Federal Register, Volume 79 Issue 240 (Monday, December 15, 2014)

[Federal Register Volume 79, Number 240 (Monday, December 15, 2014)]
[Rules and Regulations]
[Pages 74544-74553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29137]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 22, and 52

[FAC 2005-79; FAR Case 2015-003; Item I; Docket No. 2014-0050; Sequence
No. 1]
RIN 9000-AM82

Federal Acquisition Regulation; Establishing a Minimum Wage for
Contractors

AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule.

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[[Page 74545]]

SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the
Federal Acquisition Regulation (FAR) to implement the Executive Order,
Establishing a Minimum Wage for Contractors, and a final rule issued by
the Department of Labor.

DATES: Effective: February 13, 2015.
Comment Date: Interested parties should submit written comments to
the Regulatory Secretariat Division on or before February 13, 2015 to
be considered in the formation of the final rule.
Applicability: This rule applies to solicitations issued on or
after the effective date of the rule. Applicability of the clause at
52.222-55, Minimum Wages Under Executive Order 13658, to existing
contracts that do not contain a class deviation clause implementing the
Executive Order (E.O.), is as follows--
(1) Contracting officers shall include the clause in bilateral
modifications extending the contract when such modifications are
individually or cumulatively longer than six months.
(2) In accordance with FAR 1.108(d)(3), contracting officers are
strongly encouraged to include the clause in existing indefinite-
delivery indefinite-quantity contracts, if the remaining ordering
period extends at least six months and the amount of remaining work or
number of orders expected is substantial.

ADDRESSES: Submit comments identified by FAC 2005-79, FAR Case 2015-003
by any of the following methods:
Regulations.gov: http://www.regulations.gov. Submit
comments via the Federal eRulemaking portal by searching for ``FAR Case
2015-003''. Select the link ``Comment Now'' that corresponds with ``FAR
Case 2015-003''. Follow the instructions provided at the ``Comment
Now'' screen. Please include your name, company name (if any), and
``FAR Case 2015-003'' on your attached document.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat Division (MVCB), ATTN: Ms. Hada Flowers, 1800 F Street NW.,
2nd Floor, Washington, DC 20405-0001.
Instructions: Please submit comments only and cite ``FAR Case 2015-
003'' in all correspondence related to this case. All comments received
will be posted without change to http://www.regulations.gov, including
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT: Mr. Edward Loeb, Procurement Analyst,
at 202-501-0650 for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat Division at 202-501-4755. Please cite FAC 2005-79, FAR Case
2015-003.

SUPPLEMENTARY INFORMATION:

Applicability

I. Background

DoD, GSA, and NASA are issuing an interim rule amending the FAR to
implement E.O. 13658, Establishing a Minimum Wage for Contractors. The
E.O. was signed February 12, 2014, and published in the Federal
Register at 79 FR 9851, on February 20, 2014. The FAR is also
implementing a final rule issued by the Wage and Hour Division of the
Department of Labor (DOL), published at 79 FR 60634, on October 7,
2014, also entitled ``Establishing a Minimum Wage for Contractors.''
The DOL rule added a new 29 CFR part 10. The DOL rule covers both FAR-
based contracts, and non-FAR-based contracts and contract-like
instruments; this interim rule only applies to FAR-based contracts.
The E.O. seeks to increase efficiency and cost savings in the work
performed by parties who contract with the Federal Government by
raising the hourly minimum wage paid to workers on specified Federal
contracts. Beginning January 1, 2015, the hourly rate will be $10.10,
and beginning January 1, 2016, and annually thereafter, an amount
determined by the Secretary of Labor. The E.O. explains that
``[r]aising the pay of low-wage workers increases their morale and the
productivity and quality of their work, lowers turnover and
accompanying costs, and reduces supervisory costs,'' and that ``[t]hese
savings and quality improvements will lead to improved economy and
efficiency in Government procurement.'' The E.O. directed DOL to issue
regulations by October 1, 2014, and for the FAR Council to issue
regulations within 60 days of the DOL regulations.
Section 8(c) of the E.O. strongly encouraged agencies to take all
reasonable and legally permissible steps to ensure individuals working
on Federal contracts subject to the E.O. would be paid an hourly wage
of at least $10.10 as of January 1, 2015. This paragraph intended that
agencies would apply the E.O. minimum wage to contracts awarded between
the issuance of the E.O. and the effective date of the FAR rule. OMB
and DOL issued a joint memorandum on June 12, 2014 to the Executive
Departments and Agencies providing guidance for implementing the
requirements of the E.O. prior to January 1, 2015 and prior to the
issuance of final DOL regulations. This memorandum requested that the
FAR Council provide standard wording for a clause to be included in
solicitations and contracts pursuant to a deviation from the FAR
pending issuance of a FAR rule implementing DOL regulations. The FAR
Council, in coordination with DOL, drafted matching class deviations
with a contract clause to implement Section 8(c) of the E.O. DoD and
NASA issued the class deviations. GSA issued CAAC Letter 2014-03 on
June 25, 2014 to the Civilian Agency Acquisition Council (CAAC)
agencies which constituted consultation with the CAAC Chair, as
required by FAR 1.404(a)(1), for use of a model deviation clause.

Discussion and Analysis

A. This FAR interim rule only applies to acquisitions subject to
the FAR. The DOL rule applies to FAR acquisitions as described in FAR
1.104, and actions that are not governed by the FAR such as contracts
for concessions and contracts entered into with the Federal Government
in connection with Federal property or lands and related to offering
services for Federal employees, their dependents, or the general
public.
B. The DOL regulatory requirements included in the FAR rule:
1. Require that the minimum hourly wage rate paid to workers
performing on, or in connection with, contracts and subcontracts
covered by the Service Contract Labor Standards statute or the Wage
Rate Requirements (Construction) statute, is at least $10.10 per hour
beginning January 1, 2015, and beginning January 1, 2016, and annually
thereafter an amount determined by the Secretary of Labor (Secretary)
(29 CFR 10.1) (FAR 22.1902 and 52.222-55(b)).
2. Define a ``worker'' to whom the rule applies (29 CFR 10.2) (FAR
22.1901 and 52.222-55(a)).
3. Apply to construction contracts covered by the Wage Rate
Requirements (Construction) statute (formerly known as the Davis Bacon
Act, FAR subpart 22.4), and to contracts for services covered by the
Service Contract Labor Standards statute (formerly known as the Service
Contract Act, FAR subpart 22.10), and workers whose wages are governed
by those statutes or the Fair Labor Standards Act (FLSA) (29 CFR 10.2
and 10.3) (FAR 22.1903, 22.1906 and 52.222-55(c)).
4. Only apply to contracts with the Federal Government requiring
performance in whole or in part within the United States (the 50 states
and the District of Columbia) (29 CFR 10.2 and 10.3) (FAR 22.1903,
22.1906 and 52.222-55 (a), (b)(1), and (k)).

[[Page 74546]]

5. Provide that the rule does not excuse a contractor's
noncompliance with any applicable Federal or State prevailing wage law
or any applicable law or municipal ordinance establishing a minimum
wage higher than the minimum established under the E.O. (29 CFR 10.5
and 10.22) (FAR 22.1902(b) and 52.222-55(b)(8)).
6. Exempt the following individuals from the requirements of the
rule (29 CFR 10.2 and 10.4) (FAR 22.1901 and 22.1903(b)(2), and 52.222-
55(a) and (c)):
a. Employees who are not entitled to the minimum wage set forth at
29 U.S.C. 206(a)(1) of the FLSA pursuant to 29 U.S.C. 213(a) and
214(a)-(b), except for workers who are otherwise covered by the Wage
Rate Requirements (Construction) statute and the Service Contract Labor
Standards statute. These individuals include but are not limited to:
i. Learners, apprentices, or messengers whose wages are calculated
pursuant to special certificates issued under 29 U.S.C. 214(a).
ii. Students whose wages are calculated pursuant to special
certificates issued under 29 U.S.C. 214(b).
iii. Individuals employed in a bona fide executive, administrative,
or professional capacity as those terms are defined in 29 CFR part 541.
b. FLSA-covered individuals performing in connection with covered
contracts, i.e., those workers who perform work duties necessary to the
performance of the contract but who are not directly engaged in
performing the specific work called for by the contract, and who spend
less than 20 percent of their hours worked in a particular workweek
performing in connection with such contracts.
7. Prohibit any person from discriminating against any worker
because the worker has filed a complaint, instituted or caused to be
instituted a proceeding under the DOL rule, or has testified or is
about to testify in any such proceeding (29 CFR 10.6 and 10.44) (FAR
22.1905(d) and 52.222-55(i)).
8. Provide that the clause flows down to all covered subcontracts
at any tier. The DOL rule provides that the contractor and any upper-
tier subcontractor are responsible for the compliance by any
subcontractor or lower-tier subcontractor with the E.O. minimum wage
requirements, whether or not the contract clause was included in the
subcontract (29 CFR 10.21) (52.222-55(j) and (k)).
9. Provide that the Government may withhold payment from the
contractor to reimburse unpaid wages and shall withhold payment for
failure to comply with the recordkeeping requirement under the contract
or any other Federal contract with the same contractor (29 CFR 10.11,
10.44, and Appendix A(g)(3)) (FAR 22.1905(a) and (d) and 52.222-55(e)
and (g)).
10. Provide that a contracting agency is responsible for forwarding
relevant information to the DOL, within 14 calendar days of receipt of
a complaint alleging contractor noncompliance with the E.O. or the DOL
rule or of being contacted by DOL (29 CFR 10.11) (FAR 22.1905(b)).
11. Describe the methodology for determining the new E.O. minimum
wage and for notifying the public of the new applicable minimum wage
rate on an annual basis at least 90 days before any new minimum wage is
to take effect. (29 CFR 10.5(b) and 10.12) (FAR 22.1904 and 52.222-
55(b)).
12. Prohibit a contractor from discharging any part of minimum wage
obligation under the E.O. by furnishing fringe benefits or, with
respect to workers whose wages are governed by the Service Contract
Labor Standards statute, the cash equivalent thereof. (29 CFR 10.22(b))
(FAR 52.222-55(b)).
13. Provide that a contractor may satisfy the wage payment
obligation to a tipped employee through a combination of an hourly cash
wage (which, in accordance with the E.O. and DOL's regulation, must be
at least $4.90 an hour, beginning January 1, 2015, and an amount
determined in accordance with the E.O. in future years) and a credit
based on tips received by such employee. (29 CFR 10.24(b) and 10.28)
(FAR 22.1902(c) and 52.222-55(b)).
14. Permit a contractor to make deductions that reduce a worker's
wages below the E.O. minimum wage rate only if the deduction qualifies
as a deduction required by Federal, State, or local law, such as
Federal or State withholding of income taxes, or in other limited
circumstances specified in the DOL rule. (29 CFR 10.23) (FAR 52.222-
55(b)).
15. Establish that wage payments to workers are to be made no later
than one pay period following the end of the regular pay period in
which the wages were earned, and that a pay period under the E.O. may
not be longer than semi-monthly. (29 CFR 10.25) (FAR 52.222-55(b)).
16. Delineate the records to be kept by contractors. These
requirements are consistent with existing requirements under the
Service Contract Labor Standards statute and the Wage Rate Requirements
(Construction) statute. (29 CFR 10.26) (FAR 52.222-55(e)).
17. Require the contractor to notify all workers performing work
on, or in connection with, a covered contract of the applicable minimum
wage rate under the E.O. The rule details the authorized means of doing
so. (29 CFR 10.29) (FAR 52.222-55(d)).
18. Address enforcement of the E.O. requirements and details the
process for filing complaints, investigating complaints, and the
remedies and sanctions available for violations. (29 CFR 10.41-10.44)
(FAR 22.1905 and 52.222-55(f) and (g)).
19. Address the handling of disputes concerning contractor
compliance and identifies the DOL procedures for adjudication. (29 CFR
10.51-10.58) (FAR 52.222-55(h)).
C. FAR implementation of the DOL rule by DoD, GSA, and NASA is
discussed below, as well as those instances where the FAR rule differs
from the DOL rule, and the rationale for those differences:
1. A new part 22 subpart, FAR 22.19, Establishing a Minimum Wage
for Contractors, is added to include the following sections:
a. Scope of subpart. FAR 22.1900 gives the authority citations for
the E.O. and DOL regulation.
b. Definition of ``Worker''. FAR 22.1901 incorporates the DOL
definition, updating the statutory references to reflect the
recodification of Titles 40 and 41 of the United States Code (see FAR
1.110).
c. Policy. FAR 22.1902 describes the E.O. minimum wage requirements
and the relationship to other wage rates, including other Federal or
State prevailing wage rates and collective bargaining agreements that
provide a higher wage rate, and to wages of tipped workers. The DOL
preamble discussed the relationship of the E.O. minimum wage to minimum
wages required in collective bargaining agreements. DoD, GSA, and NASA
determined that this information is critical to both contractors and
contracting officers and included this information in this policy
section and in the contract clause. This issue is addressed, although
not in the same manner, in the clause for Service contracts, 52.222-41,
Service Contract Labor Standards, but it is not addressed in the clause
for Construction contracts, 52.222-6, Construction Wage Rate
Requirements.
The DOL rule included a definition of ``tipped employees'' at 29
CFR 10.2 as well as a discussion of treatment of tipped employees at 29
CFR 10.28. DoD, GSA, and NASA determined that a detailed discussion of
tipped employees or a definition is not needed because tipped employees
are infrequently employed under FAR-based contracts, and concluded that
reference to 29 CFR

[[Page 74547]]

10.24(b) and 10.28 in the FAR rule is adequate coverage.
d. Applicability. FAR 22.1903(a) provides applicability to
contracts governed by the Service Contract Labor Standards statute or
the Wage Rate Requirements (Construction) statute, and to performance
in whole or in part in the United States. The FAR 2.101 definition of
``United States,'' as used in the geographic sense, is used in this
rule--the 50 states and the District of Columbia.
FAR 22.1903(b) delineates individuals to whom the subpart applies
or does not apply. The subpart does not apply to an individual who
performs solely ``in connection with'' covered contracts for less than
20% of hours worked in a given work week. DOL, in its final rule
preamble (79 FR 60634 at 60661), gave helpful examples.
e. Annual Executive Order Minimum Wage Rate. FAR 22.1904, describes
DOL's processes to notify the public of the annual E.O. minimum wage
rates. The coverage at 22.1904 establishes FAR policy for how price
adjustments will be made by contracting officers, when appropriate,
after requests for such price adjustments are received from
contractors. This coverage provides detail and direction, including
examples of how price adjustments are calculated.
The price adjustment language used in the class deviations, which
were crafted prior to formal DOL rulemaking, was adequate for that
purpose. However, given the fully developed DOL regulation, the price
adjustment language in this rule is significantly revised from the
deviation language.
The language in this rule will ensure price adjustments under the
E.O. minimum wage clause do not duplicate other price adjustments made
under the same contract. Only those labor costs, associated labor
costs, and relevant subcontract costs directly resulting from the
increase in the E.O. minimum wage will be subject to adjustment.
f. Enforcement of Executive Order Minimum Wage Requirements. FAR
22.1905 provides information on enforcement authority, filing
complaints, reporting and investigating complaints, remedies and
sanctions, and retroactive inclusion of the contract clause when an
agency fails to include the clause in a contract to which the E.O.
applies.
g. FAR 22.1906 establishes a contract clause prescription for
clause 52.222-55, Minimum Wages under Executive Order 13658, when the
contracts include 52.222-6, Construction Wage Rate Requirements,
($2,000 threshold), or 52.222-41, Service Contract Labor Standards,
($2,500 threshold) and performance is in whole or in part in the United
States.
2. Coverage is added to 22.403-5 and 22.1002-5 by adding new
sections discussing the new minimum wage subpart.
3. Coverage is added to part 52 to--
a. Revise the clause at 52.212-5, Contract Terms and Conditions
Required to Implement Statutes or Executive Orders--Commercial Items,
to include 52.222-55, Minimum Wages Under Executive Order 13658;
b. Revise the clause at 52.213-4, Terms and Conditions--Simplified
Acquisitions (Other than Commercial Items), to include 52.222-55,
Minimum Wages Under Executive Order 13658; and
c. Add 52.222-55, Minimum Wages Under Executive Order 13658. This
includes coverage of the following:
i. Paragraph (a) definitions of ``Worker'' and ``United States''
are provided.
ii. Paragraph (b) includes particular requirements regarding
payment to workers of the E.O. minimum wage. It informs contractors
that the minimum wage rate may be adjusted annually, beginning January
1, 2016 and that they are required to pay workers the adjusted rate.
The Contractor may request a price adjustment to reflect an increase in
wages due to the annual wage rate adjustment. The Contractor must
warrant that the prices in the contract do not include any allowance
for contingency to cover increased costs for such adjustments. Language
for warranting contract price is adapted from existing price adjustment
clauses applicable to Service Contract Labor Standards and the FLSA.
Other subjects covered in this paragraph (b) are: subcontractor price
adjustments, length of pay period, deductions, fringe benefits,
relationship to higher minimum wages imposed by other statutes,
ordinances, or collective bargaining agreements, and workers who
regularly receive tips.
iii. Paragraph (c) informs the contractor which workers the E.O.
minimum wage requirement applies to, and to which individuals it does
not apply.
iv. Paragraph (d) addresses the requirement for the contractor to
notify employees of the E.O. minimum wage rate.
v. Paragraph (e) identifies payroll recordkeeping requirements. It
includes a requirement to make such records available to DOL and the
contracting officer; noncompliance with this requirement will result in
withholding of contract payment.
vi. Paragraph (f) informs the contractor that it must permit access
to DOL to conduct investigations.
vii. Paragraphs (g), (h), and (i) provides information on
enforcement of E.O. Minimum Wage requirements including withholding of
payment for unpaid wages, resolution of disputes, and a prohibition on
retaliation.
viii. Paragraph (j) states that the contractor is responsible for
subcontractor compliance with the requirements of the clause and may be
held liable for unpaid wages due subcontractor workers. Although the
DOL regulation, at 29 CFR 10.21(b) states that the contractor and any
upper-tier subcontractors are responsible for subcontractor compliance
and shall be liable for any unpaid wages for its workers or its
subcontractor workers, DoD, GSA, and NASA have not placed this
responsibility on upper-tier subcontractors in this rule because the
Government does not have privity of contract with subcontractors.
ix. Paragraph (k) states that the Contractor shall include the
substance of the clause, including this paragraph (k) in all
subcontracts, regardless of dollar value, that are subject to Service
Contract Labor Standards statute or the Wage Rate Requirements
(Construction) statute, and are to be performed in whole or in part in
the United States. The requirement to include the substance of the
clause allows only for ministerial changes to the clause. The substance
of the clause will be consistent with the requirements of the clause,
and will not permit substantive changes such as to the rights and
responsibilities of the parties.
4. DoD, GSA, and NASA reviewed the regulations at 29 CFR part 10
including the Appendix A contract clause and determined that adequate
coverage for the following issues is accomplished by existing FAR
coverage and clauses that are applied to contracts subject to the E.O.,
therefore inclusion of the following items into FAR clause 52.222-55,
Minimum Wages Under Executive Order 13658, is unnecessary:
a. Appendix A, paragraph (d) Contract Suspension/Contract
Termination/Contractor Debarment. Suspension and debarment is
independently covered in FAR subpart 9.4. Termination is addressed in
individual applicable contract clauses.
b. Appendix A, paragraph (i), Certification of Eligibility. This
paragraph duplicates coverage in paragraph (p) of FAR clause 52.222-41,
Service Contract Labor Standards, for service and 52.222-15,
Certification of Eligibility, for construction contracts. 41

[[Page 74548]]

U.S.C. 1304 discourages adding certifications to the FAR.
c. Waiver of Rights, states that rights under the DOL rule at 29
CFR 10.7, Waiver of rights, cannot be waived or induced to be waived.
With respect to the FAR, the FAR clause requirements become contract
requirements, which likewise cannot be waived, thus separate inclusion
is unnecessary.
d. 29 CFR 10.24, Overtime payments, restates requirements of the
Fair Labor Standards Act and the Contract Work Hours and Safety
Standards Acts and thus, it is unnecessary to restate existing
requirements.
e. Terms defined in 29 CFR 10.2, Definitions, include ``new
contract''. The FAR rule did not adopt this definition as not all the
elements of the definition apply to or are consistent with FAR
principles. When FAR rules apply to existing contracts, application is
addressed in the Effective Date/Applicability section of the preamble,
not in the Code of Federal Regulations; treatment of bilateral
modifications to existing contracts is addressed in the Applicability
section at the beginning of this preamble. In discussing treatment of
existing contracts DOL stated in the preamble of its rule, ``if parties
bilaterally negotiate a modification that is outside the scope of the
contract, the agency will be required to create a new contract,
triggering solicitation and/or justification requirements, and thus
such a modification after January 1, 2015 should be addressed as a new
contract subject to the Executive Order''. We understand this to refer
to the long-standing requirement for any out-of-scope modification to
be addressed as a new procurement and conducted in accordance with the
requirements of FAR part 6, Competition Requirements.

III. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.

IV. Regulatory Flexibility Act

DoD, GSA, and NASA do not expect this rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
However, an Initial Regulatory Flexibility Analysis (IRFA) has been
performed, and is summarized as follows:

This rule revises the Federal Acquisition Regulation (FAR) to
include procurement policy implementing Executive Order 13658,
Establishing a Minimum Wage for Contractors, dated February 12,
2014, and associated Department of Labor regulatory requirements at
29 CFR Part 10. The Department of Labor (DOL) published an initial
regulatory flexibility analysis of the minimum wage requirement in
its Notice of Proposed Rulemaking (79 FR 34568 at 34602) June 17,
2014. On October 7, 2014 DOL published the final regulatory
flexibility analysis in the final rule (79 FR 60634 at 60704).
This rule applies to contracts awarded under FAR procedures and
covered by the Service Contract Labor Standards statute (41 U.S.C.
chapter 67; see FAR subpart 22.10), including contracts for the
acquisition of commercial services, and the Wage Rate Requirements
(Construction) statute (40 U.S.C. chapter 31 subchapter IV; see FAR
subpart 22.4). The FAR rule does not apply to certain contracts,
such as concession contracts, which may be covered by the DOL rule
and the E.O. but are not FAR contracts. FAR 1.104 addresses the
applicability of the FAR to Federal acquisitions. FAR 2.101 states
``acquisition'' means the ``acquiring by contract with appropriated
funds of supplies or services . . .''.
The objective of this rule is to implement Executive Order
13658, Establishing a Minimum Wage for Contractors, dated February
12, 2014, and associated Department of Labor regulatory requirements
at 29 CFR part 10.
The rule establishes requirements for contractors under
contracts containing the clauses at 52.222-6, Construction Wage Rate
Requirements, or 52.222-41, Labor Standards, i.e. ``covered
contracts'', to pay no less than the applicable E.O. minimum wage to
workers for all hours worked on or in connection with a covered
contract. Contractors must also include a minimum wage contract
clause in covered subcontracts and require covered subcontractors to
include the substance of the clause in covered lower-tier contracts.
This rule applies to contracts and subcontracts at all tiers
covered by the Service Contract Labor Standards statute, or the Wage
Rate Requirements (Construction) statute, which require performance
in whole or in part within the United States. When performance is in
part within and in part outside the United States, the rule applies
to the part of the contract or subcontract performed within the
United States.
This rule applies to workers as defined at 22.1901. As provided
in that definition--
1. Workers are covered regardless of the contractual
relationship alleged to exist between the contractor or
subcontractor and the worker;
2. Workers with disabilities whose wages are calculated pursuant
to special certificates issued under 29 U.S.C. 214(c) are covered;
and
3. Workers who are registered in a bona fide apprenticeship
program or training program registered with the Department of
Labor's Employment and Training Administration, Office of
Apprenticeship, or with a State Apprenticeship Agency recognized by
the Office of Apprenticeship, are covered.

This rule does not apply to--

Fair Labor Standards Act (FLSA)-covered individuals performing
in connection with covered contracts, i.e. those individuals who
perform duties necessary to the performance of the contract, but who
are not directly engaged in performing the specific work called for
by the contract, and who spend less than 20 percent of their hours
worked in a particular workweek performing in connection with such
contracts;
Individuals exempted from the minimum wage requirements of the
FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise
covered by the Service Contract Labor Standards statute, or the Wage
Rate Requirements (Construction) statute. These individuals include
but are not limited to--
a. Learners, apprentices, or messengers whose wages are
calculated pursuant to special certificates issued under 29 U.S.C.
214(a);
b. Students whose wages are calculated pursuant to special
certificates issued under 29 U.S.C. 214(b); and
c. Those employed in a bona fide executive, administrative, or
professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541).
Small businesses in the service or construction industry with
FAR-based contracts or subcontracts awarded after the effective date
of this rule will be impacted unless an exclusion listed above
applies. The rule will require these contractors and subcontractors
to raise their employees' minimum hourly rate to $10.10 per hour,
beginning January 1, 2015, then annually adjust it thereafter, if
necessary, based on the annual minimum wage rate determined by the
DOL.
Data available through the Federal Procurement Data System
(FPDS) for Fiscal Year 2013, reveals 16,264 contracts were awarded
to unique small business vendors for services which contained the
clause at 52.222-41, Labor Standards. Additionally, 5,211 contracts
were awarded to unique small business vendors for construction which
contained the clause at 52.222-6, Construction Wage Rate
Requirements, for a total of 21,475 unique small businesses.
Subcontract data is available from the USASpending Federal Funding
Accountability and Transparency Act Subaward Reporting System
(FSRS), however this system does not distinguish small businesses
from other than small businesses. Data for Fiscal Year 2013 shows
there were a total of 20,127 subcontracts for services and
construction reported and of those 5,391 were unique DUNS. These
5,391 first tier

[[Page 74549]]

unique subcontracts are approximately 25% of the 21,475 unique
contracts. Given that first tier subcontracts account for 25%, then
for estimating purposes, 20% of subcontracts have a second-tier, 10%
of second tier have a third tier, and 5% of third tier have a fourth
tier. This calculation estimates the total number of subcontracts is
6,631. However, since the FSRS does not distinguish small
businesses, this number is overestimated. Data from FPDS has shown
that typically, approximately 60% of a contractor population is
small.
The DOL noted in their final rule (79 FR 60634 at 60691) that
the rule did not impose any additional notice or recordkeeping
requirements on contractors and therefore, the burden for complying
with the recordkeeping requirements was not adjusted. However, DOL
submitted a revised information collection request (ICR), to OMB to
revise the existing ICR for control number 1235-0018 to incorporate
the recordkeeping regulatory citations in its final rule.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
There are no known significant alternatives to the rule that
would meet the requirements of the E.O. and DOL regulation and
minimize any significant economic impact of the rule on small
entities.
DOL, in its final rule, estimated the average wage for affected
employees is $8.79; thus affected firms must raise the hourly wage
for affected employees by $1.31 per hour. Additionally, contractors
must adjust related payroll and unemployment taxes and fringe
benefits. Under covered contracts, contractors are entitled to
recover increases in labor costs resulting from the E.O. minimum
wage requirements by including such costs in offers and when
requesting contract price adjustment under existing and future
contracts for the additional costs related to the increase in the
minimum wage rate for workers performing under the contract. DOL
notes increases in economy and efficiency and expects these added
costs to be offset by an increase in employee morale and
productivity, reduced absenteeism, reduced supervisory costs, and
reduced turnover.
To remind contractors of their obligation in ensuring
subcontractor workers are paid in compliance with the minimum wage
requirement, the following was added at the FAR clause 52.222-55:
1. The contractor is responsible for subcontractor compliance
with the requirements of this subpart, and may be held liable for
unpaid wages due subcontractor's workers.
2. The rule provides that subcontractors may be entitled to
adjustments due to the new minimum wage and that contractors shall
consider any subcontractor(s) requests for such price adjustment.
The rule does not address late payments to small business
subcontractors, however pending FAR case 2014-004 implements section
1334 of the Small Business Jobs and Credit Act of 2010 (Public Law
111-240) and the Small Business Administration's final rule at 78 FR
42391. The rule will require a contractor to self-report to the
contracting officer when the contractor makes late or reduced
payments to small business subcontractors.

The Regulatory Secretariat Division has submitted a copy of the
IRFA to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the IRFA may be obtained from the Regulatory
Secretariat Division. DoD, GSA, and NASA invite comments from small
business concerns and other interested parties on the expected impact
of this rule on small entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C 610 (FAR Case 2015-003), in
correspondence.

V. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C chapter 35) does apply;
however, these changes to the FAR do not impose additional information
collection requirements to the paperwork burden previously approved for
the DOL regulations under OMB Control Number 1235-0018, Records to be
kept by Employers--Fair Labor Standards Act.

VI. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary
of Defense (DoD), the Administrator of General Services (GSA), and the
Administrator of the National Aeronautics and Space Administration
(NASA) that urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment. This action
is necessary because the E.O. requires DoD, GSA, and NASA to issue
regulations within 60 days of the DOL rule, and include a clause which
specifies the new $10.10 per hour minimum wage will be paid to workers
beginning January 1, 2015. The DOL final rule was published October 7,
2014. The DOL rule was published for public comment prior to
publication of the final rule. However, pursuant to 41 U.S.C. 1707,
DoD, GSA, and NASA will consider public comments received in response
to this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 1, 22, and 52

Government procurement.

Dated: December 5, 2014.
William Clark,
Acting Director, Office of Government-wide Acquisition Policy, Office
of Acquisition Policy, Office of Government-wide Policy.

Therefore, the DoD, GSA, and NASA amend 48 CFR parts 1, 22, and 52
as set forth below:

0
1. The authority citation for 48 CFR parts 1, 22, and 52 continues to
read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.

PART 1--FEDERAL AQUSITION REGULATIONS SYSTEM

1.106 [Amended]

0
2. Amend section 1.106, in the table following the introductory text,
by--
0
a. Removing the FAR Segment ``52.222-8'' and its corresponding OMB
control numbers ``1215-0149 and 1215-0017'' and adding ``52.222-8'' and
``1235-0008 and 1235-0018'' in their places, respectively;
0
b. Removing the FAR segment ``52.222-41'' and its corresponding OMB
control numbers ``1215-0017 and 1215-0150'' and adding ``52.222-41''
and ``1235-0018 and 1235-0007'' in their places, respectively; and
0
c. Adding in numerical sequence, FAR segment ``52.222-55'' and its
corresponding OMB Control No. ``1235-0018''.

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

0
3. Amend section 22.001 by adding, in alphabetical order, the
definition ``Agency labor advisor'' to read as follows:

22.001 Definitions.

* * * * *
Agency labor advisor means an individual responsible for advising
contracting agency officials on Federal contract labor matters.
* * * * *

0
4. Amend section 22.403 by revising the heading to read as follows:

22.403 Statutory, Executive Order, and regulatory requirements.

* * * * *

0
5. Add section 22.403-5 to read as follows:

22.403-5 Executive Order 13658.

[[Page 74550]]

Minimum Wages under Executive Order 13658, requires the Executive Order
13658 minimum wage rate to be paid if it is higher than other minimum
wage rates, such as the subpart 22.4 statutory wage determination
amount.

22.1001 [Amended]

0
6. Amend section 22.1001 by removing the definition ``Agency labor
advisor.''

0
7. Amend section 22.1002 by revising the section heading to read as
follows:

22.1002 Statutory and Executive Order requirements.

* * * * *

0
8. Add section 22.1002-5 to read as follows:

22.1002-5 Executive Order 13658.

Executive Order 13658 establishes minimum wages for certain
workers. The wage rate is subject to annual increases by an amount
determined by the Secretary of Labor. See subpart 22.19. The clause at
52.222-55, Minimum Wages under Executive Order 13658, requires the
Executive Order 13658 minimum wage rate to be paid if it is higher than
other minimum wage rates, such as the subpart 22.10 statutory wage
determination amount.

0
9. Add subpart 22.19 to read as follows:
Subpart 22.19--Establishing a Minimum Wage for Contractors
Sec.
22.1900 Scope of subpart.
22.1901 Definition.
22.1902 Policy.
22.1903 Applicability.
22.1904 Annual Executive Order Minimum Wage Rate.
22.1905 Enforcement of Executive Order Minimum Wage Requirements.
22.1906 Contract clause.

Subpart 22.19--Establishing a Minimum Wage for Contractors

22.1900 Scope of subpart.

This subpart prescribes policies and procedures to implement
Executive Order (E.O.) 13658, Establishing a Minimum Wage for
Contractors, dated February 12, 2014, and Department of Labor (DOL)
implementing regulations at 29 CFR part 10.

22.1901 Definition.

Worker, as used in this subpart, (in accordance with 29 CFR 10.2)--
(1) Means any person engaged in performing work on, or in
connection with, a contract covered by Executive Order 13658, and
(i) Whose wages under such contract are governed by the Fair Labor
Standards Act (29 U.S.C. chapter 8), the Service Contract Labor
Standards statute (41 U.S.C. chapter 67), or the Wage Rate Requirements
(Construction) statute (40 U.S.C. chapter 31, subchapter IV),
(ii) Other than individuals employed in a bona fide executive,
administrative, or professional capacity, as those terms are defined in
29 CFR part 541,
(iii) Regardless of the contractual relationship alleged to exist
between the individual and the employer.
(2) Includes workers performing on, or in connection with, the
contract whose wages are calculated pursuant to special certificates
issued under 29 U.S.C. 214(c).
(3) Also includes any person working on, or in connection with, the
contract and individually registered in a bona fide apprenticeship or
training program registered with the Department of Labor's Employment
and Training Administration, Office of Apprenticeship, or with a State
Apprenticeship Agency recognized by the Office of Apprenticeship.

22.1902 Policy.

(a) Pursuant to Executive Order 13658, the minimum hourly wage rate
required to be paid to workers performing on, or in connection with,
contracts and subcontracts subject to this subpart is at least $10.10
per hour beginning January 1, 2015, and beginning January 1, 2016, and
annually thereafter, an amount determined by the Secretary of Labor.
The Administrator of the Wage and Hour Division (the Administrator)
will notify the public of the new E.O. minimum wage rate at least 90
days before it is to take effect. (See 22.1904.)
(b) Relationship with other wage rates. (1) Nothing in this subpart
shall excuse noncompliance with any applicable Federal or State
prevailing wage law or any applicable law or municipal ordinance
establishing a minimum wage higher than the E.O. minimum wage. However,
wage increases under such other laws or municipal ordinances are not
subject to price adjustment under this subpart.
(2) The E.O. minimum wage rate applies whenever it is higher than
any applicable collective bargaining agreement(s) wage rate.
(c) Application to tipped workers. Policies and procedures in DOL
regulations at 29 CFR 10.24(b) and 10.28 address the relationship
between the E.O. minimum wage and wages of workers engaged in an
occupation in which they customarily and regularly receive more than
$30 a month in tips.

22.1903 Applicability.

(a) This subpart applies to contracts covered by the Service
Contract Labor Standards statute (41 U.S.C. chapter 67, formerly known
as the Service Contract Act, subpart 22.10), or the Wage Rate
Requirements (Construction) statute (40 U.S.C. chapter 31, Subchapter
IV, formerly known as the Davis Bacon Act, subpart 22.4), that require
performance in whole or in part within the United States (the 50 states
and the District of Columbia). When performance is in part within and
in part outside the United States, this subpart applies to the part of
the contract that is performed within the United States.
(b)(1) This subpart applies to workers as defined at 22.1901. As
provided in that definition--
(i) Workers are covered regardless of the contractual relationship
alleged to exist between the contractor or subcontractor and the
worker;
(ii) Workers with disabilities whose wages are calculated pursuant
to special certificates issued under 29 U.S.C. 214(c) are covered; and
(iii) Workers who are registered in a bona fide apprenticeship
program or training program registered with the Department of Labor's
Employment and Training Administration, Office of Apprenticeship, or
with a State Apprenticeship Agency recognized by the Office of
Apprenticeship, are covered.
(2) This subpart does not apply to--
(i) Fair Labor Standards Act (FLSA)-covered individuals performing
in connection with contracts covered by the E.O., i.e., those
individuals who perform duties necessary to the performance of the
contract, but who are not directly engaged in performing the specific
work called for by the contract, and who spend less than 20 percent of
their hours worked in a particular workweek performing in connection
with such contracts;
(ii) Individuals exempted from the minimum wage requirements of the
FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise
covered by the Service Contract Labor Standards statute or the Wage
Rate Requirements (Construction) statute. These individuals include but
are not limited to--
(A) Learners, apprentices, or messengers whose wages are calculated
pursuant to special certificates issued under 29 U.S.C. 214(a);
(B) Students whose wages are calculated pursuant to special
certificates issued under 29 U.S.C. 214(b); and
(C) Those employed in a bona fide executive, administrative, or

[[Page 74551]]

professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541).
(c) Agency Labor Advisors, as defined at 22.001, are listed at
http://wdol.gov, and are available to provide guidance and assistance
with the application of this subpart.

22.1904 Annual Executive Order Minimum Wage Rate.

(a) For the E.O. minimum wage rate that becomes effective on
January 1, 2016, and annually thereafter, the Administrator will--
(1) Notify the public of the new E.O. minimum wage rate at least 90
days before it becomes effective by publishing a notice in the Federal
Register;
(2) Publish and maintain on Wage Determinations OnLine (WDOL),
http://www.wdol.gov, or any successor site, the E.O. minimum wage rate;
and
(3) Include a general notice on wage determinations which are
issued under the Service Contract Labor Standards statute or the Wage
Rate Requirements (Construction) statute. The notice will provide
information on the E.O. minimum wage and how to obtain annual updates.
(b)(1) The contractor may request a price adjustment only after the
effective date of a new annual E.O. minimum wage determination
published pursuant to paragraph (a). Prices will be adjusted only if
labor costs increase as a result of the annual E.O. minimum wage, and
for associated labor costs and relevant subcontract costs. Associated
labor costs shall include increases or decreases that result from
changes in social security and unemployment taxes and workers'
compensation insurance, but will not otherwise include any amount for
general and administrative costs, overhead, or profit.
(2) The wage rate price adjustment under this clause is the amount
calculated by subtracting from the new E.O. wage rate the highest of
the following: the previous E.O. minimum wage rate; the current Service
or Construction wage determination rate under the contract; or the
actual wage paid the worker prior to the new minimum wage. If the
amount is zero or below, there will be no price adjustment for this
worker.

------------------------------------------------------------------------

------------------------------------------------------------------------
(i) Example 1_New E.O. wage rate is $11.10.
------------------------------------------------------------------------
Previous E.O. wage rate is $10.70...... Analysis: The calculation is
The current Service or Construction $11.10 - $10.80 = $.30. The
wage determination rate under the price adjustment for this
contract is $10.75.. worker is $.30.
The actual wage paid to the worker
prior the new minimum wage is $10.80..
------------------------------------------------------------------------
(ii) Example 2_New E.O. wage rate is $10.50.
------------------------------------------------------------------------
Previous E.O. wage rate is $10.10...... Analysis: The calculation is
The current Service or Construction $10.50 - $10.80 = -$.30. There
wage determination rate under the is no price adjustment for
contract is $10.75.. this worker.
The actual wage paid to the worker
prior to the new minimum wage is
$10.80..
------------------------------------------------------------------------

(3) The contracting officer shall not adjust the contract price for
any costs other than those identified in paragraph (b)(1) of this
section, and shall not provide duplicate price adjustments with any
price adjustment under clauses implementing the Service Contract Labor
Standards statute or the Wage Rate Requirements (Construction) statute.

22.1905 Enforcement of Executive Order Minimum Wage Requirements.

(a) Authority. (1) Section 5 of the E.O. grants the authority for
investigating potential violations of, and obtaining compliance with,
the E.O. to the Secretary of Labor. The Secretary of Labor, in
promulgating the implementing regulations required by Section 4 of the
E.O., has assigned this authority to the Administrator. Contracting
agencies do not have authority to conduct compliance investigations
under 29 CFR part 10 as implemented in this subpart. This does not
limit the contracting officer's authority to otherwise enforce the
terms and conditions of the contract.
(2) Contracting officers shall withhold payment at the direction of
the Administrator, or upon the contracting officer's own action, if the
contractor fails to comply with the requirements in paragraph (e)(2) of
52.222-55, Minimum Wages Under Executive Order 13658, until such time
as the noncompliance is corrected.
(b) Complaints. (1) Complaints may be filed with the contracting
officer or the Administrator by any person, entity, or organization
that believes a violation of this subpart has occurred.
(2) The identity of any individual who makes a written or oral
statement as a complaint or in the course of an investigation, as well
as portions of the statement which would reveal the individual's
identity, shall not be disclosed in any manner to anyone other than
Federal officials without the prior consent of the individual, unless
otherwise authorized by law.
(3) Upon receipt of a complaint, or if notified that the
Administrator has received a complaint, the contracting officer shall
report the following information, within 14 days, if available without
conducting an investigation, to the Department of Labor, Wage and Hour
Division, Office of Government Contracts, 200 Constitution Avenue NW.,
Room S3006, Washington, DC 20210.
(i) The complaint or description of the alleged violation;
(ii) Available statements by the worker, contractor, or any other
person regarding the alleged violation;
(iii) Evidence that clause 52.222-55, Minimum Wages Under Executive
Order 13658, was included in the contract;
(iv) Information concerning known settlement negotiations between
the parties, if applicable; and
(v) Any other relevant facts known to the contracting officer or
other information requested by the Wage and Hour Division.
(c) Investigations. Complaints will be investigated by the
Administrator, if warranted, in accordance with the procedures in 29
CFR part 10.43.
(d) Remedies and sanctions--(1) Unpaid wages. When the
Administrator's investigation reveals that a contractor has failed to
pay the applicable E.O. minimum wage, the Administrator will notify the
contractor and the contracting agency of the unpaid wage violation, and
request that the contractor remedy the violation. If the contractor
does not remedy the

[[Page 74552]]

violation, the Administrator may direct withholding of payments due on
the contract or any other contract between the contractor and the
Federal Government. Upon final decision and direction of the
Administrator, the contracting agency shall transfer the withheld funds
to the Department of Labor for disbursement in accordance with the
procedures at 22.406-9(c).
(2) Antiretaliation. When a contractor has been found to have
violated paragraph (i) of clause 52.222-55, Minimum Wages Under
Executive Order 13658, the Administrator may provide for relief to the
worker in accordance with 29 CFR 10.44.
(3) Debarment. (i) The Department of Labor may initiate debarment
proceedings under 29 CFR 10.52 whenever a contractor is found to have
disregarded its obligations under 29 CFR part 10.
(ii) Contracting officers shall consider notifying the agency
suspending and debarring official in accordance with agency procedures
when a contractor commits significant violations of contract terms and
conditions related to this subpart.
(4) Retroactive inclusion of contract clause. If a contracting
agency fails to include the contract clause in a contract to which the
E.O. applies, the contracting agency, on its own initiative or within
15 calendar days of notification by an authorized representative of the
Department of Labor, shall incorporate the contract clause in the
contract retroactive to commencement of performance under the contract
through the exercise of any and all authority that may be needed
(including, where necessary, its authority to negotiate or amend, its
authority to pay any necessary additional costs, and its authority
under any contract provision authorizing changes, cancellation and
termination).

22.1906 Contract clause.

Insert the clause at 52.222-55, Minimum Wages Under Executive Order
13658, in solicitations and contracts that include the clause at
52.222-6, Construction Wage Rate Requirements, or 52.222-41, Service
Contract Labor Standards, where work is to be performed, in whole or in
part, in the United States (the 50 States and the District of
Columbia).

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
10. Amend 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Adding paragraph (c)(10);
0
c. Adding paragraph (e)(1)(xvii); and
0
d. Revising the date of Alternate II; and adding paragraph
(e)(1)(ii)(O).
The revisions and additions read as follows:

52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items

* * * * *

Contract Terms and Conditions Required To Implement Statutes or
Executive Orders--Commercial Items DEC 2014)

* * * * *
(c) * * *
(10) 52.222-55, Minimum Wages Under Executive Order 13658 DEC
2014) (Executive Order 13658).
* * * * *
(e)(1) * * *
(xvii) 52.222-55, Minimum Wages Under Executive Order 13658 (DEC
2014) (Executive Order 13658).
* * * * *

Alternate II (DEC 2014)

* * * * *
(e)(1)(ii) * * *
(O) 52.222-55, Minimum Wages Under Executive Order 13658 (DEC
2014) Executive Order 13658).
* * * * *

0
11. Amend 52.213-4 by revising the date of the clause; and adding
paragraph (b)(1)(xv) to read as follows:

52.213-4 Terms and Conditions--Simplified Acquisitions (Other than
Commercial Items)

* * * * *

Terms and Conditions--Simplified Acquisitions (Other Than Commercial
Items) (DEC 2014)

* * * * *
(b)(1) * * *
(xv) 52.222-55, Minimum Wages Under Executive Order 13658 (DEC
2014) (Executive Order 13658) (Applies when 52.222-6 or 52.222-41
are in the contract and performance in whole or in part is in the
United States (the 50 States and the District of Columbia.)
* * * * *

0
12. Add section 52.222-55 to read as follows:

52.222-55, Minimum Wages Under Executive Order 13658.

As prescribed in 22.1906, insert the following clause:

Minimum Wages Under Executive Order 13658 (DEC 2014)

(a) Definitions. As used in this clause--
``United States'' means the 50 states and the District of
Columbia.
``Worker''--
(1) Means any person engaged in performing work on, or in
connection with, a contract covered by Executive Order 13658, and
(i) Whose wages under such contract are governed by the Fair
Labor Standards Act (29 U.S.C. chapter 8), the Service Contract
Labor Standards statute (41 U.S.C. chapter 67), or the Wage Rate
Requirements (Construction) statute (40 U.S.C. chapter 31,
subchapter IV),
(ii) Other than individuals employed in a bona fide executive,
administrative, or professional capacity, as those terms are defined
in 29 CFR part 541,
(iii) Regardless of the contractual relationship alleged to
exist between the individual and the employer.
(2) Includes workers performing on, or in connection with, the
contract whose wages are calculated pursuant to special certificates
issued under 29 U.S.C. 214(c).
(3) Also includes any person working on, or in connection with,
the contract and individually registered in a bona fide
apprenticeship or training program registered with the Department of
Labor's Employment and Training Administration, Office of
Apprenticeship, or with a State Apprenticeship Agency recognized by
the Office of Apprenticeship.
(b) Executive Order Minimum Wage rate. (1) The Contractor shall
pay to workers, while performing in the United States, and
performing on, or in connection with, this contract, a minimum
hourly wage rate of $10.10 per hour beginning January 1, 2015.
(2) The Contractor shall adjust the minimum wage paid, if
necessary, beginning January 1, 2016 and annually thereafter, to
meet the Secretary of Labor's annual E.O. minimum wage. The
Administrator of the Department of Labor's Wage and Hour Division
(the Administrator) will publish annual determinations in the
Federal Register no later than 90 days before the effective date of
the new E.O. minimum wage rate. The Administrator will also publish
the applicable E.O. minimum wage on www.wdol.gov (or any successor
Web site) and on all wage determinations issued under the Service
Contract Labor Standards statute or the Wage Rate Requirements
(Construction) statute. The applicable published E.O. minimum wage
is incorporated by reference into this contract.
(3)(i) The Contractor may request a price adjustment only after
the effective date of the new annual E.O. minimum wage
determination. Prices will be adjusted only if labor costs increase
as a result of an increase in the annual E.O. minimum wage, and for
associated labor costs and relevant subcontract costs. Associated
labor costs shall include increases or decreases that result from
changes in social security and unemployment taxes and workers'
compensation insurance, but will not otherwise include any amount
for general and administrative costs, overhead, or profit.
(ii) Subcontractors may be entitled to adjustments due to the
new minimum wage, pursuant to paragraph (b)(2). Contractors shall
consider any subcontractor requests for such price adjustment.
(iii) The Contracting Officer will not adjust the contract price
under this clause for any costs other than those identified in
paragraph (b)(3)(i) of this clause, and will not provide

[[Page 74553]]

duplicate price adjustments with any price adjustment under clauses
implementing the Service Contract Labor Standards statute or the
Wage Rate Requirements (Construction) statute.
(4) The Contractor warrants that the prices in this contract do
not include allowance for any contingency to cover increased costs
for which adjustment is provided under this clause.
(5) A pay period under this clause may not be longer than semi-
monthly, but may be shorter to comply with any applicable law or
other requirement under this contract establishing a shorter pay
period. Workers shall be paid no later than one pay period following
the end of the regular pay period in which such wages were earned or
accrued.
(6) The Contractor shall pay, unconditionally to each worker,
all wages due free and clear without subsequent rebate or kickback.
The Contractor may make deductions that reduce a worker's wages
below the E.O. minimum wage rate only if done in accordance with 29
CFR 10.23, Deductions.
(7) The Contractor shall not discharge any part of its minimum
wage obligation under this clause by furnishing fringe benefits or,
with respect to workers whose wages are governed by the Service
Contract Labor Standards statute, the cash equivalent thereof.
(8) Nothing in this clause shall excuse the Contractor from
compliance with any applicable Federal or State prevailing wage law
or any applicable law or municipal ordinance establishing a minimum
wage higher than the E.O. minimum wage. However, wage increases
under such other laws or municipal ordinances are not subject to
price adjustment under this subpart.
(9) The Contractor shall pay the E.O. minimum wage rate whenever
it is higher than any applicable collective bargaining agreement(s)
wage rate.
(10) The Contractor shall follow the policies and procedures in
29 CFR 10.24(b) and 10.28 for treatment of workers engaged in an
occupation in which they customarily and regularly receive more than
$30 a month in tips.
(c)(1) This clause applies to workers as defined in paragraph
(a). As provided in that definition--
(i) Workers are covered regardless of the contractual
relationship alleged to exist between the contractor or
subcontractor and the worker;
(ii) Workers with disabilities whose wages are calculated
pursuant to special certificates issued under 29 U.S.C. 214(c) are
covered; and
(iii) Workers who are registered in a bona fide apprenticeship
program or training program registered with the Department of
Labor's Employment and Training Administration, Office of
Apprenticeship, or with a State Apprenticeship Agency recognized by
the Office of Apprenticeship, are covered.
(2) This clause does not apply to--
(i) Fair Labor Standards Act (FLSA)-covered individuals
performing in connection with contracts covered by the E.O., i.e.
those individuals who perform duties necessary to the performance of
the contract, but who are not directly engaged in performing the
specific work called for by the contract, and who spend less than 20
percent of their hours worked in a particular workweek performing in
connection with such contracts;
(ii) Individuals exempted from the minimum wage requirements of
the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise
covered by the Service Contract Labor Standards statute, or the Wage
Rate Requirements (Construction) statute. These individuals include
but are not limited to--
(A) Learners, apprentices, or messengers whose wages are
calculated pursuant to special certificates issued under 29 U.S.C.
214(a).
(B) Students whose wages are calculated pursuant to special
certificates issued under 29 U.S.C. 214(b).
(C) Those employed in a bona fide executive, administrative, or
professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541).
(d) Notice. The Contractor shall notify all workers performing
work on, or in connection with, this contract of the applicable E.O.
minimum wage rate under this clause. With respect to workers covered
by the Service Contract Labor Standards statute or the Wage Rate
Requirements (Construction) statute, the Contractor may meet this
requirement by posting, in a prominent and accessible place at the
worksite, the applicable wage determination under those statutes.
With respect to workers whose wages are governed by the FLSA, the
Contractor shall post notice, utilizing the poster provided by the
Administrator, which can be obtained at www.dol.gov/whd/govcontracts, in a prominent and accessible place at the worksite.
Contractors that customarily post notices to workers electronically
may post the notice electronically provided the electronic posting
is displayed prominently on any Web site that is maintained by the
contractor, whether external or internal, and customarily used for
notices to workers about terms and conditions of employment.
(e) Payroll Records. (1) The Contractor shall make and maintain
records, for three years after completion of the work, containing
the following information for each worker:
(i) Name, address, and social security number;
(ii) The worker's occupation(s) or classification(s);
(iii) The rate or rates of wages paid;
(iv) The number of daily and weekly hours worked by each worker;
(v) Any deductions made; and
(vi) Total wages paid.
(2) The Contractor shall make records pursuant to paragraph
(e)(1) of this clause available for inspection and transcription by
authorized representatives of the Administrator. The Contractor
shall also make such records available upon request of the
Contracting Officer.
(3) The Contractor shall make a copy of the contract available,
as applicable, for inspection or transcription by authorized
representatives of the Administrator.
(4) Failure to comply with this paragraph (e) shall be a
violation of 29 CFR 10.26 and this contract. Upon direction of the
Administrator or upon the Contracting Officer's own action, payment
shall be withheld until such time as the noncompliance is corrected.
(5) Nothing in this clause limits or otherwise modifies the
Contractor's payroll and recordkeeping obligations, if any, under
the Service Contract Labor Standards statute, the Wage Rate
Requirements (Construction) statute, the Fair Labor Standards Act,
or any other applicable law.
(f) Access. The Contractor shall permit authorized
representatives of the Administrator to conduct investigations,
including interviewing workers at the worksite during normal working
hours.
(g) Withholding. The Contracting Officer, upon his or her own
action or upon written request of the Administrator, will withhold
funds or cause funds to be withheld, from the Contractor under this
or any other Federal contract with the same Contractor, sufficient
to pay workers the full amount of wages required by this clause.
(h) Disputes. Department of Labor has set forth in 29 CFR 10.51,
Disputes concerning contractor compliance, the procedures for
resolving disputes concerning a contractor's compliance with
Department of Labor regulations at 29 CFR part 10. Such disputes
shall be resolved in accordance with those procedures and not the
Disputes clause of this contract. These disputes include disputes
between the Contractor (or any of its subcontractors) and the
contracting agency, the Department of Labor, or the workers or their
representatives.
(i) Antiretaliation. The Contractor shall not discharge or in
any other manner discriminate against any worker because such worker
has filed any complaint or instituted or caused to be instituted any
proceeding under or related to compliance with the E.O. or this
clause, or has testified or is about to testify in any such
proceeding.
(j) Subcontractor compliance. The Contractor is responsible for
subcontractor compliance with the requirements of this clause and
may be held liable for unpaid wages due subcontractor workers.
(k) Subcontracts. The Contractor shall include the substance of
this clause, including this paragraph (k) in all subcontracts,
regardless of dollar value, that are subject to the Service Contract
Labor Standards statute or the Wage Rate Requirements (Construction)
statute, and are to be performed in whole or in part in the United
States.

(End of clause)
[FR Doc. 2014-29137 Filed 12-12-14; 8:45 am]
BILLING CODE 6820-EP-P