The FAR Council published a final rule to implement the President’s February 2014 Executive Order establishing a minimum wage for federal contractors.  The final rule adopts almost all of the provisions of last year’s interim rule, with a few changes that employers should note.

First, the final rule clarifies the timing of price adjustments.  Because the Executive Order contemplates an annual review and increase of the minimum wage to keep pace with the Consumer Price Index, contractors can request price adjustments to reflect the increased labor costs.  Under the final rule, contractors may make the request “only after the effective date of a new annual E.O. minimum wage determination published” by the Department of Labor.  In September, the Department announced that the minimum wage would increase to $10.15 per hour, effective January 1, 2016.

Second, the final rule pushes some enforcement authority down to contracting officers.  For most enforcement actions, contracting officers must receive authorization and direction from the Administrator of the Wage and Hour Division.  If, however, a contractor fails to comply with the requirement (in FAR 52.222-55(e)(2)) “to furnish payroll records,” the final rule directs the contracting officer to withhold payment until the contractor comes into compliance.

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Photo of Jeff Bozman Jeff Bozman

Jeff Bozman practices with the Public Policy & Government Affairs and Government Contracts practice groups in Washington, DC.  He focuses on the defense and aerospace industry, and on the labor and employment laws that apply to government contractors.

Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions…

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions as well as transactional and legislative issues. Her practice also includes bid protest and contract claims and appeals litigation before GAO, agency boards and the federal courts. Ms. Plitsch has particular expertise in advising clients in the pharmaceutical and biologics industry. She advises a range of pharmaceutical and biologics manufacturers on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as research and development contracts and grants with various federal agencies. She also has significant experience advising on the requirements of various programs under which vaccine products and biodefense medical countermeasures are procured by the Government.