Minimum Wage for Federal Contracts Covered by Executive Order 14026, Notice of Rate Change in Effect as of January 1, 2023, 59464-59468 [2022-20906]
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59464
Federal Register / Vol. 87, No. 189 / Friday, September 30, 2022 / Notices
Washington, DC 20210; telephone (202)
693–2350. In addition, the charter is
available for viewing or download at the
Federal Advisory Committee Database at
https://www.facadatabase.gov.
Authority and Signature
James S. Frederick, Deputy Assistant
Secretary of Labor for Occupational
Safety and Health, authorized the
preparation of this notice under the
authority granted by 29 U.S.C. 656; 5
U.S.C. App. 2; 29 CFR part 1912a; 41
CFR part 102–3; and Secretary of
Labor’s Order No. 8–2020 (85 FR 58393,
Sept. 18, 2020).
Signed at Washington, DC, on September
26, 2022.
James S. Frederick,
Deputy Assistant Secretary of Labor for
Occupational Safety and Health.
[FR Doc. 2022–21230 Filed 9–29–22; 8:45 am]
BILLING CODE 4510–26–P
DEPARTMENT OF LABOR
Wage and Hour Division
Minimum Wage for Federal Contracts
Covered by Executive Order 14026,
Notice of Rate Change in Effect as of
January 1, 2023
Wage and Hour Division,
Department of Labor.
ACTION: Notice.
AGENCY:
The Wage and Hour Division
(WHD) of the U.S. Department of Labor
(the Department) is issuing this notice to
announce the applicable minimum
wage rate for workers performing work
on or in connection with federal
contracts covered by Executive Order
14026, Increasing the Minimum Wage
for Federal Contractors (the Executive
Order or the order). Beginning on
January 1, 2023, the Executive Order
14026 minimum wage rate that
generally must be paid to workers
performing work on or in connection
with covered contracts will increase to
$16.20 per hour, while the required
minimum cash wage that generally must
be paid to tipped employees performing
work on or in connection with covered
contracts will increase to $13.75 per
hour. Similar contracts that were
entered into, renewed, or extended prior
to January 30, 2022, are generally
subject to a lower minimum wage rate
established by Executive Order 13658 of
February 12, 2014, Establishing a
Minimum Wage for Contractors.
DATES: These new Executive Order
14026 wage rates shall take effect on
January 1, 2023.
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SUMMARY:
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FOR FURTHER INFORMATION CONTACT:
Amy DeBisschop, 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). Alternative formats are
available upon request by calling 1–
866–487–9243. If you are deaf, hard of
hearing, or have a speech disability,
please dial 7–1–1 to access
telecommunications relay services.
SUPPLEMENTARY INFORMATION:
I. Executive Order 14026 Background
and Requirements for Determining
Annual Increases to the Minimum
Wage Rate
On April 27, 2021, President Joseph
R. Biden, Jr. signed Executive Order
14026, ‘‘Increasing the Minimum Wage
for Federal Contractors.’’ 86 FR 22835.
In relevant part, Executive Order 14026
raised the hourly minimum wage paid
by federal contractors to workers
performing work on or in connection
with certain covered Federal contracts
to $15.00 per hour, beginning January
30, 2022, with annual adjustments for
inflation thereafter in amounts
determined by the Secretary of Labor.
Id.
Executive Order 14026 directed the
Secretary to issue regulations to
implement the order’s requirements. See
86 FR 22836. Accordingly, after
engaging in notice-and-comment
rulemaking, the Department published a
final rule on November 24, 2021,
implementing Executive Order 14026.
See 86 FR 67126. The final regulations,
set forth at 29 CFR part 23, established
standards and procedures for
implementing and enforcing the
minimum wage protections of Executive
Order 14026.1
Executive Order 14026 and its
implementing regulations require the
Secretary to determine the applicable
minimum wage rate for workers
performing work on or in connection
with covered contracts on an annual
basis, beginning January 1, 2023. See 86
FR 22835–36; see also 29 CFR
23.10(b)(2), 23.50(a)(2), 23.120(a).
Sections 2(a) and (b) of Executive Order
14026 establish the methodology that
1 Based on an order issued by the U.S. Court of
Appeals for the Tenth Circuit on February 17, 2022,
the minimum wage requirements of the final rule
implementing Executive Order 14026 are not
currently being enforced as 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.’’ The final rule’s requirements remain in
effect for all other contracts subject to the rule.
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the Secretary must use to determine the
annual inflation-based increases to the
minimum wage rate. See 86 FR 22835–
36. These provisions, which are
implemented in 29 CFR 23.50(b)(2),
explain that the applicable minimum
wage determined by the Secretary for
each calendar year shall be:
• Not less than the amount in effect
on the date of such determination;
• Increased from such amount by the
annual percentage increase in the
Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI–W)
(United States city average, all items,
not seasonally adjusted), or its successor
publication, as determined by the
Bureau of Labor Statistics (BLS); and
• Rounded to the nearest multiple of
$0.05.
Section 2(b) of Executive Order 14026
further provides that, in calculating the
annual percentage increase in the CPI–
W for purposes of determining the new
minimum wage rate, the Secretary shall
compare such CPI–W for the most
recent month, quarter, or year available
(as selected by the Secretary prior to the
first year for which a minimum wage is
in effect) with the CPI–W for the same
month in the preceding year, the same
quarter in the preceding year, or the
preceding year, respectively. See 86 FR
22835–36. To calculate the annual
percentage increase in the CPI–W, the
Department elected in its final rule
implementing Executive Order 14026 to
compare such CPI–W for the most
recent year available with the CPI–W for
the preceding year. See 29 CFR
23.50(b)(2)(iii). Consistent with the
regulations implementing Executive
Order 13658, see 29 CFR 10.5, the
Department explained that it decided to
compare the CPI–W for the most recent
year available (instead of using the most
recent month or quarter, as allowed by
the order) with the CPI–W for the
preceding year, ‘‘to minimize the impact
of seasonal fluctuations on the
Executive order minimum wage rate.’’
86 FR 67167.
Once a determination has been made
with respect to the new minimum wage
rate, Executive Order 14026 and its
implementing regulations require the
Secretary to notify the public of the
applicable minimum wage rate on an
annual basis at least 90 days before any
new minimum wage takes effect. See 86
FR 22835; 29 CFR 23.50(a)(2),
23.120(c)(1). The regulations explain
that the Administrator of the
Department’s Wage and Hour Division
(the Administrator) will publish an
annual notice in the Federal Register
stating the applicable minimum wage
rate at least 90 days before any new
minimum wage takes effect. See 29 CFR
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Federal Register / Vol. 87, No. 189 / Friday, September 30, 2022 / Notices
23.120(c)(2)(i). Additionally, the
regulations state that the Administrator
will provide notice of the Executive
Order minimum wage rate on https://
sam.gov/content/wage-determinations,
or any successor site; on all wage
determinations issued under the DavisBacon Act (DBA), 40 U.S.C. 3141 et seq.,
and the Service Contract Act (SCA), 41
U.S.C. 6701 et seq.; and by other means
the Administrator deems appropriate.
See 29 CFR 23.120(c)(2)(ii)–(iv).
Section 3 of Executive Order 14026
explains the application of the order to
tipped workers. 86 FR 22836. It
provides that for workers covered by
section 2 of the order who are tipped
employees pursuant to section 3(t) of
the FLSA, 29 U.S.C. 203(t), the cash
wage that must be paid by an employer
to such workers shall be at least: (i)
$10.50 an hour, beginning on January
30, 2022; (ii) beginning January 1, 2023,
85 percent of the wage in effect under
section 2 of the order, rounded to the
nearest multiple of $0.05; and (iii)
beginning January 1, 2024, and for each
subsequent year, 100 percent of the
wage in effect under section 2 of the
order. 86 FR 22836. Where workers do
not receive a sufficient additional
amount of tips, when combined with
the hourly cash wage paid by the
employer, such that their total earnings
are equal to the minimum wage under
section 2 of the order, section 3 requires
that the cash wage paid by the employer
be increased such that the workers’ total
earnings equal the section 2 minimum
wage. Id. Consistent with applicable
law, if the wage required to be paid
under the SCA, 41 U.S.C. 6701 et seq.,
or any other applicable law or
regulation is higher than the wage
required by section 2 of the order, the
employer must pay additional cash
wages sufficient to meet the highest
wage required to be paid. 86 FR 22836.
Because Executive Order 14026 is still
in its first year of implementation, the
Executive Order 14026 minimum wage
and the cash wage required for tipped
employees are currently at their initial
amounts of $15.00 and $10.50 per hour,
respectively.2
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2 Contracts
of the same kind as are covered by
Executive Order 14026 and that were entered into,
renewed, or extended prior to January 30, 2022, are
generally subject to Executive Order 13658 and its
lower minimum wage requirements. The Executive
Order 13658 minimum wage and the cash wage
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II. The 2023 Executive Order 14026
Minimum Wage Rate
Using the methodology set forth in
Executive Order 14026 and summarized
above, the Department must first
determine the annual percentage
increase in the CPI–W (United States
city average, all items, not seasonally
adjusted), as published by BLS, to
determine the new Executive Order
14026 minimum wage rate. In
calculating the annual percentage
increase in the CPI–W, the Department
must compare the CPI–W for the most
recent year available with the CPI–W for
the preceding year. The Department
therefore compares the percentage
change in the CPI–W between the most
recent year (i.e., the most recent four
quarters) and the prior year (i.e., the four
quarters preceding the most recent
year). The Department then increases
the current Executive Order minimum
wage rate by the resulting annual
percentage change and rounds to the
nearest multiple of $0.05.
To determine the Executive Order
14026 minimum wage rate beginning
January 1, 2023, the Department
therefore calculated the CPI–W for the
most recent year by averaging the CPI–
W for the four most recent quarters,
which consist of the first two quarters
of 2022 and the last two quarters of 2021
(i.e., July 2021 through June 2022). This
produced an average index level of
277.2779.3 The Department then
compared that data to the average CPI–
W for the preceding year—257.0463—
which consists of the first two quarters
of 2021 and the last two quarters of 2020
(i.e., July 2020 through June 2021).
Based on this methodology, the
Department determined that the annual
percentage increase in the CPI–W
(United States city average, all items,
not seasonally adjusted) was 7.871
percent ((277.2779 ÷ 257.0463) ¥ 1).
The Department then applied that
annual percentage increase of 7.871
percent to the current Executive Order
14026 minimum wage ($15.00 per
hour), which resulted in an hourly wage
rate of $16.181 (($15.00 × 0.07871) +
required for tipped employees are currently $11.25
and $7.90 per hour, respectively. See 86 FR 51683.
3 In 1988, the reference base for the CPI–W was
changed from 1967=100 to 1982–84=100. The
1982–84 period was chosen to coincide with the
updated expenditure weights which were based on
the Consumer Expenditure Surveys for the years
1982, 1983 and 1984.
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59465
$15.00); however, pursuant to Executive
Order 14026, the updated minimum
wage rate must be rounded to the
nearest multiple of $0.05.
Accordingly, effective January 1,
2023, the new minimum wage rate that
must generally be paid to workers
performing on or in connection with
contracts covered by Executive Order
14026 will be $16.20 per hour. A poster
reflecting this new Executive Order
14026 minimum wage rate is set forth at
Appendix B.
III. The 2023 Executive Order 14026
Minimum Cash Wage for Tipped
Employees
As noted above, section 3 of Executive
Order 14026 provides a methodology to
determine the amount of the minimum
hourly cash wage that must be paid to
tipped employees performing on or in
connection with covered contracts. In
relevant part, section 3(a)(ii) of the
Executive order specifies that, for
calendar year 2023, the minimum
hourly cash wage for tipped employees
shall increase to 85 percent of the wage
in effect under section 2 of the order,
rounded to the nearest multiple of
$0.05. See 86 FR 22836; see also 29 CFR
23.280(a)(1)(ii). Eighty-five percent of
the new Executive Order 14026
minimum wage rate of $16.20 is $13.77
($16.20 × 0.85). Because the Executive
Order provides that the rate must be
rounded to the nearest $0.05, the new
minimum hourly cash wage for tipped
workers performing on or in connection
with covered contracts will—effective
on January 1, 2023—be $13.75 per hour.
IV. Appendix
The Appendix to this notice provides
a chart of the CPI–W data published by
BLS that the Department used to
calculate the new Executive Order
14026 minimum wage rate based on the
methodology explained herein.
Martin J. Walsh,
Secretary of Labor.
Appendix A: Data Used To Determine
Executive Order 14026 Minimum Wage
Rate Effective January 1, 2023
Data Source: Consumer Price Index for
Urban Wage Earners and Clerical Workers
(CPI–W)
(United States city average, all items, not
seasonally adjusted)
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Federal Register / Vol. 87, No. 189 / Friday, September 30, 2022 / Notices
Quarter 3
2020Q3 to
2021Q2 ..........
2021Q3 to
2022Q2 ..........
Annual Percentage Increase ..
Quarter 4
Quarter 1
Quarter 2
252.636
253.597
254.004
254.076
253.826
254.081
255.296
256.843
258.935
261.237
263.612
266.412
257.0463
267.789
268.387
269.086
271.552
273.042
273.925
276.296
278.943
283.176
284.575
288.022
292.542
277.2779
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
7.871%
Appendix B: Updated Version of the
Executive Order 14026 Poster
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59467
The law requires certain employers to display this posterwhereempfoyees can easily see it
Ml NIMU M WAGE
Executive Order 14026 (Eb) requlres ihatfecleral coniraclors pay workers performing work on or in
connection with covered contracts at least {1) $15.00 per hour beginning January 30, 2022, and (2)
beginnlng January 1, 2023, and every year·thereafter, an 1nflation-adjusted amount determined by
the Secretary of Labor in accordance with the EO and appropriate regulations. The EO hourly
minimum wage in effectfrom January 1, 2023 through Deeember 31, 2023 is $16.20.
TIPS
Covered lipped employees must be paid a cash wage of at least $13.75 per hour effecfiiie·Januaty.
1, 2023 through December 31, 2023. If a worker's tips. combined with the required cash wage of at
least $13.75 per hour paid by the contractor do not equal the EO hourly minimum wage for
contractors, the contractor must increase the cash wage paid to. make up the difference. Certain
other conditions mus! also be met
EXCLUSION$
•
The EO minimum wage may not apply to some workers who provide support "in eonneetioh wltt\"
covered contracts for less than 20 percent of their hours worked in a week..
• The EO minimum wage may not apply to certain other occupations and workers.
EI\IFQRCEI\IIENT
The U.S. Department of Labor's Wage and Hour Division (WHD) is responsible for enforcing this
law, WHD can answer questions about your workptace rights and protections, investigate.
employers, and recover back wages, All WHD serviees are free and confidential, Employers tar\not
retaliate or discriminate against someone who files a complaint or participates in an investigation.
WH D will accept a complaint in any language. You can find your nearest WHD office at
https:/lwww.dol.gov/whd/locatl or call loll-free 1(866) 4US-WAGE (1-866-48.7--9243). We do no! ask
workers aboutthe.ir immigration status. .\Jl/e·can help.
ADDITIONAL
IN FORMATION
• The EO applies Ohly io new federai constri.lelion ahd service conitacls, as defined by the
Secretary in the regulations at 29 CFR part 23.
• Workers with disabillttes whose wages are governed by special certificates issued. under sectroh
14(c) of the Fair llilbor Standards Act must also raceive no less than the full EO minimum wage
rate.
• Some stale or local laws may provide greater worker protections; employers must follow the law
that requires the highest rate of pay,
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• More information about; the EO is available at www.dol.gov/agencies/whd/government•
contractsleo14026.
59468
Federal Register / Vol. 87, No. 189 / Friday, September 30, 2022 / Notices
I. Executive Order 13658 Background
and Requirements for Determining
Annual Increases to the Minimum
Wage Rate
[FR Doc. 2022–20906 Filed 9–29–22; 8:45 am]
BILLING CODE 4510–27–P
DEPARTMENT OF LABOR
Wage and Hour Division
Minimum Wage for Federal Contracts
Covered by Executive Order 13658,
Notice of Rate Change in Effect as of
January 1, 2023
Wage and Hour Division,
Department of Labor.
ACTION: Notice.
AGENCY:
The Wage and Hour Division
(WHD) of the U.S. Department of Labor
(the Department) is issuing this notice to
announce the applicable minimum
wage rate for workers performing work
on or in connection with federal
contracts covered by Executive Order
13658, Establishing a Minimum Wage
for Contractors (the Executive Order or
the order), beginning January 1, 2023.
Beginning on that date, the Executive
Order 13658 minimum wage rate that
generally must be paid to workers
performing work on or in connection
with covered contracts will increase to
$12.15 per hour, while the required
minimum cash wage that generally must
be paid to tipped employees performing
work on or in connection with covered
contracts will increase to $8.50 per
hour. Covered contracts that are entered
into on or after January 30, 2022, or that
are renewed or extended (pursuant to an
option or otherwise) on or after January
30, 2022, are generally subject to a
higher minimum wage rate established
by Executive Order 14026 of April 27,
2021, Increasing the Minimum Wage for
Federal Contractors.
DATES: These new Executive Order
13658 rates shall take effect on January
1, 2023.
FOR FURTHER INFORMATION CONTACT:
Amy DeBisschop, 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). Alternative formats are
available upon request by calling 1–
866–487–9243. If you are deaf, hard of
hearing, or have a speech disability,
please dial 7–1–1 to access
telecommunications relay services.
SUPPLEMENTARY INFORMATION:
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SUMMARY:
VerDate Sep<11>2014
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Jkt 256001
Executive Order 13658 was signed on
February 12, 2014, and raised the hourly
minimum wage for workers performing
work on or in connection with covered
federal contracts to $10.10 per hour,
beginning January 1, 2015, with annual
adjustments thereafter in an amount
determined by the Secretary pursuant to
the order. See 79 FR 9851. The
Executive Order directed the Secretary
to issue regulations to implement the
order’s requirements. See 79 FR 9852.
Accordingly, after engaging in noticeand-comment rulemaking, the
Department published a final rule on
October 7, 2014, to implement the
Executive Order. See 79 FR 60634. The
final regulations, set forth at 29 CFR part
10, established standards and
procedures for implementing and
enforcing the minimum wage
protections of the order.
Executive Order 13658 and its
implementing regulations require the
Secretary to determine the applicable
minimum wage rate for workers
performing work on or in connection
with covered contracts on an annual
basis, beginning January 1, 2016. See 79
FR 9851; 29 CFR 10.1(a)(2), 10.5(a)(2),
10.12(a). Sections 2(a) and (b) of the
order establish the methodology that the
Secretary must use to determine the
annual inflation-based increases to the
minimum wage rate. See 79 FR 9851.
These provisions, which are
implemented in 29 CFR 10.5(b)(2),
explain that the applicable minimum
wage determined by the Secretary for
each calendar year shall be:
• Not less than the amount in effect
on the date of such determination;
• Increased from such amount by the
annual percentage increase in the
Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI–W)
(United States city average, all items,
not seasonally adjusted), or its successor
publication, as determined by the
Bureau of Labor Statistics (BLS); and
• Rounded to the nearest multiple of
$0.05.
Section 2(b) of Executive Order 13658
further provides that, in calculating the
annual percentage increase in the CPI–
W for purposes of determining the new
minimum wage rate, the Secretary shall
compare such CPI–W for the most
recent month, quarter, or year available
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(as selected by the Secretary prior to the
first year for which a minimum wage is
in effect) with the CPI–W for the same
month in the preceding year, the same
quarter in the preceding year, or the
preceding year, respectively. See 79 FR
9851. To calculate the annual
percentage increase in the CPI–W, the
Department elected in the final rule
implementing the Executive Order to
compare such CPI–W for the most
recent year available with the CPI–W for
the preceding year. See 29 CFR
10.5(b)(2)(iii). In the final rule, the
Department explained that it decided to
compare the CPI–W for the most recent
year available (instead of using the most
recent month or quarter, as allowed by
the order) with the CPI–W for the
preceding year, ‘‘to minimize the impact
of seasonal fluctuations on the
Executive Order minimum wage rate.’’
79 FR 60666.
Once a determination has been made
with respect to the new minimum wage
rate, Executive Order 13658 and its
implementing regulations require the
Secretary to notify the public of the
applicable minimum wage rate on an
annual basis at least 90 days before any
new minimum wage takes effect. See 79
FR 9851; 29 CFR 10.5(a)(2), 10.12(c)(1).
The regulations explain that the
Administrator of the Department’s Wage
and Hour Division (the Administrator)
will publish an annual notice in the
Federal Register stating the applicable
minimum wage rate at least 90 days
before any new minimum wage takes
effect. See 29 CFR 10.12(c)(2)(i).
Additionally, the regulations state that
the Administrator will provide notice of
the Executive Order minimum wage rate
on Wage Determinations OnLine
(WDOL), https://www.wdol.gov, or any
successor site; 1 on all wage
determinations issued under the DavisBacon Act (DBA), 40 U.S.C. 3141 et seq.,
and the Service Contract Act (SCA), 41
U.S.C. 6701 et seq.; and by other means
the Administrator deems appropriate.
See 29 CFR 10.12(c)(2)(ii)–(iv).
Section 3 of Executive Order 13658
requires contractors to pay tipped
employees covered by the order
performing on or in connection with
covered contracts an hourly cash wage
1 WDOL.gov has since moved to https://sam.gov/
content/wage-determinations. This website is the
authoritative and single website for obtaining
appropriate Service Contract Act and Davis-Bacon
Act wage determinations for each official contract
action.
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]]>Agencies
[Federal Register Volume 87, Number 189 (Friday, September 30, 2022)]
[Notices]
[Pages 59464-59468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20906]
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Wage and Hour Division
Minimum Wage for Federal Contracts Covered by Executive Order
14026, Notice of Rate Change in Effect as of January 1, 2023
AGENCY: Wage and Hour Division, Department of Labor.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Wage and Hour Division (WHD) of the U.S. Department of
Labor (the Department) is issuing this notice to announce the
applicable minimum wage rate for workers performing work on or in
connection with federal contracts covered by Executive Order 14026,
Increasing the Minimum Wage for Federal Contractors (the Executive
Order or the order). Beginning on January 1, 2023, the Executive Order
14026 minimum wage rate that generally must be paid to workers
performing work on or in connection with covered contracts will
increase to $16.20 per hour, while the required minimum cash wage that
generally must be paid to tipped employees performing work on or in
connection with covered contracts will increase to $13.75 per hour.
Similar contracts that were entered into, renewed, or extended prior to
January 30, 2022, are generally subject to a lower minimum wage rate
established by Executive Order 13658 of February 12, 2014, Establishing
a Minimum Wage for Contractors.
DATES: These new Executive Order 14026 wage rates shall take effect on
January 1, 2023.
FOR FURTHER INFORMATION CONTACT: Amy DeBisschop, 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). Alternative formats are available upon request by calling
1-866-487-9243. If you are deaf, hard of hearing, or have a speech
disability, please dial 7-1-1 to access telecommunications relay
services.
SUPPLEMENTARY INFORMATION:
I. Executive Order 14026 Background and Requirements for Determining
Annual Increases to the Minimum Wage Rate
On April 27, 2021, President Joseph R. Biden, Jr. signed Executive
Order 14026, ``Increasing the Minimum Wage for Federal Contractors.''
86 FR 22835. In relevant part, Executive Order 14026 raised the hourly
minimum wage paid by federal contractors to workers performing work on
or in connection with certain covered Federal contracts to $15.00 per
hour, beginning January 30, 2022, with annual adjustments for inflation
thereafter in amounts determined by the Secretary of Labor. Id.
Executive Order 14026 directed the Secretary to issue regulations
to implement the order's requirements. See 86 FR 22836. Accordingly,
after engaging in notice-and-comment rulemaking, the Department
published a final rule on November 24, 2021, implementing Executive
Order 14026. See 86 FR 67126. The final regulations, set forth at 29
CFR part 23, established standards and procedures for implementing and
enforcing the minimum wage protections of Executive Order 14026.\1\
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\1\ Based on an order issued by the U.S. Court of Appeals for
the Tenth Circuit on February 17, 2022, the minimum wage
requirements of the final rule implementing Executive Order 14026
are not currently being enforced as 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.'' The
final rule's requirements remain in effect for all other contracts
subject to the rule.
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Executive Order 14026 and its implementing regulations require the
Secretary to determine the applicable minimum wage rate for workers
performing work on or in connection with covered contracts on an annual
basis, beginning January 1, 2023. See 86 FR 22835-36; see also 29 CFR
23.10(b)(2), 23.50(a)(2), 23.120(a). Sections 2(a) and (b) of Executive
Order 14026 establish the methodology that the Secretary must use to
determine the annual inflation-based increases to the minimum wage
rate. See 86 FR 22835-36. These provisions, which are implemented in 29
CFR 23.50(b)(2), explain that the applicable minimum wage determined by
the Secretary for each calendar year shall be:
Not less than the amount in effect on the date of such
determination;
Increased from such amount by the annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) (United States city average, all items, not
seasonally adjusted), or its successor publication, as determined by
the Bureau of Labor Statistics (BLS); and
Rounded to the nearest multiple of $0.05.
Section 2(b) of Executive Order 14026 further provides that, in
calculating the annual percentage increase in the CPI-W for purposes of
determining the new minimum wage rate, the Secretary shall compare such
CPI-W for the most recent month, quarter, or year available (as
selected by the Secretary prior to the first year for which a minimum
wage is in effect) with the CPI-W for the same month in the preceding
year, the same quarter in the preceding year, or the preceding year,
respectively. See 86 FR 22835-36. To calculate the annual percentage
increase in the CPI-W, the Department elected in its final rule
implementing Executive Order 14026 to compare such CPI-W for the most
recent year available with the CPI-W for the preceding year. See 29 CFR
23.50(b)(2)(iii). Consistent with the regulations implementing
Executive Order 13658, see 29 CFR 10.5, the Department explained that
it decided to compare the CPI-W for the most recent year available
(instead of using the most recent month or quarter, as allowed by the
order) with the CPI-W for the preceding year, ``to minimize the impact
of seasonal fluctuations on the Executive order minimum wage rate.'' 86
FR 67167.
Once a determination has been made with respect to the new minimum
wage rate, Executive Order 14026 and its implementing regulations
require the Secretary to notify the public of the applicable minimum
wage rate on an annual basis at least 90 days before any new minimum
wage takes effect. See 86 FR 22835; 29 CFR 23.50(a)(2), 23.120(c)(1).
The regulations explain that the Administrator of the Department's Wage
and Hour Division (the Administrator) will publish an annual notice in
the Federal Register stating the applicable minimum wage rate at least
90 days before any new minimum wage takes effect. See 29 CFR
[[Page 59465]]
23.120(c)(2)(i). Additionally, the regulations state that the
Administrator will provide notice of the Executive Order minimum wage
rate on https://sam.gov/content/wage-determinations, or any successor
site; on all wage determinations issued under the Davis-Bacon Act
(DBA), 40 U.S.C. 3141 et seq., and the Service Contract Act (SCA), 41
U.S.C. 6701 et seq.; and by other means the Administrator deems
appropriate. See 29 CFR 23.120(c)(2)(ii)-(iv).
Section 3 of Executive Order 14026 explains the application of the
order to tipped workers. 86 FR 22836. It provides that for workers
covered by section 2 of the order who are tipped employees pursuant to
section 3(t) of the FLSA, 29 U.S.C. 203(t), the cash wage that must be
paid by an employer to such workers shall be at least: (i) $10.50 an
hour, beginning on January 30, 2022; (ii) beginning January 1, 2023, 85
percent of the wage in effect under section 2 of the order, rounded to
the nearest multiple of $0.05; and (iii) beginning January 1, 2024, and
for each subsequent year, 100 percent of the wage in effect under
section 2 of the order. 86 FR 22836. Where workers do not receive a
sufficient additional amount of tips, when combined with the hourly
cash wage paid by the employer, such that their total earnings are
equal to the minimum wage under section 2 of the order, section 3
requires that the cash wage paid by the employer be increased such that
the workers' total earnings equal the section 2 minimum wage. Id.
Consistent with applicable law, if the wage required to be paid under
the SCA, 41 U.S.C. 6701 et seq., or any other applicable law or
regulation is higher than the wage required by section 2 of the order,
the employer must pay additional cash wages sufficient to meet the
highest wage required to be paid. 86 FR 22836.
Because Executive Order 14026 is still in its first year of
implementation, the Executive Order 14026 minimum wage and the cash
wage required for tipped employees are currently at their initial
amounts of $15.00 and $10.50 per hour, respectively.\2\
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\2\ Contracts of the same kind as are covered by Executive Order
14026 and that were entered into, renewed, or extended prior to
January 30, 2022, are generally subject to Executive Order 13658 and
its lower minimum wage requirements. The Executive Order 13658
minimum wage and the cash wage required for tipped employees are
currently $11.25 and $7.90 per hour, respectively. See 86 FR 51683.
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II. The 2023 Executive Order 14026 Minimum Wage Rate
Using the methodology set forth in Executive Order 14026 and
summarized above, the Department must first determine the annual
percentage increase in the CPI-W (United States city average, all
items, not seasonally adjusted), as published by BLS, to determine the
new Executive Order 14026 minimum wage rate. In calculating the annual
percentage increase in the CPI-W, the Department must compare the CPI-W
for the most recent year available with the CPI-W for the preceding
year. The Department therefore compares the percentage change in the
CPI-W between the most recent year (i.e., the most recent four
quarters) and the prior year (i.e., the four quarters preceding the
most recent year). The Department then increases the current Executive
Order minimum wage rate by the resulting annual percentage change and
rounds to the nearest multiple of $0.05.
To determine the Executive Order 14026 minimum wage rate beginning
January 1, 2023, the Department therefore calculated the CPI-W for the
most recent year by averaging the CPI-W for the four most recent
quarters, which consist of the first two quarters of 2022 and the last
two quarters of 2021 (i.e., July 2021 through June 2022). This produced
an average index level of 277.2779.\3\ The Department then compared
that data to the average CPI-W for the preceding year--257.0463--which
consists of the first two quarters of 2021 and the last two quarters of
2020 (i.e., July 2020 through June 2021). Based on this methodology,
the Department determined that the annual percentage increase in the
CPI-W (United States city average, all items, not seasonally adjusted)
was 7.871 percent ((277.2779 / 257.0463) - 1). The Department then
applied that annual percentage increase of 7.871 percent to the current
Executive Order 14026 minimum wage ($15.00 per hour), which resulted in
an hourly wage rate of $16.181 (($15.00 x 0.07871) + $15.00); however,
pursuant to Executive Order 14026, the updated minimum wage rate must
be rounded to the nearest multiple of $0.05.
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\3\ In 1988, the reference base for the CPI-W was changed from
1967=100 to 1982-84=100. The 1982-84 period was chosen to coincide
with the updated expenditure weights which were based on the
Consumer Expenditure Surveys for the years 1982, 1983 and 1984.
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Accordingly, effective January 1, 2023, the new minimum wage rate
that must generally be paid to workers performing on or in connection
with contracts covered by Executive Order 14026 will be $16.20 per
hour. A poster reflecting this new Executive Order 14026 minimum wage
rate is set forth at Appendix B.
III. The 2023 Executive Order 14026 Minimum Cash Wage for Tipped
Employees
As noted above, section 3 of Executive Order 14026 provides a
methodology to determine the amount of the minimum hourly cash wage
that must be paid to tipped employees performing on or in connection
with covered contracts. In relevant part, section 3(a)(ii) of the
Executive order specifies that, for calendar year 2023, the minimum
hourly cash wage for tipped employees shall increase to 85 percent of
the wage in effect under section 2 of the order, rounded to the nearest
multiple of $0.05. See 86 FR 22836; see also 29 CFR 23.280(a)(1)(ii).
Eighty-five percent of the new Executive Order 14026 minimum wage rate
of $16.20 is $13.77 ($16.20 x 0.85). Because the Executive Order
provides that the rate must be rounded to the nearest $0.05, the new
minimum hourly cash wage for tipped workers performing on or in
connection with covered contracts will--effective on January 1, 2023--
be $13.75 per hour.
IV. Appendix
The Appendix to this notice provides a chart of the CPI-W data
published by BLS that the Department used to calculate the new
Executive Order 14026 minimum wage rate based on the methodology
explained herein.
Martin J. Walsh,
Secretary of Labor.
Appendix A: Data Used To Determine Executive Order 14026 Minimum Wage
Rate Effective January 1, 2023
Data Source: Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W)
(United States city average, all items, not seasonally adjusted)
[[Page 59466]]
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Quarter 3
Quarter 4
Quarter 1
Quarter 2 Annual
average
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2020Q3 to 2021Q2..... 252.636 253.597 254.004 254.076 253.826 254.081 255.296 256.843 258.935 261.237 263.612 266.412 257.0463
2021Q3 to 2022Q2..... 267.789 268.387 269.086 271.552 273.042 273.925 276.296 278.943 283.176 284.575 288.022 292.542 277.2779
Annual Percentage ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 7.871%
Increase............
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Appendix B: Updated Version of the Executive Order 14026 Poster
BILLING CODE 4510-27-C
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[GRAPHIC] [TIFF OMITTED] TN30SE22.000
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[FR Doc. 2022-20906 Filed 9-29-22; 8:45 am]
BILLING CODE 4510-27-P
