[Federal Register Volume 81, Number 182 (Tuesday, September 20, 2016)]
[Notices]
[Pages 64513-64517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22515]
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DEPARTMENT OF LABOR
Office of the Secretary
Establishing a Minimum Wage for Contractors, Notice of Rate
Change in Effect as of January 1, 2017
AGENCY: Wage and Hour Division, Department of Labor.
ACTION: Notice.
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SUMMARY: The Wage and Hour Division (WHD) of the U.S. Department of
Labor (the Department) is issuing this notice to announce the
applicable minimum wage rate to be paid to workers performing work on
or in connection with Federal contracts covered by Executive Order
13658, beginning January 1, 2017.
Executive Order 13658, Establishing a Minimum Wage for Contractors
(the Executive Order or the Order), was signed by President Barack
Obama on February 12, 2014, and raised the hourly minimum wage paid by
contractors to workers performing work on covered Federal contracts to:
$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 Secretary) in accordance with the methodology set forth in
the Order. See 79 FR 9851. The Secretary's determination of the
Executive Order minimum wage rate also affects the minimum hourly cash
wage that must be paid to tipped employees performing work on or in
connection with covered contracts. See 79 FR 9851-52. The Secretary is
required to provide notice to the public of the new minimum wage rate
at least 90 days before such rate is to take effect. See 79 FR 9851.
The applicable minimum wage under Executive Order 13658 is currently
$10.15 per hour, in effect since January 1, 2016. See 80 FR 55646. The
applicable minimum cash wage that generally must be paid to tipped
employees performing work on or in connection with covered contracts is
currently $5.85 per hour, in effect since January 1, 2016. Id.
Pursuant to Executive Order 13658 and its implementing regulations
at 29 CFR part 10, notice is hereby given that beginning January 1,
2017, the Executive Order minimum wage rate that generally must be paid
to workers performing work on or in connection with covered contracts
will increase to $10.20 per hour. Notice is also hereby given that,
beginning January 1, 2017, the required minimum cash wage that
generally must be paid to tipped employees performing work on or in
connection with covered contracts will increase to $6.80 per hour.
DATES: This notice is effective on September 20, 2016.
FOR FURTHER INFORMATION CONTACT: Robert Waterman, Division of
Regulations, Legislation, and Interpretation, Wage and Hour Division,
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW.,
Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-
free number). Copies of this notice may be obtained in alternative
formats (Large Print, Braille, Audio Tape, or Disc), upon request, by
calling (202) 693-0023 (not a toll-free number). TTY/TTD callers may
dial toll-free (877) 889-5627 to obtain information or request
materials in alternative formats.
SUPPLEMENTARY INFORMATION:
I. Executive Order 13658 Background and Requirements for Determining
Annual Increases to the Minimum Wage Rate
Executive Order 13658 was signed by President Barack Obama on
February 12, 2014, and raised the hourly minimum wage paid by
contractors to workers performing work on or in connection with covered
Federal contracts to $10.10 per hour, beginning January 1, 2015; and
beginning January 1, 2016, and annually thereafter, an amount
determined by the Secretary pursuant to the Order. See 79 FR 9851. The
Executive Order directed the Secretary to issue regulations to
implement the Order's requirements. See 79 FR 9852. Accordingly, after
engaging in notice-and-comment rulemaking, the Department published a
Final Rule on October 7, 2014 to implement the Executive Order. See 79
FR 60634. The final regulations, set forth at 29 CFR part 10,
established standards and procedures for implementing and enforcing the
minimum wage protections of the Order.
The Executive Order and its implementing regulations require the
Secretary to determine the applicable minimum wage rate to be paid to
workers performing work on or in connection with covered contracts on
an annual basis, beginning January 1, 2016. See 79 FR 9851; 29 CFR
10.1(a)(2), 10.5(a)(2), 10.12(a). Sections 2(a) and (b) of the Order
establish the methodology that the Secretary must use to determine the
annual inflation-based increases to the minimum wage rate. See 79 FR
9851. These provisions, which are implemented in 29 CFR 10.5(b),
explain that the applicable minimum wage determined by the Secretary
for each calendar year shall be:
(i) Not less than the amount in effect on the date of such
determination;
(ii) Increased from such amount by the annual percentage increase
in the Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) (United States city average, all items, not seasonally
adjusted), or its successor publication, as determined by the Bureau of
Labor Statistics (BLS); and
(iii) Rounded to the nearest multiple of $0.05.
Section 2(b) of the Executive Order further provides that, in
calculating the annual percentage increase in the CPI-W for purposes of
determining the new minimum wage rate, the Secretary shall compare such
CPI-W for the most recent month, quarter, or year available (as
selected by the Secretary prior to the first year for which a minimum
wage is in effect) with the CPI-W for the same month in the preceding
year, the same quarter in the preceding year, or the preceding year,
respectively. See 79 FR 9851. In order to calculate the annual
percentage increase in the CPI-W, the Department elected in its Final
Rule implementing the Executive Order to compare such CPI-W for the
most recent year available with the CPI-W for the preceding year. See
29 CFR 10.5(b)(2)(iii). In its Final Rule, the Department explained
that it decided to compare the CPI-W for the most recent year available
(instead of using the most recent month or quarter, as allowed by the
Order) with the CPI-W for the preceding year, in order ``to minimize
the impact of seasonal fluctuations on the Executive Order minimum wage
rate.'' 79 FR 60666.
Once a determination has been made with respect to the new minimum
wage rate to be paid to workers performing work on or in connection
with covered contracts, the Executive Order and its implementing
regulations require the Secretary to notify the public of the
applicable minimum wage rate on an annual basis at least 90 days before
any new minimum wage is to take effect. See 79 FR 9851; 29 CFR
10.5(a)(2),
[[Page 64514]]
10.12(c)(1). The regulations explain that the Administrator of the
Department's Wage and Hour Division (the Administrator) will publish an
annual notice in the Federal Register stating the applicable minimum
wage rate at least 90 days before any new minimum wage is to take
effect. See 29 CFR 10.12(c)(2)(i). Additionally, the regulations state
that the Administrator will provide notice of the Executive Order
minimum wage rate on Wage Determinations OnLine (WDOL), http://www.wdol.gov, or any successor site; on all wage determinations issued
under the Davis-Bacon Act (DBA), 40 U.S.C. 3141 et seq., and the
Service Contract Act (SCA), 41 U.S.C. 6701 et seq.; and by other means
the Administrator deems appropriate. See 29 CFR 10.12(c)(2)(ii)-(iv).
Section 3 of the Executive Order requires contractors to pay tipped
employees covered by the Order performing on or in connection with
covered contracts an hourly cash wage of at least $4.90, beginning on
January 1, 2015, provided the employees receive sufficient tips to
equal the Executive Order minimum wage rate under section 2 of the
Order when combined with the cash wage. See 79 FR 9851-52; 29 CFR
10.28(a). The Order further provides that, in each succeeding year,
beginning January 1, 2016, the required cash wage must increase by
$0.95 (or a lesser amount if necessary) until it reaches 70 percent of
the Executive Order minimum wage. Id. For subsequent years, the cash
wage for tipped employees will be 70 percent of the Executive Order
minimum wage rounded to the nearest $0.05. Id. At all times, the amount
of tips received by the employee must equal at least the difference
between the cash wage paid and the Executive Order minimum wage; if the
employee does not receive sufficient tips, the contractor must increase
the cash wage paid so that the cash wage in combination with the tips
received equals the Executive Order minimum wage. Id.
On September 16, 2015, the Administrator published a notice in the
Federal Register informing the public that, effective January 1, 2016,
the Executive Order minimum wage and the minimum cash wage required to
be paid to tipped employees covered by the Executive Order would be
$10.15 and $5.85 per hour, respectively. See 80 FR 55646.
II. The 2017 Executive Order Minimum Wage Rate
In accordance with the methodology set forth in the Executive Order
and summarized above, the Department must first determine the annual
percentage increase in the CPI-W (United States city average, all
items, not seasonally adjusted) as published by BLS in order to
determine the new Executive Order minimum wage rate. In calculating the
annual percentage increase in the CPI, the Department must compare the
CPI-W for the most recent year available with the CPI-W for the
preceding year. The Department therefore compares the percentage change
in the CPI-W between the most recent year (i.e., the most recent four
quarters) and the prior year (i.e., the four quarters preceding the
most recent year). The current Executive Order minimum wage rate must
then be increased by the resulting annual percentage change and rounded
to the nearest multiple of $0.05.
In order to determine the Executive Order minimum wage rate
beginning January 1, 2017, the Department therefore calculated the CPI-
W for the most recent year by averaging the CPI-W for the four most
recent quarters, which consist of the first two quarters of 2016 and
the last two quarters of 2015 (i.e., July 2015 through June 2016). The
Department then compared that data to the average CPI-W for the
preceding year, which consists of the first two quarters of 2015 and
the last two quarters of 2014 (i.e., July 2014 through June 2015).
Based on this methodology, the Department determined that the annual
percentage increase in the CPI-W (United States city average, all
items, not seasonally adjusted) was 0.278%. The Department then applied
that annual percentage increase of 0.278% to the current Executive
Order hourly minimum wage rate of $10.15, which resulted in a wage rate
of $10.18 (($10.15 x .00278) + $10.15); however, pursuant to the
Executive Order, that rate must be rounded to the nearest multiple of
$0.05.
The new Executive Order minimum wage rate that must generally be
paid to workers performing on or in connection with covered contracts
beginning January 1, 2017 is therefore $10.20 per hour.
III. The 2017 Executive Order Minimum Cash Wage for Tipped Employees
As noted above, section 3 of the Executive Order requires
contractors to pay tipped employees covered by the Order performing on
or in connection with covered contracts an hourly cash wage of at least
$4.90, beginning January 1, 2015, provided the employees receive
sufficient tips to equal the Executive Order minimum wage rate under
section 2 of the Order when combined with the cash wage. See 79 FR
9851-52; 29 CFR 10.28(a). Section 3 of the Executive Order also
provides a methodology to be utilized each year in determining the
amount of the minimum hourly cash wage that must be paid to tipped
employees performing on or in connection with covered contracts.
Pursuant to the Order, in each succeeding year, beginning January 1,
2016, the required cash wage increases by $0.95 (or a lesser amount if
necessary) until it reaches 70 percent of the Executive Order minimum
wage rate. For subsequent years, the cash wage for tipped employees
will be 70 percent of the Executive Order minimum wage rate rounded to
the nearest $0.05.
In order to determine the minimum hourly cash wage that must be
paid to tipped employees performing on or in connection with covered
contracts beginning January 1, 2017, the Department first calculated
that 70 percent of the new Executive Order minimum wage rate of $10.20
is $7.14. The Executive Order provides that the current minimum hourly
cash wage of $5.85 must increase by the lesser of $0.95 or the amount
necessary for the hourly cash wage to equal 70 percent of the
applicable Executive Order minimum wage. Because $0.95 is less than
$1.29 (the amount necessary for the hourly cash wage to reach 70
percent of $10.20), the hourly cash wage must increase by $0.95.
The new minimum hourly cash wage that must generally be paid to
tipped workers performing on or in connection with covered contracts
beginning January 1, 2017 is therefore $6.80 per hour.
IV. Appendices
Appendix A to this notice provides a comprehensive chart of the
CPI-W data published by BLS that the Department utilized to calculate
the new Executive Order minimum wage rate based on the methodology
explained herein. Appendix B to this notice sets forth an updated
version of the Executive Order 13658 poster that the Department
published with its Final Rule, reflecting the updated wage rates that
will be in effect beginning January 1, 2017. See 79 FR 60732-33.
Pursuant to 29 CFR 10.29, contractors are required to notify all
workers performing on or in connection with a covered contract of the
applicable minimum wage rate under the Executive Order. Contractors
with employees covered by the Fair Labor Standards Act who are
performing on or in connection with a covered contract may satisfy the
notice requirement by displaying the poster set forth in
[[Page 64515]]
Appendix B in a prominent or accessible place at the worksite.
Dated: September 6, 2016.
David Weil,
Wage and Hour Administrator.
Appendix A: Data Used To Determine Executive Order 13658 Minimum Wage
Rate Effective January 1, 2017
Data Source: Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) (United States city average, all items, not
seasonally adjusted)
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Quarter 3
Quarter 4
Quarter 1
Quarter 2 Annual
Average
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2014Q3 to 2015Q2................................. 234.525 234.030 234.170 233.229 231.551 229.909 228.294 229.421 231.055 231.520 232.908 233.804 232.0347
2015Q3 to 2016Q2................................. 233.806 233.366 232.661 232.373 231.721 230.791 231.061 230.972 232.209 233.438 234.444 235.308 232.6792
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Annual Percentage Increase................... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 0.278%
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Appendix B:
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[FR Doc. 2016-22515 Filed 9-19-16; 8:45 am]
BILLING CODE 4510-27-P