The Labor Department released its final rule on Tuesday to raise the minimum wage for more than 200,000 federal contracting employees to $10.10 per hour, effective Jan. 1, 2015.
The document put out by Labor reflects an executive order signed by President Barack Obama in February, which argued that the federal government benefits its procurement interests when it contracts with sources that adequately compensate their workers.
“Raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs. These savings and quality improvements will lead to improved economy and efficiency in government procurement,” Obama wrote in an executive order that he signed on Feb. 12.
The wage hike reflects a recent push by Obama to increase the federal minimum wage to $10.10 per hour for all American workers. That effort, however, has not gained traction in Congress. The current minimum wage is $7.25 per hour and cannot be increased unilaterally by the President.
According to the measure, the wage increase applies only to employees when they are completing work on a federal contract. The wage hike does not apply to workers who spend less than 20 percent of their time in a given work week on the contract project. Likewise, students, apprentices and employees paid with grant money do not benefit from the minimum wage increase.
Under the measure, federal contractors must also pay its tipped employees at least $4.90 per hour.
Starting Jan. 1, 2016, the Labor secretary will set the minimum wage for contractors, and must publish notice of the new minimum wage 90 days before it takes effect. The final rule also states that the secretary has the authority to reset the minimum wage annually.