U.S. Department of Labor Announces Rule to Increase Minimum Wage for Federal Contract Employees

by Abeer Sikder

On November 24, 2021, the U.S. Department of Labor published a final rule that increases the hourly minimum wage to $15 for federal contract employees beginning January 30, 2022, up from the current rate of $10.95 per hour. The rule also eliminates the exemption for federal contractors with disabilities to be paid less than the minimum wage.

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Federal and State Subminimum Wage Legal and Policy Framework

State Exchange on Employment & Disability

Federal Legal and Policy Framework

Under Section 14(c) of the Fair Labor Standards Act, employers are authorized, after receiving a certificate from the Wage and Hour Division, to pay subminimum wages (SMWs)—wages less than the federal minimum wage—to workers who have disabilities “for the job  being performed.” The certificate also allows the payment of wages that are less than the prevailing wage to workers who have disabilities for the work being performed on contracts subject to the McNamara-O’Hara Service Contract Act (SCA) and the Walsh-Healey Public Contracts Act (PCA).

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