Federal Minimum Wage for Federal Contractors and the Veterans Administration

On February 12, 2014, President Obama signed Executive Order 13658, Establishing a Minimum Wage for Contractors. The Executive Order raises the hourly minimum wage paid by contractors to workers performing on covered Federal contracts to: (i) $10.10 per hour, beginning January 1, 2015; and (ii) beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of the Department of Labor (DoL) in accordance with the Order. On October 1, 2014, DOL published the final rule implementing the provisions of Executive Order 13658.

According to the DOL press release, “key provisions of the final rule include:

  • It defines key terms used in the Executive Order, including contracts, contract-like instruments, and concessions contracts.
  • It provides guidance for contractors on their obligations under the Executive Order.
  • It establishes an enforcement process that should be familiar to most government contractors and will protect the right of workers to receive the new $10.10 minimum wage.
  • It confirms that approximately 200,000 workers will benefit from the Executive Order.”

Executive Order 13658 applies to new contracts and replacements for expiring contracts with the Federal Government that result from solicitations issued on or after January 1, 2015, or to contracts that are awarded outside the solicitation process on or after January 1, 2015. It is long-standing policy that Medicare (Parts A and B) or Medicaid providers are not considered to be federal contractors. However, if a provider currently has VA patients, they are considered to be a federal contractor. If you have a VA contract, you will want to visit with your legal counsel or local or regional VA contact on how this minimum wage increase will impact you at the time of the renewal of your contract option year. If you are considering entering into a VA contract once 2015 begins, Executive Order 13658 will be applicable to you as you will be a federal contractor. You will need to pay the $10.10 rate. That being said, under the VA Provider agreement proposed rule AHCA has been working to finalize, providers would not be considered federal contractors, and would therefore not have to follow complex federal contracting and reporting rules. AHCA is currently awaiting the release of the final rule, and will keep its members posted on any updates relating to this matter. 

For more information, including a fact sheet and FAQ on the DOL final rule, please visit the Wage and Hour Division’s Executive Order 13658 webpage. If you have any questions, please contact AHCA’s Dana Halvorson or Dianne De La Mare.