HR Compliance

Federal Contract Workers to See Minimum Wage Increase

By

Robert Barclay

| Feb 14, 2014

President Barack Obama’s promise to increase the minimum wage for federal contract workers became official when he signed an executive order earlier this week. The increase from $7.25 to $10.10 per hour will become effective Jan. 1, 2015.

The increase will apply to new contracts and replacements for expiring contracts. Based on changes to the U.S. Consumer Price Index, the rates will continue to increase annually after 2015.

Examples given by the White House of workers who will benefit from the increase include concession workers in national parks, nursing assistants who serve veterans and those serving food to American troops.

Tipped workers employed through federal contracts will see an increase in their hourly pay as well, to at least $4.90 per hour, effective Jan. 1, 2015. The new wage minimum is set to increase by 95 cents each year until it reaches 70 percent of the standard federal minimum wage rate. Through a combination of tips and employer wages, federal-contracted tipped workers will make an hourly minimum of $10.10.

Per Obama’s executive order, all disabled individuals employed through federal contracts also will receive the $10.10 hourly minimum. Previously, workers whose productivity was affected based on their disabilities could be paid less than others performing the same job.

For more information, view the White House’s fact sheet.

About the Author

Robert Barclay

Robert Barclay has been the Tax Research Team Lead at Paycom since 2012, and has been instrumental in such company projects as the development of its Affordable Care Act compliance product, implementation of geolocation services and redesign of Form W-2. He joined Paycom in 2011, bringing more than 20 years of experience with the capital markets consulting practices of Ernst & Young in Memphis, Tenn., and Birmingham, Ala.; and Causey Demgen & Moore in Denver, Colo. A native Oklahoman, Barclay is a graduate of Rhodes College in Memphis, where he played football as linebacker.

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