprinting’’ that requirement in its own regulations. Komjathy v. Nat’l Transp. Safety Bd., 832 F.2d 1294, 1297 (D.C. Cir. 1987). Here, the Department for good cause finds that notice and comment are unnecessary because this rule updates the October 7, 2014, regulation to conform with E.O. 13838 by inserting into the regulation the identical language that E.O. 13838 inserted into E.O. 13658. Thus, the rule is merely restating the changes to the enabling authority—E.O. 13658—that these regulations implement. E.O. 13838 requires agencies ‘‘to implement [its] exemption and to ensure that all applicable regulations and agency guidance are consistent with [the E.O.],’’ and the Department lacks the discretion to deviate from this directive. The Department has explained that in this circumstance, it ‘‘may not, in response to public comment, change or decline to implement [an] amendment’’ to an executive order. 68 FR 56392 (Sept. 30, 2003). Indeed, it has promulgated final rules without notice and comment in similar situations. See, e.g., Affirmative Action Obligations of Government Contractors, 68 FR 56392 (Sept. 30, 2003) (adding religious exemption into regulations by ‘‘simply incorporat[ing]’’ language from executive order in regulations). The Department accordingly finds that notice and comment are ‘‘unnecessary’’ under the APA. Additionally, this rule is effective on the date of publication because the standard 30-day delay does not apply when a rule recognizes an exemption or relieves a restriction. 5 U.S.C. 553(d)(1). This final rule establishes no new burdens on the regulated community; rather it relaxes an existing restriction. The Department has explained that, under the APA, when a rule ‘‘relieves 2 Although a separate provision dispenses with notice and comment for matters relating to public contracts, 5 U.S.C. 553(a)(2), the Department generally does not rely on that provision, 29 CFR 2.7. E:\FR\FM\26SER1.SGM 26SER1 Federal Register / Vol. 83, No. 187 / Wednesday, September 26, 2018 / Rules and Regulations present restrictions, delay in its effective date is excused by 5 U.S.C. 553(d)(1).’’ 33 FR 8542 (June 11, 1968); see also 45 FR 35325 (May 27, 1980). The Department has followed this interpretation on numerous occasions, having rules become effective upon issuance when they recognized an exemption to a generally applicable duty or relieved a regulated community of a restriction. See, e.g., Cranes and Derricks in Construction, 82 FR 51986 (Nov. 9, 2017); Employment of Homeworkers in Certain Industries, 49 FR 11792 (Mar. 27, 1984); Farm Labor Contractor Registration, 45 FR 25323 (May 27, 1980); Procedures for Consolidation of Existing Exclusively Recognized Units, 40 FR 50714 (Oct. 31, 1975); Federal Extension Service Exemption, 33 FR 8542 (June 11, 1968). Because this rule relieves the regulated community of a compliance duty, a 30day delay is unnecessary and the rule is effective upon issuance. In short, the rule promulgated today adds into the Department’s regulations the identical text that E.O. 13838 inserted into E.O. 13658. This action recognizes an exemption to E.O. 13658’s requirements for certain contracts. In this circumstance, issuance of the rule without notice and comment is proper, as is the rule’s effectiveness upon publication. V. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., and its attendant regulations, 5 CFR part 1320, require the Department to consider the agency’s need for its information collections and their practical utility, as well as the impact of paperwork and other information collection burdens imposed on the public, and how to minimize those burdens. The PRA typically requires an agency to provide notice and seek public comments on any proposed collection of information contained in a rule. See 44 U.S.C. 3506(c)(2)(B); 5 CFR 1320.8. This rule does not contain a collection of information subject to Office of Management and Budget (OMB) approval under the Paperwork Reduction Act. daltland on DSKBBV9HB2PROD with RULES VI. Analysis Conducted in Accordance With E.O. 12866, Regulatory Planning and Review, and E.O. 13563, Improved Regulation and Regulatory Review A. Introduction Under E.O. 12866, OMB’s Office of Information and Regulatory Affairs determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and OMB VerDate Sep<11>2014 17:04 Sep 25, 2018 Jkt 244001 review.3 Section 3(f) of E.O. 12866 defines a ‘‘significant regulatory action’’ as an action that is likely to result in a rule that: (1) Has an annual effect on the economy of $100 million or more, or adversely affects in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities (also referred to as economically significant); (2) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the E.O.. Because the annual effect of this rule would be less than $100 million, this rule would not be economically significant under section 3(f) of E.O. 12866. E.O. 13563 directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; that it is tailored to impose the least burden on society, consistent with achieving the regulatory objectives; and that, in choosing among alternative regulatory approaches, the agency has selected the approaches that maximize net benefits. E.O. 13563 recognizes that some benefits are difficult to quantify and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts. This rule is an E.O. 13771 deregulatory action. B. Economic Analysis E.O. 13658 required an increase in the minimum wage to $10.10 for workers on covered Federal contracts where the solicitation for such contracts was issued (or the contract was awarded outside the solicitation process) on or after January 1, 2015. The E.O. applied only to new contracts. Each year, pursuant to E.O. 13658, the Department adjusts this minimum wage using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W). As of January 2018, the minimum wage for non-tipped covered workers on covered Federal contracts was $10.35. E.O. 13838, issued on May 25, 2018, exempts from E.O. 13658 contracts with the Federal Government in connection with seasonal recreational services or 3 58 PO 00000 FR 51735 (Sept. 30, 1993). Frm 00019 Fmt 4700 Sfmt 4700 48539 seasonal recreational equipment rental for the general public on Federal lands. E.O. 13838 directs executive departments and agencies to implement promptly the exemption. This economic analysis attempts to quantify the transfers and costs associated with the exemption from E.O. 13658 for recreational services on Federal lands, and it provides a qualitative discussion of benefits. Under E.O. 13838, exempted contractors no longer have to pay a minimum wage of $10.35; they can instead pay, at least, the higher of either the Federal minimum wage of $7.25 or any applicable state or local minimum wage. Transfers will occur when employers choose to adjust employees’ wages below $10.35. C. Transfer Calculation To calculate transfers, the Department first determined the number of potential workers that E.O. 13838 could affect. There is no single source that provides data on how many workers are employed on contracts in connection with seasonal recreational services on Federal lands, so the Department relied on a variety of data sources to estimate the number of affected workers. The Department assumes that most impacted workers will fall under two Standard Occupational Classification (SOC) codes: SOC 39–7010 Tour and Travel Guides, and SOC 39–9032 Recreation Workers. The Department recognizes that impacted workers may be found in additional occupations, but this analysis is limited to these two occupations because the Department lacks more substantive data on other workers. The Department also recognizes that E.O. 13658 and E.O. 13838 do not govern all workers in these two occupations, but limiting the number of impacted workers to Federal contract workers in those occupations will help narrow the analysis to the impacted population. According to data from the Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) program, as of May 2017, the economy had 46,140 workers employed as Tour and Travel Guides and had 352,350 workers employed as Recreation Workers— totaling 398,490 workers employed in those two occupations.4 These two occupations together represent approximately 0.28 percent of employment in the United States.5 To estimate the total number of impacted workers, the Department also 4 BLS Occupational Employment Statistics, https://www.bls.gov/oes/2016/may/ distribution.htm. 5 May 2017 employment in all occupations was 142,549,250. BLS OES, https://www.bls.gov/oes/ tables.htm. E:\FR\FM\26SER1.SGM 26SER1 48540 Federal Register / Vol. 83, No. 187 / Wednesday, September 26, 2018 / Rules and Regulations daltland on DSKBBV9HB2PROD with RULES needed to determine the number of workers carrying out Federal contracts. The Department has previously estimated that annually, 1,727,000 workers carry out Federal contracts in the four categories covered by E.O. 13658.6 This figure is an approximation only. The Department multiplied 0.28 percent (the occupational share) by the number of workers on covered Federal contracts to estimate the number of Federal-contract workers who are employed in connection with recreational services.7 The Department thus estimates that there are 4,828 workers (= 1,727,000 × 0.28%) employed on Federal contracts as outfitters, guides, and other recreational-service workers. Because about 20 percent of Federal contracts are initiated each year and because E.O. 13658 has been in effect for fewer than four years, the Department estimates that 3,862 (= 4,828 × 80%) workers will be affected by this rule. This economic analysis attempts to calculate the total potential transfers from employees to employers when employers no longer have to pay the E.O. 13658 minimum wage, which is currently $10.35. The Department assumes that employers with contracts on Federal lands who were paying $10.35 before E.O. 13838 will now choose to pay the Federal minimum wage of $7.25.8 The Department assumes that employers who pay workers more than the minimum wage of $10.35 will continue paying those wages and therefore will not be affected. The analysis assumes that only those making $10.35 per hour will be affected. Because there is no easily accessible data on the exact wages of seasonal recreational employees on Federal contracts, the Department used the distribution of employment within specific wage ranges from BLS Occupational Employment Statistics to estimate the share of workers earning $10.35 or less.9 The Department 6 For a full discussion of this methodology and estimate, see https://www.federalregister.gov/ documents/2016/09/30/2016-22964/establishingpaid-sick-leave-for-federal-contractors. 7 For purposes of this analysis, the Department assumes that the occupational distribution of workers on Federal contracts is the same as in the overall economy. In reality, the occupational distribution may differ, so this number may be imprecise. 8 This assumption likely significantly overstates the number of employers who, if currently paying the applicable minimum wage, would lower wages all the way to a new minimum. But the Department lacks data on which employers would pay more than $7.25 per hour if not obligated to pay $10.35. 9 BLS OES, May 2017 National Occupational Employment and Wage Estimates United States, May 2017. https://www.bls.gov/oes/current/oes_ nat.htm. VerDate Sep<11>2014 17:04 Sep 25, 2018 Jkt 244001 therefore assumes that everyone making $10.35 or less is actually earning the minimum of $10.35. Using a linear approximation of the employment share earning $10.35 within the weighted wage ranges for Tour and Travel Guides and Recreation Workers occupations, the Department estimates that 30.83 percent of workers in the Tour and Travel Guides and Recreation Workers occupations earn $10.35 or less. Applying this share to the previous calculation of workers employed on Federal contracts as outfitters, guides, and other recreational-service workers, the Department estimates that 1,191 of these workers earn $10.35 per hour. The total value of these transfers is estimated to be the difference between $10.35 and the minimum wage for each of these workers. Because data are not available to distinguish these workers by state, the Department calculated the difference between $10.35 and the Federal minimum wage of $7.25. This transfer calculation is therefore likely to be an overestimation because some workers will earn their applicable state minimum wage (which is higher than $7.25) and because, in many other instances, contractors with contracts that are now exempt from E.O. 13658 will choose to pay these workers more than the applicable Federal or state minimum wage (though less than $10.35). Multiplying the $3.10 difference in wages by the 1,191 affected workers for 1,040 hours per year, the Department estimates that total transfers will be $3,839,784 at discount rates of both 3 percent and 7 percent.10 D. Costs The costs associated with this rulemaking are regulatory familiarization costs and any costs that businesses will incur to change their existing payroll systems. Regulatory familiarization costs represent direct costs on businesses associated with reviewing the new regulation. In this rule, regulatory familiarization costs are a function of the number of contractor firms, and only firms that have contracts with the Federal Government in connection with seasonal recreational services will incur costs. For this activity, the Department estimates that contractor firms will spend 15 minutes to determine whether the exemption applies to them, to evaluate and adjust their pay rates, and to modify their payroll systems. For familiarization cost analysis, the Department assumes that a 10 Full-time, year-round workers usually work around 2,080 hours. Because most affected workers are seasonal, the Department used half of this number as an estimate for usual hours-worked in a year. PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 Compensation, Benefits, and Job Analysis Specialist (SOC 13–1141) (or a staff member in a similar position) with a median wage of $30.14 per hour in 2017 will review the rule.11 Assuming benefits are paid at a rate of 46 percent of the base wage, and overhead costs are 17 percent of the base wage, the reviewer’s effective hourly rate is $49.13 (= $30.14 + ($30.14 × 46%) + ($30.14 × 17%)); thus, the average cost per establishment is $12.28 (=$49.13 × .25 hour of review and adjustment time). According to the 2016 Final Rule to implement E.O. 13706, there are approximately 489,419 potentially affected contractor firms.12 In order to estimate the share of these contractors involved in seasonal recreational activities, the Department used the occupational employment share for Travel and Tour Guides and Recreation Workers as a proxy for contractor firm industry share. Applying the 0.28 percent share to the 489,419 contractor firms yields 1,368 contractor firms in industries related to seasonal recreational activities. The Department calculated the total estimated cost as $16,804 (=0.25 hour × $49.13/hour × 1,368 contractor firms) in the first year. This amounts to a 10-year annualized cost of $1,913 at a discount rate of 3 percent and $2,236 at a discount rate of 7 percent. E. Qualitative Discussion of Benefits Lowering the cost of business for outfitter providers could incentivize small outfitters to enter the market. Likewise, it could also incentivize existing outfitters to hire more guides and to increase the hours of current employees. What all this translates into is more affordable guided tours and recreational services for visitors to Federal lands. And ultimately, greater access to outfitter services affords ordinary Americans a greater opportunity to experience ‘‘the great beauty of America’s outdoors.’’ E.O. 13838. 11 Compensation/benefits specialist ensures company compliance with Federal and state laws, including reporting requirements; evaluates job positions, determining classification, exempt or non-exempt status, and salary; plans, develops, evaluates, improves, and communicates methods and techniques for selecting, promoting, compensating, evaluating, and training workers. 13–1141 Compensation, Benefits, and Job Analysis Specialists, https://www.bls.gov/oes/current/ oes131141.htm (last visited on June 20, 2018). 12 This estimate includes firms registered in the General Services Administration’s (GSA) System for Award Management (SAM) and from additional data sources. For a full discussion of this methodology and estimate, see https:// www.federalregister.gov/documents/2016/09/30/ 2016-22964/establishing-paid-sick-leave-for-federalcontractors. E:\FR\FM\26SER1.SGM 26SER1 48541 Federal Register / Vol. 83, No. 187 / Wednesday, September 26, 2018 / Rules and Regulations F. Summary of Transfers and Costs Table 1 provides a summary of the quantified transfers and costs for this rule. TABLE 1—SUMMARY OF TRANSFERS AND COSTS CALCULATIONS Potential Transfers First Year Transfers ................................................................................................................. $3,839,784 Discount Rate = 3% 10-Year Annualized Transfers ................................................................................................. Discount Rate = 7%. $3,839,784 $3,839,784 Regulatory Familiarization and Adjustment Costs First Year Costs ....................................................................................................................... $16,804 Discount Rate = 3% 10-Year Annualized Transfers ................................................................................................. G. Regulatory Flexibility Analysis In 2014, the Small Business Association’s Office of Advocacy provided comments on the regulations implementing E.O. 13658 (Establishing a Minimum Wage for Federal Contractors). The comment letter urged the Department to adopt a regulatory alternative that exempts recreational companies and provides regulatory cost savings for small businesses. In 2018, small business stakeholders also recommended this rule for regulatory reform under E.O. 13771. Per the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (as amended), the Department examined the regulatory requirements of the rule to determine whether they would have a significant economic impact on a substantial number of small entities. As indicated in Section B, Economic Analysis, the annualized burden is estimated to be $2,236 at a discount rate of 7 percent; therefore, the annualized cost per firm is estimated to be $1.63 (= $2,236 ÷ 1,368 firms). See Table 2. Discount Rate = 7%. $1,913 $2,236 TABLE 2—ANNUALIZED COST PER FIRM—Continued Total cost ...................................... Annualized with 7% Discounting .. Annualized cost per firm ............... $16,804 $2,236 $1.63 * Minutes. Table 3 provides the annualized cost per firm as a percentage of revenue by firm size in the arts, entertainment, and TABLE 2—ANNUALIZED COST PER recreation industry. As the table shows, FIRM the annualized burden as a percentage of the smallest employer’s revenue Estimated number of firms ........... 1,368 would be far less than 1 percent. Compensation, Benefits, and Job Accordingly, the Department certifies Analysis Specialists fully loaded hourly compensation ................. $49.13 that the rule would not have a significant economic impact on a Time to review rule and make payroll adjustments ................... * 15 substantial number of small entities. TABLE 3—ANNUAL COST PER FIRM IN THE ARTS, ENTERTAINMENT, AND RECREATION INDUSTRY Number of firms Total number of employees Annual cost per firm $1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 Annual receipts Average receipts per firm Annual cost per firm as percent of receipts $1,434,271,000 11,476,438,000 11,394,483,000 19,329,326,000 16,246,680,000 10,478,303,000 6,855,951,000 8,148,731,000 5,452,457,000 4,493,765,000 3,701,048,000 3,075,728,000 2,382,282,000 $48,136 248,381 702,496 1,524,996 3,401,734 5,821,279 8,028,046 10,923,232 14,617,847 18,802,364 21,899,692 24,410,540 28,702,193 0.003 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Arts, Entertainment, and Recreation Industry Small Business Size Standard: $7.5 million–$38.5 million daltland on DSKBBV9HB2PROD with RULES Firms Firms Firms Firms Firms Firms Firms Firms Firms Firms Firms Firms Firms with with with with with with with with with with with with with sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue sales/receipts/revenue below $100,000 .................................................... of $100,000 to $499,999 ...................................... of $500,000 to $999,999 ...................................... of $1,000,000 to $2,499,999 ................................ of $2,500,000 to $4,999,999 ................................ of $5,000,000 to $7,499,999 ................................ of $7,500,000 to $9,999,999 ................................ of $10,000,000 to $14,999,999 ............................ of $15,000,000 to $19,999,999 ............................ of $20,000,000 to $24,999,999 ............................ of $25,000,000 to $29,999,999 ............................ of $30,000,000 to $34,999,999 ............................ of $35,000,000 to $39,999,999 ............................ H. Unfunded Mandates Reform Act This rule has been reviewed in accordance with the Unfunded Mandates Reform Act of 1995 (UMRA). VerDate Sep<11>2014 17:04 Sep 25, 2018 Jkt 244001 29,796 46,205 16,220 12,675 4,776 1,800 854 746 373 239 169 126 83 43,003 177,421 161,111 260,098 205,728 126,508 78,319 94,755 58,407 46,528 36,443 34,942 22,145 2 U.S.C. 1501 et seq. For the purposes of the UMRA, this rule does not impose any Federal mandate that may result in increased expenditures by State, local, or Tribal governments, or increased PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 expenditures by the private sector, of more than $100 million in any year. E:\FR\FM\26SER1.SGM 26SER1 48542 Federal Register / Vol. 83, No. 187 / Wednesday, September 26, 2018 / Rules and Regulations I. Executive Order 13132 (Federalism) The Department has reviewed this rule in accordance with the Executive Order on Federalism (Executive Order 13132, 64 FR 43255, August 10, 1999). This rule does not have federalism implications as outlined in E.O. 13132. The rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. J. Executive Order 13175, Indian Tribal Governments The Department has reviewed this rule under the terms of Executive Order 13175 (65 FR 67249, November 6, 2000) and determined it does not have ‘‘tribal implications.’’ The rule does not have ‘‘substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.’’ As a result, no Tribal summary impact statement has been prepared. VII. Regulatory Revision For the reasons set forth in the preamble, the Department of Labor amends part 10 of title 29 of the Code of Federal Regulations as follows: PART 10—ESTABLISHING A MINIMUM WAGE FOR CONTRACTORS 1. The authority citation for part 10 is revised to read as follows: ■ Authority: 5 U.S.C. 301; section 2, E.O. 13838, 83 FR 25341; section 4, E.O. 13658, 79 FR 9851; Secretary’s Order 01–2014, 79 FR 77527. 2. In § 10.4, add paragraph (g) to read as follows: ■ § 10.4 Exclusions. daltland on DSKBBV9HB2PROD with RULES * * * * * (g) Contracts in connection with seasonal recreational services and seasonal recreational equipment rental offered for public use on Federal lands. This part shall not apply to contracts or contract-like instruments entered into with the Federal Government in connection with seasonal recreational services or seasonal recreational equipment rental for the general public on Federal lands, but this exemption shall not apply to lodging and food services associated with seasonal recreational services. Seasonal recreational services include river running, hunting, fishing, horseback riding, camping, mountaineering VerDate Sep<11>2014 17:04 Sep 25, 2018 Jkt 244001 activities, recreational ski services, and youth camps. Signed in Washington, DC, this 18th day of September. Bryan L. Jarrett, Acting Administrator, Wage and Hour Division. [FR Doc. 2018–20757 Filed 9–25–18; 8:45 am] BILLING CODE 4510–27–P DEPARTMENT OF LABOR Office of the Secretary 29 CFR Part 34 RIN 1290–AA32 Rescission of Regulations Implementing the Nondiscrimination and Equal Opportunity Provisions of the Job Training Partnership Act of 1982 Office of the Assistant Secretary for Administration and Management, Department of Labor. ACTION: Direct final rule. AGENCY: The U.S. Department of Labor takes this action to remove regulations for an inoperative program but continues to require non-discrimination and equal-employment opportunity under its programs. The Department is undergoing a process of identifying identify regulations that are ‘‘outdated’’ and ‘‘unnecessary.’’ The regulations being rescinded by this rule are ‘‘outdated’’ because they administer a program that no longer exists. And they are ‘‘unnecessary’’ because they currently serve no purpose, as their existence or non-existence has no impact on the Department’s enforcement of non-discrimination standards under its existing programs. In particular, the Department is rescinding its regulations implementing Section 167 of the Job Training Partnership Act of 1982, as amended (JTPA). Section 167 contained the nondiscrimination and equalopportunity provisions of the JTPA. In 1998, Congress passed the Workforce Investment Act (WIA), which repealed the JTPA and required the Secretary of Labor to transition any authority under the JTPA to the system that WIA created. WIA, in turn, was subsequently altered by the Workforce Innovation and Opportunity Act (WIOA). In sum, this rule removes regulations for an inoperative program, but has no impact on existing non-discrimination rules. DATES: This direct final rule is effective on November 26, 2018, unless the Department receives a significant SUMMARY: PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 adverse comment to this direct final rule or the companion proposed rule by October 26, 2018, on any unintended changes this action makes in the nondiscrimination and equal opportunity obligations the Department enforces. If timely, significant adverse comment is received, the Department will publish a notification of withdrawal of the direct final rule in the Federal Register before the effective date. Such notification may withdraw the direct final rule in whole or in part. ADDRESSES: Comments may be submitted, identified by Regulatory Information Number (RIN) 1290–AA32, by any one of the following methods: • Federal e-Rulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. • Fax: (202) 693–6505 (for comments of six pages or less). • Mail or Hand Delivery/Courier: Naomi Barry-Perez, Director, Civil Rights Center (CRC), U.S. Department of Labor, 200 Constitution Avenue NW, Room N–4123, Washington, DC 20210. • Email: CRC-WIOA@dol.gov. Please submit your comment by only one method. Receipt of comments will not be acknowledged; however, the Department will post all comments received on http://www.regulations.gov without making any change to the comments, including any personal information provided. The http:// www.regulations.gov website is the Federal e-rulemaking portal, and all comments posted there are available and accessible to the public. The Department cautions commenters not to include personal information, such as Social Security Numbers, personal addresses, telephone numbers and email addresses, in comments, as such submitted information will become viewable by the public via http:// www.regulations.gov. It is the responsibility of the commenter to safeguard personal information. Comments submitted through http:// www.regulations.gov will not include the commenter’s email address unless the commenter chooses to include that information as part of a comment. Postal delivery in Washington, DC, may be delayed due to security concerns. Therefore, the Department encourages the public to submit comments via the website indicated above. The Department will also make all the comments it receives available for public inspection during normal business hours at the Civil Rights Center at the above address. If you need assistance to review the comments, the Department will provide you with E:\FR\FM\26SER1.SGM 26SER1

Agencies

[Federal Register Volume 83, Number 187 (Wednesday, September 26, 2018)]
[Rules and Regulations]
[Pages 48537-48542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20757]


=======================================================================
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DEPARTMENT OF LABOR

Office of the Secretary

29 CFR Part 10

RIN 1235-AA27


Minimum Wage for Contractors; Updating Regulations To Reflect 
Executive Order 13838

AGENCY: Wage and Hour Division, Department of Labor.

ACTION: Final rule.

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SUMMARY: In this final rule, the Department of Labor (the Department) 
implements Executive Order (E.O.) 13838, issued on May 25, 2018. E.O. 
13838 exempts certain contracts with the Federal Government from the 
requirements of E.O. 13658. In particular, the E.O. exempts contracts 
in connection with both seasonal recreational services and also 
seasonal recreational equipment rental when such services and equipment 
are offered to the general public on Federal lands. E.O. 13838 amends 
E.O. 13658 by inserting two sentences into that order and also directs 
executive departments and agencies to promptly implement the exemption. 
In order to carry out that directive, this rule inserts the same two 
sentences into the Department's regulations.

DATES: Effective September 26, 2018.

FOR FURTHER INFORMATION CONTACT: Melissa Smith, 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) or email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    E.O. 13658, titled ``Establishing a Minimum Wage for Contractors,'' 
was issued on February 12, 2014. See 79 FR 9849. E.O. 13658 raised the 
hourly minimum wage for certain workers performing work on covered 
Federal contracts to $10.10 per hour in 2015, with annual inflation-
based adjustments thereafter as determined by the Secretary of Labor 
(Secretary). Id. As of January 1, 2018, the E.O. 13658 minimum wage 
rate is $10.35 per hour. As of January 1, 2019, the E.O. 13658 minimum 
wage will be $10.60 per hour. See 83 FR 44906.\1\
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    \1\ For tipped employees performing work on or in connection 
with covered contracts, E.O. 13658 established a different minimum 
wage, which is currently $7.25 per hour and will increase to $7.40 
per hour beginning January 1, 2019. Id.
---------------------------------------------------------------------------

    E.O. 13658 and its implementing regulations established that this 
minimum wage requirement applies only to a ``new contract'' that 
qualifies as: (A) A procurement contract for construction covered under 
the Davis-Bacon Act (DBA); (B) a contract for services covered under 
the McNamara-O'Hara Service Contract Act (SCA); (C) a contract for 
concessions, including any concessions contract that the Department's 
regulations at 29 CFR 4.133(b) exclude from the SCA; or (D) a contract 
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. Further, this minimum wage 
requirement applies only when the Fair Labor Standards Act (FLSA), the 
SCA, or the DBA governs the workers' wages. The October 7, 2014 final 
rule implementing E.O. 13658 applied to covered workers of contractors 
providing seasonal recreational services or seasonal recreational 
equipment rental on Federal lands under covered contracts.
    On May 25, 2018, President Donald J. Trump issued E.O. 13838, 
titled ``Exemption from Executive Order 13658 for Recreational Services 
on Federal Lands.'' See 83 FR 25341. Section 2 of E.O. 13838 amended 
E.O. 13658 to add language providing that the provisions of E.O. 13658 
do ``not apply to federal contracts or contract-like instruments'' 
entered into ``in connection with seasonal recreational services or 
seasonal recreational equipment rental.'' The E.O. additionally stated 
that seasonal recreational services include ``river running, hunting, 
fishing, horseback riding, camping, mountaineering activities, 
recreational ski services, and youth camps.'' E.O. 13838 further 
specified that this exemption does not apply to ``lodging and food 
services associated with seasonal recreational activities.''
    E.O. 13838 explained that because of the nature of the industry, 
seasonal recreational workers have ``irregular work schedules, a high 
incidence of overtime pay, and an unusually high turnover rate.'' The 
order further explained that implementing E.O. 13658, therefore, 
threatened to significantly increase the cost of seasonal recreational 
services on Federal lands, while limiting the hours that recreational-
service workers would be available to work. Thus, exempting these 
services from E.O. 13658 would help prevent job losses and ensure 
affordable guided tours for visitors to Federal lands.
    E.O. 13838 requires executive departments and agencies to 
``promptly

[[Page 48538]]

take appropriate action to implement this exemption and to ensure that 
[their] regulations and agency guidance are consistent'' with the E.O.

II. Basis and Purpose

A. Basis

    The Department is updating 29 CFR 10.4 to conform to the 
requirements of E.O. 13838. The President issued E.O. 13838 pursuant to 
his authority under the Constitution and the Federal Property and 
Administrative Services Act (Procurement Act). 83 FR 25341. The 
Procurement Act authorizes the President to ``prescribe policies and 
directives that [the President] considers necessary to carry out'' the 
statutory purposes of ensuring ``economical and efficient'' government 
procurement and administration of government property. 40 U.S.C. 101, 
121(a).
    The Secretary has delegated his authority to implement E.O. 13658, 
and hence E.O. 13838, to the Administrator of the WHD. See Secretary's 
Order 01-2014 (Dec. 19, 2014), 79 FR 77527 (published Dec. 24, 2014).

B. Purpose

    The Department is promulgating this final rule to implement E.O. 
13838's exemption for seasonal recreational services and equipment 
rental. This action makes no substantive changes to E.O. 13658 or its 
implementing regulations beyond what E.O. 13838 addresses, as E.O. 
13838 itself modified E.O. 13658 and directed Federal agencies and 
departments to implement that exemption. This action conforms E.O. 
13658's implementing regulations with the requirements of E.O. 13838. 
This will help ensure that parties contracting with the Federal 
Government are aware of the scope of coverage under E.O. 13658, as 
amended by E.O. 13838.

III. Discussion of the Final Rule

    To incorporate E.O. 13838 into existing regulations, the Department 
is amending 29 CFR 10.4 to add a new subsection (g), containing 
language identical to that which E.O. 13838 inserted into E.O. 13658. 
New 29 CFR 10.4(g) will reflect that the requirements of E.O. 13658 no 
longer apply to special-use permits or similar instruments issued by 
the U.S. Forest Service or other Federal agencies for seasonal 
recreational outfitter services, seasonal recreational guide services, 
and other seasonal recreational services, or to permits or instruments 
issued for seasonal recreational equipment rental.
    Consistent with the instruction in E.O. 13838, new 29 CFR 10.4(g) 
does not limit E.O. 13658's coverage of lodging and food services 
associated with seasonal recreational services, even when seasonal 
recreational services or seasonal recreational equipment rental are 
also provided under the same contract. Thus, when a contract contains 
both exempt and covered services--say, services for equipment rental 
and also services for food and lodging--E.O. 13658 will continue to 
apply to the covered services (i.e. the contractor minimum wage would 
apply to the positions in food service and lodging, but not to the 
positions in equipment rental). In such circumstances, the E.O. minimum 
wage contract-clause in appendix A of 29 CFR part 10 should therefore 
be included in all covered contracts and solicitations for such 
contracts, as described in 29 CFR 10.3. In these instances, the 
contracting agency, in consultation with the contractor and WHD as 
needed, shall identify which services are covered and which are exempt 
from the requirements of E.O. 13658.
    E.O. 13838 and new 29 CFR 10.4(g) do not affect the Department's 
implementation, administration, or enforcement of the Final Rule 
implementing E.O. 13658 with respect to any contracts other than those 
exempted in whole or in part from coverage under E.O. 13838 and 29 CFR 
10.4(g). They likewise do not affect contracting agencies' 
implementation and administration of E.O. 13658 and its implementing 
regulations with respect to any contract other than those specifically 
described in E.O. 13838.
    E.O. 13838 and new 29 CFR 10.4(g) also do not limit or otherwise 
modify a contractor's obligations under the FLSA, SCA, DBA, or any 
other law. For example, as reflected in 29 CFR 10.26(c), the 
requirements of E.O. 13658 do not limit or otherwise modify a 
contractor's payroll and recordkeeping obligations, if any, under the 
FLSA, SCA, or DBA, or their implementing regulations. E.O. 13838 and 29 
CFR 10.4(g) therefore do not exempt a contractor who is subject to the 
exemption, established by E.O. 13838 and by 29 CFR 10.4(g), from the 
requirements of the FLSA, SCA, DBA, or any other applicable law.

IV. Administrative Procedure Act

    The Department promulgates this final rule without notice or an 
opportunity for public comment because this action is limited to 
implementing E.O. 13838 by inserting into the Department's regulations 
the identical language that E.O. 13838 inserted into E.O. 13658. The 
Administrative Procedure Act (APA) provides that the notice-and-comment 
procedure does not apply when an agency for good cause finds that it is 
``impracticable, unnecessary, or contrary to the public interest.'' 5 
U.S.C. 553(b)(3)(B). Notice and comment are ``unnecessary,'' within the 
meaning of the APA, when changes to regulations ``merely restate'' the 
changes in the enabling authority that they implement.\2\ Gray Panthers 
Advocacy Cmt. v. Sullivan, 936 F.2d 1284, 1291 (D.C. Cir. 1991). In 
other words, the normal ``notice-and-comment procedures'' are not 
required when an agency ``reiterates'' an existing requirement by 
``reprinting'' that requirement in its own regulations. Komjathy v. 
Nat'l Transp. Safety Bd., 832 F.2d 1294, 1297 (D.C. Cir. 1987).
---------------------------------------------------------------------------

    \2\ Although a separate provision dispenses with notice and 
comment for matters relating to public contracts, 5 U.S.C. 
553(a)(2), the Department generally does not rely on that provision, 
29 CFR 2.7.
---------------------------------------------------------------------------

    Here, the Department for good cause finds that notice and comment 
are unnecessary because this rule updates the October 7, 2014, 
regulation to conform with E.O. 13838 by inserting into the regulation 
the identical language that E.O. 13838 inserted into E.O. 13658. Thus, 
the rule is merely restating the changes to the enabling authority--
E.O. 13658--that these regulations implement. E.O. 13838 requires 
agencies ``to implement [its] exemption and to ensure that all 
applicable regulations and agency guidance are consistent with [the 
E.O.],'' and the Department lacks the discretion to deviate from this 
directive. The Department has explained that in this circumstance, it 
``may not, in response to public comment, change or decline to 
implement [an] amendment'' to an executive order. 68 FR 56392 (Sept. 
30, 2003). Indeed, it has promulgated final rules without notice and 
comment in similar situations. See, e.g., Affirmative Action 
Obligations of Government Contractors, 68 FR 56392 (Sept. 30, 2003) 
(adding religious exemption into regulations by ``simply 
incorporat[ing]'' language from executive order in regulations). The 
Department accordingly finds that notice and comment are 
``unnecessary'' under the APA.
    Additionally, this rule is effective on the date of publication 
because the standard 30-day delay does not apply when a rule recognizes 
an exemption or relieves a restriction. 5 U.S.C. 553(d)(1). This final 
rule establishes no new burdens on the regulated community; rather it 
relaxes an existing restriction. The Department has explained that, 
under the APA, when a rule ``relieves

[[Page 48539]]

present restrictions, delay in its effective date is excused by 5 
U.S.C. 553(d)(1).'' 33 FR 8542 (June 11, 1968); see also 45 FR 35325 
(May 27, 1980). The Department has followed this interpretation on 
numerous occasions, having rules become effective upon issuance when 
they recognized an exemption to a generally applicable duty or relieved 
a regulated community of a restriction. See, e.g., Cranes and Derricks 
in Construction, 82 FR 51986 (Nov. 9, 2017); Employment of Homeworkers 
in Certain Industries, 49 FR 11792 (Mar. 27, 1984); Farm Labor 
Contractor Registration, 45 FR 25323 (May 27, 1980); Procedures for 
Consolidation of Existing Exclusively Recognized Units, 40 FR 50714 
(Oct. 31, 1975); Federal Extension Service Exemption, 33 FR 8542 (June 
11, 1968). Because this rule relieves the regulated community of a 
compliance duty, a 30-day delay is unnecessary and the rule is 
effective upon issuance.
    In short, the rule promulgated today adds into the Department's 
regulations the identical text that E.O. 13838 inserted into E.O. 
13658. This action recognizes an exemption to E.O. 13658's requirements 
for certain contracts. In this circumstance, issuance of the rule 
without notice and comment is proper, as is the rule's effectiveness 
upon publication.

V. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., 
and its attendant regulations, 5 CFR part 1320, require the Department 
to consider the agency's need for its information collections and their 
practical utility, as well as the impact of paperwork and other 
information collection burdens imposed on the public, and how to 
minimize those burdens. The PRA typically requires an agency to provide 
notice and seek public comments on any proposed collection of 
information contained in a rule. See 44 U.S.C. 3506(c)(2)(B); 5 CFR 
1320.8. This rule does not contain a collection of information subject 
to Office of Management and Budget (OMB) approval under the Paperwork 
Reduction Act.

VI. Analysis Conducted in Accordance With E.O. 12866, Regulatory 
Planning and Review, and E.O. 13563, Improved Regulation and Regulatory 
Review

A. Introduction

    Under E.O. 12866, OMB's Office of Information and Regulatory 
Affairs determines whether a regulatory action is significant and, 
therefore, subject to the requirements of the E.O. and OMB review.\3\ 
Section 3(f) of E.O. 12866 defines a ``significant regulatory action'' 
as an action that is likely to result in a rule that: (1) Has an annual 
effect on the economy of $100 million or more, or adversely affects in 
a material way a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
tribal governments or communities (also referred to as economically 
significant); (2) creates serious inconsistency or otherwise interferes 
with an action taken or planned by another agency; (3) materially 
alters the budgetary impacts of entitlement grants, user fees, or loan 
programs, or the rights and obligations of recipients thereof; or (4) 
raises novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in the E.O.. 
Because the annual effect of this rule would be less than $100 million, 
this rule would not be economically significant under section 3(f) of 
E.O. 12866.
---------------------------------------------------------------------------

    \3\ 58 FR 51735 (Sept. 30, 1993).
---------------------------------------------------------------------------

    E.O. 13563 directs agencies to propose or adopt a regulation only 
upon a reasoned determination that its benefits justify its costs; that 
it is tailored to impose the least burden on society, consistent with 
achieving the regulatory objectives; and that, in choosing among 
alternative regulatory approaches, the agency has selected the 
approaches that maximize net benefits. E.O. 13563 recognizes that some 
benefits are difficult to quantify and provides that, where appropriate 
and permitted by law, agencies may consider and discuss qualitatively 
values that are difficult or impossible to quantify, including equity, 
human dignity, fairness, and distributive impacts.
    This rule is an E.O. 13771 deregulatory action.

B. Economic Analysis

    E.O. 13658 required an increase in the minimum wage to $10.10 for 
workers on covered Federal contracts where the solicitation for such 
contracts was issued (or the contract was awarded outside the 
solicitation process) on or after January 1, 2015. The E.O. applied 
only to new contracts. Each year, pursuant to E.O. 13658, the 
Department adjusts this minimum wage using the Consumer Price Index for 
Urban Wage Earners and Clerical Workers (CPI-W). As of January 2018, 
the minimum wage for non-tipped covered workers on covered Federal 
contracts was $10.35.
    E.O. 13838, issued on May 25, 2018, exempts from E.O. 13658 
contracts with the Federal Government in connection with seasonal 
recreational services or seasonal recreational equipment rental for the 
general public on Federal lands. E.O. 13838 directs executive 
departments and agencies to implement promptly the exemption. This 
economic analysis attempts to quantify the transfers and costs 
associated with the exemption from E.O. 13658 for recreational services 
on Federal lands, and it provides a qualitative discussion of benefits. 
Under E.O. 13838, exempted contractors no longer have to pay a minimum 
wage of $10.35; they can instead pay, at least, the higher of either 
the Federal minimum wage of $7.25 or any applicable state or local 
minimum wage. Transfers will occur when employers choose to adjust 
employees' wages below $10.35.

C. Transfer Calculation

    To calculate transfers, the Department first determined the number 
of potential workers that E.O. 13838 could affect. There is no single 
source that provides data on how many workers are employed on contracts 
in connection with seasonal recreational services on Federal lands, so 
the Department relied on a variety of data sources to estimate the 
number of affected workers. The Department assumes that most impacted 
workers will fall under two Standard Occupational Classification (SOC) 
codes: SOC 39-7010 Tour and Travel Guides, and SOC 39-9032 Recreation 
Workers. The Department recognizes that impacted workers may be found 
in additional occupations, but this analysis is limited to these two 
occupations because the Department lacks more substantive data on other 
workers. The Department also recognizes that E.O. 13658 and E.O. 13838 
do not govern all workers in these two occupations, but limiting the 
number of impacted workers to Federal contract workers in those 
occupations will help narrow the analysis to the impacted population. 
According to data from the Bureau of Labor Statistics (BLS) 
Occupational Employment Statistics (OES) program, as of May 2017, the 
economy had 46,140 workers employed as Tour and Travel Guides and had 
352,350 workers employed as Recreation Workers--totaling 398,490 
workers employed in those two occupations.\4\ These two occupations 
together represent approximately 0.28 percent of employment in the 
United States.\5\
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    \4\ BLS Occupational Employment Statistics, https://www.bls.gov/oes/2016/may/distribution.htm.
    \5\ May 2017 employment in all occupations was 142,549,250. BLS 
OES, https://www.bls.gov/oes/tables.htm.
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    To estimate the total number of impacted workers, the Department 
also

[[Page 48540]]

needed to determine the number of workers carrying out Federal 
contracts. The Department has previously estimated that annually, 
1,727,000 workers carry out Federal contracts in the four categories 
covered by E.O. 13658.\6\ This figure is an approximation only. The 
Department multiplied 0.28 percent (the occupational share) by the 
number of workers on covered Federal contracts to estimate the number 
of Federal-contract workers who are employed in connection with 
recreational services.\7\ The Department thus estimates that there are 
4,828 workers (= 1,727,000 x 0.28%) employed on Federal contracts as 
outfitters, guides, and other recreational-service workers. Because 
about 20 percent of Federal contracts are initiated each year and 
because E.O. 13658 has been in effect for fewer than four years, the 
Department estimates that 3,862 (= 4,828 x 80%) workers will be 
affected by this rule.
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    \6\ For a full discussion of this methodology and estimate, see 
https://www.federalregister.gov/documents/2016/09/30/2016-22964/establishing-paid-sick-leave-for-federal-contractors.
    \7\ For purposes of this analysis, the Department assumes that 
the occupational distribution of workers on Federal contracts is the 
same as in the overall economy. In reality, the occupational 
distribution may differ, so this number may be imprecise.
---------------------------------------------------------------------------

    This economic analysis attempts to calculate the total potential 
transfers from employees to employers when employers no longer have to 
pay the E.O. 13658 minimum wage, which is currently $10.35. The 
Department assumes that employers with contracts on Federal lands who 
were paying $10.35 before E.O. 13838 will now choose to pay the Federal 
minimum wage of $7.25.\8\ The Department assumes that employers who pay 
workers more than the minimum wage of $10.35 will continue paying those 
wages and therefore will not be affected. The analysis assumes that 
only those making $10.35 per hour will be affected. Because there is no 
easily accessible data on the exact wages of seasonal recreational 
employees on Federal contracts, the Department used the distribution of 
employment within specific wage ranges from BLS Occupational Employment 
Statistics to estimate the share of workers earning $10.35 or less.\9\ 
The Department therefore assumes that everyone making $10.35 or less is 
actually earning the minimum of $10.35. Using a linear approximation of 
the employment share earning $10.35 within the weighted wage ranges for 
Tour and Travel Guides and Recreation Workers occupations, the 
Department estimates that 30.83 percent of workers in the Tour and 
Travel Guides and Recreation Workers occupations earn $10.35 or less. 
Applying this share to the previous calculation of workers employed on 
Federal contracts as outfitters, guides, and other recreational-service 
workers, the Department estimates that 1,191 of these workers earn 
$10.35 per hour.
---------------------------------------------------------------------------

    \8\ This assumption likely significantly overstates the number 
of employers who, if currently paying the applicable minimum wage, 
would lower wages all the way to a new minimum. But the Department 
lacks data on which employers would pay more than $7.25 per hour if 
not obligated to pay $10.35.
    \9\ BLS OES, May 2017 National Occupational Employment and Wage 
Estimates United States, May 2017. https://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------

    The total value of these transfers is estimated to be the 
difference between $10.35 and the minimum wage for each of these 
workers. Because data are not available to distinguish these workers by 
state, the Department calculated the difference between $10.35 and the 
Federal minimum wage of $7.25. This transfer calculation is therefore 
likely to be an overestimation because some workers will earn their 
applicable state minimum wage (which is higher than $7.25) and because, 
in many other instances, contractors with contracts that are now exempt 
from E.O. 13658 will choose to pay these workers more than the 
applicable Federal or state minimum wage (though less than $10.35). 
Multiplying the $3.10 difference in wages by the 1,191 affected workers 
for 1,040 hours per year, the Department estimates that total transfers 
will be $3,839,784 at discount rates of both 3 percent and 7 
percent.\10\
---------------------------------------------------------------------------

    \10\ Full-time, year-round workers usually work around 2,080 
hours. Because most affected workers are seasonal, the Department 
used half of this number as an estimate for usual hours-worked in a 
year.
---------------------------------------------------------------------------

D. Costs

    The costs associated with this rulemaking are regulatory 
familiarization costs and any costs that businesses will incur to 
change their existing payroll systems. Regulatory familiarization costs 
represent direct costs on businesses associated with reviewing the new 
regulation. In this rule, regulatory familiarization costs are a 
function of the number of contractor firms, and only firms that have 
contracts with the Federal Government in connection with seasonal 
recreational services will incur costs. For this activity, the 
Department estimates that contractor firms will spend 15 minutes to 
determine whether the exemption applies to them, to evaluate and adjust 
their pay rates, and to modify their payroll systems. For 
familiarization cost analysis, the Department assumes that a 
Compensation, Benefits, and Job Analysis Specialist (SOC 13-1141) (or a 
staff member in a similar position) with a median wage of $30.14 per 
hour in 2017 will review the rule.\11\ Assuming benefits are paid at a 
rate of 46 percent of the base wage, and overhead costs are 17 percent 
of the base wage, the reviewer's effective hourly rate is $49.13 (= 
$30.14 + ($30.14 x 46%) + ($30.14 x 17%)); thus, the average cost per 
establishment is $12.28 (=$49.13 x .25 hour of review and adjustment 
time). According to the 2016 Final Rule to implement E.O. 13706, there 
are approximately 489,419 potentially affected contractor firms.\12\ In 
order to estimate the share of these contractors involved in seasonal 
recreational activities, the Department used the occupational 
employment share for Travel and Tour Guides and Recreation Workers as a 
proxy for contractor firm industry share. Applying the 0.28 percent 
share to the 489,419 contractor firms yields 1,368 contractor firms in 
industries related to seasonal recreational activities. The Department 
calculated the total estimated cost as $16,804 (=0.25 hour x $49.13/
hour x 1,368 contractor firms) in the first year. This amounts to a 10-
year annualized cost of $1,913 at a discount rate of 3 percent and 
$2,236 at a discount rate of 7 percent.
---------------------------------------------------------------------------

    \11\ Compensation/benefits specialist ensures company compliance 
with Federal and state laws, including reporting requirements; 
evaluates job positions, determining classification, exempt or non-
exempt status, and salary; plans, develops, evaluates, improves, and 
communicates methods and techniques for selecting, promoting, 
compensating, evaluating, and training workers. 13-1141 
Compensation, Benefits, and Job Analysis Specialists, https://www.bls.gov/oes/current/oes131141.htm (last visited on June 20, 
2018).
    \12\ This estimate includes firms registered in the General 
Services Administration's (GSA) System for Award Management (SAM) 
and from additional data sources. For a full discussion of this 
methodology and estimate, see https://www.federalregister.gov/documents/2016/09/30/2016-22964/establishing-paid-sick-leave-for-federal-contractors.
---------------------------------------------------------------------------

E. Qualitative Discussion of Benefits

    Lowering the cost of business for outfitter providers could 
incentivize small outfitters to enter the market. Likewise, it could 
also incentivize existing outfitters to hire more guides and to 
increase the hours of current employees. What all this translates into 
is more affordable guided tours and recreational services for visitors 
to Federal lands. And ultimately, greater access to outfitter services 
affords ordinary Americans a greater opportunity to experience ``the 
great beauty of America's outdoors.'' E.O. 13838.

[[Page 48541]]

F. Summary of Transfers and Costs

    Table 1 provides a summary of the quantified transfers and costs 
for this rule.

                              Table 1--Summary of Transfers and Costs Calculations
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------
                                               Potential Transfers
----------------------------------------------------------------------------------------------------------------
First Year Transfers..........................................                     $3,839,784
----------------------------------------------------------------------------------------------------------------
                                                                   Discount Rate = 3%      Discount Rate = 7%.
                                                               -------------------------------------------------
10-Year Annualized Transfers..................................               $3,839,784               $3,839,784
----------------------------------------------------------------------------------------------------------------
                                 Regulatory Familiarization and Adjustment Costs
----------------------------------------------------------------------------------------------------------------
First Year Costs..............................................                       $16,804
----------------------------------------------------------------------------------------------------------------
                                                                   Discount Rate = 3%      Discount Rate = 7%.
                                                               -------------------------------------------------
10-Year Annualized Transfers..................................                   $1,913                   $2,236
----------------------------------------------------------------------------------------------------------------

G. Regulatory Flexibility Analysis

    In 2014, the Small Business Association's Office of Advocacy 
provided comments on the regulations implementing E.O. 13658 
(Establishing a Minimum Wage for Federal Contractors). The comment 
letter urged the Department to adopt a regulatory alternative that 
exempts recreational companies and provides regulatory cost savings for 
small businesses. In 2018, small business stakeholders also recommended 
this rule for regulatory reform under E.O. 13771. Per the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq. (as amended), the Department 
examined the regulatory requirements of the rule to determine whether 
they would have a significant economic impact on a substantial number 
of small entities. As indicated in Section B, Economic Analysis, the 
annualized burden is estimated to be $2,236 at a discount rate of 7 
percent; therefore, the annualized cost per firm is estimated to be 
$1.63 (= $2,236 / 1,368 firms). See Table 2.

                    Table 2--Annualized Cost per Firm
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Estimated number of firms....................................      1,368
Compensation, Benefits, and Job Analysis Specialists fully        $49.13
 loaded hourly compensation..................................
Time to review rule and make payroll adjustments.............       * 15
Total cost...................................................    $16,804
Annualized with 7% Discounting...............................     $2,236
Annualized cost per firm.....................................      $1.63
------------------------------------------------------------------------
* Minutes.

    Table 3 provides the annualized cost per firm as a percentage of 
revenue by firm size in the arts, entertainment, and recreation 
industry. As the table shows, the annualized burden as a percentage of 
the smallest employer's revenue would be far less than 1 percent. 
Accordingly, the Department certifies that the rule would not have a 
significant economic impact on a substantial number of small entities.

                Table 3--Annual Cost per Firm in the Arts, Entertainment, and Recreation Industry
----------------------------------------------------------------------------------------------------------------
                                                                                                         Annual
                                                                                                        cost per
                                        Number of     Total     Annual                      Average     firm as
                                          firms     number of  cost per  Annual receipts    receipts    percent
                                                    employees    firm                       per firm       of
                                                                                                        receipts
----------------------------------------------------------------------------------------------------------------
                                  Arts, Entertainment, and Recreation Industry
                            Small Business Size Standard: $7.5 million-$38.5 million
----------------------------------------------------------------------------------------------------------------
Firms with sales/receipts/revenue          29,796      43,003     $1.63   $1,434,271,000      $48,136      0.003
 below $100,000.......................
Firms with sales/receipts/revenue of       46,205     177,421      1.63   11,476,438,000      248,381      0.001
 $100,000 to $499,999.................
Firms with sales/receipts/revenue of       16,220     161,111      1.63   11,394,483,000      702,496      0.000
 $500,000 to $999,999.................
Firms with sales/receipts/revenue of       12,675     260,098      1.63   19,329,326,000    1,524,996      0.000
 $1,000,000 to $2,499,999.............
Firms with sales/receipts/revenue of        4,776     205,728      1.63   16,246,680,000    3,401,734      0.000
 $2,500,000 to $4,999,999.............
Firms with sales/receipts/revenue of        1,800     126,508      1.63   10,478,303,000    5,821,279      0.000
 $5,000,000 to $7,499,999.............
Firms with sales/receipts/revenue of          854      78,319      1.63    6,855,951,000    8,028,046      0.000
 $7,500,000 to $9,999,999.............
Firms with sales/receipts/revenue of          746      94,755      1.63    8,148,731,000   10,923,232      0.000
 $10,000,000 to $14,999,999...........
Firms with sales/receipts/revenue of          373      58,407      1.63    5,452,457,000   14,617,847      0.000
 $15,000,000 to $19,999,999...........
Firms with sales/receipts/revenue of          239      46,528      1.63    4,493,765,000   18,802,364      0.000
 $20,000,000 to $24,999,999...........
Firms with sales/receipts/revenue of          169      36,443      1.63    3,701,048,000   21,899,692      0.000
 $25,000,000 to $29,999,999...........
Firms with sales/receipts/revenue of          126      34,942      1.63    3,075,728,000   24,410,540      0.000
 $30,000,000 to $34,999,999...........
Firms with sales/receipts/revenue of           83      22,145      1.63    2,382,282,000   28,702,193      0.000
 $35,000,000 to $39,999,999...........
----------------------------------------------------------------------------------------------------------------

H. Unfunded Mandates Reform Act

    This rule has been reviewed in accordance with the Unfunded 
Mandates Reform Act of 1995 (UMRA). 2 U.S.C. 1501 et seq. For the 
purposes of the UMRA, this rule does not impose any Federal mandate 
that may result in increased expenditures by State, local, or Tribal 
governments, or increased expenditures by the private sector, of more 
than $100 million in any year.

[[Page 48542]]

I. Executive Order 13132 (Federalism)

    The Department has reviewed this rule in accordance with the 
Executive Order on Federalism (Executive Order 13132, 64 FR 43255, 
August 10, 1999). This rule does not have federalism implications as 
outlined in E.O. 13132. The rule does not have substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.

J. Executive Order 13175, Indian Tribal Governments

    The Department has reviewed this rule under the terms of Executive 
Order 13175 (65 FR 67249, November 6, 2000) and determined it does not 
have ``tribal implications.'' The rule does not have ``substantial 
direct effects on one or more Indian tribes, on the relationship 
between the Federal Government and Indian tribes, or on the 
distribution of power and responsibilities between the Federal 
Government and Indian tribes.'' As a result, no Tribal summary impact 
statement has been prepared.

VII. Regulatory Revision

    For the reasons set forth in the preamble, the Department of Labor 
amends part 10 of title 29 of the Code of Federal Regulations as 
follows:

PART 10--ESTABLISHING A MINIMUM WAGE FOR CONTRACTORS

0
 1. The authority citation for part 10 is revised to read as follows:

    Authority: 5 U.S.C. 301; section 2, E.O. 13838, 83 FR 25341; 
section 4, E.O. 13658, 79 FR 9851; Secretary's Order 01-2014, 79 FR 
77527.

0
 2. In Sec.  10.4, add paragraph (g) to read as follows:


Sec.  10.4   Exclusions.

* * * * *
    (g) Contracts in connection with seasonal recreational services and 
seasonal recreational equipment rental offered for public use on 
Federal lands. This part shall not apply to contracts or contract-like 
instruments entered into with the Federal Government in connection with 
seasonal recreational services or seasonal recreational equipment 
rental for the general public on Federal lands, but this exemption 
shall not apply to lodging and food services associated with seasonal 
recreational services. Seasonal recreational services include river 
running, hunting, fishing, horseback riding, camping, mountaineering 
activities, recreational ski services, and youth camps.

    Signed in Washington, DC, this 18th day of September.
Bryan L. Jarrett,
Acting Administrator, Wage and Hour Division.
[FR Doc. 2018-20757 Filed 9-25-18; 8:45 am]
BILLING CODE 4510-27-P