Minimum Wage for Contractors; Updating Regulations To Reflect Executive Order 13838, 48537-48542 [2018-20757]
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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,
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SUMMARY:
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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.
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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]
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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
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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.
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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
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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)
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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.
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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.
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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
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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
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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.
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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.
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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.
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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.
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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.
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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: https://
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 https://www.regulations.gov
without making any change to the
comments, including any personal
information provided. The https://
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 https://
www.regulations.gov. It is the
responsibility of the commenter to
safeguard personal information.
Comments submitted through https://
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
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]]>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]
=======================================================================
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
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\3\ 58 FR 51735 (Sept. 30, 1993).
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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.
---------------------------------------------------------------------------
\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\
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\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
