[Federal Register Volume 85, Number 169 (Monday, August 31, 2020)]
[Notices]
[Pages 53850-53854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19037]


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DEPARTMENT OF LABOR

Wage and Hour Division


Establishing a Minimum Wage for Contractors, Notice of Rate 
Change in Effect as of January 1, 2021

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 for workers performing work on or in 
connection with federal contracts covered by Executive Order 13658, 
Establishing a Minimum Wage for Contractors (the Executive Order or the 
Order), beginning January 1, 2021. Beginning on that date, 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 $10.95 per hour, while 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 $7.65 per hour.

DATES: These new rates shall take effect on January 1, 2021.

FOR FURTHER INFORMATION CONTACT: Amy DeBisschop, Director, 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

    The Executive Order was signed on February 12, 2014, and raised the 
hourly minimum wage for workers performing work on or in connection 
with covered federal contracts to $10.10 per hour, beginning January 1, 
2015, with annual adjustments thereafter in 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 for 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)(2), explain 
that the applicable minimum wage determined by the Secretary for each 
calendar year shall be:
     Not less than the amount in effect on the date of such 
determination;
     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
     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. 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

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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, ``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, 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 takes 
effect. See 79 FR 9851; 29 CFR 10.5(a)(2), 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 takes 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; \1\ 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).
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    \1\ In 2019, WDOL.gov moved to beta.SAM.gov and is now known as 
Wage Determinations. The beta.SAM.gov website is the authoritative 
and single location for obtaining appropriate Service Contract Act 
and Davis-Bacon Act wage determinations for each official contract 
action.
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    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.
    The Executive Order minimum wage and the cash wage required for 
tipped employees are currently $10.80 and $7.55 per hour, respectively. 
The Department announced these rates on September 19, 2019, 84 FR 
49345, and the rates took effect on January 1, 2020.

II. The 2021 Executive Order Minimum Wage Rate

    Using 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, to determine the 
new Executive Order minimum wage rate. In calculating the annual 
percentage increase in the CPI-W, 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 Department then increases the current Executive 
Order minimum wage rate by the resulting annual percentage change and 
rounds to the nearest multiple of $0.05.
    In order to determine the Executive Order minimum wage rate 
beginning January 1, 2021, 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 2020 and 
the last two quarters of 2019 (i.e., July 2019 through June 2020). The 
Department then compared that data to the average CPI-W for the 
preceding year, which consists of the first two quarters of 2019 and 
the last two quarters of 2018 (i.e., July 2018 through June 2019). 
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 1.432 percent. The Department then 
applied that annual percentage increase of 1.432 percent to the current 
Executive Order hourly minimum wage rate of $10.80, which resulted in a 
wage rate of $10.955 (($10.80 x 0.01432) + $10.80); 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, 2021 is therefore $10.95 per hour.

III. The 2021 Executive Order Minimum Cash Wage for Tipped Employees

    As noted above, section 3 of the Executive Order provides a 
methodology to determine the amount of the minimum hourly cash wage 
that must be paid to tipped employees performing on or in connection 
with covered contracts. Because the cash wage for tipped employees 
reached 70 percent of the Executive Order minimum wage beginning on 
January 1, 2018 (i.e., $7.25 per hour compared to $10.35 per hour), 
future updates to the cash wage for tipped employees must continue to 
set the rate at 70 percent of the full Executive Order minimum wage. 
Seventy percent of the new Executive Order minimum wage rate of $10.95 
is $7.67. Because the Executive Order provides that the rate must be 
rounded to the nearest $0.05, the new minimum hourly cash wage for 
tipped workers performing on or in connection with covered contracts 
beginning January 1, 2021 is therefore $7.65 per hour.

IV. Appendices

    Appendix A to this notice provides a comprehensive chart of the 
CPI-W data published by BLS that the Department used 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 poster that the Department published 
with its Final Rule, reflecting the updated wage rates that will be in 
effect beginning January 1, 2021. 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 Appendix B in a prominent or 
accessible place at the worksite.


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    Dated: August 25, 2020.
Cheryl M. Stanton,
Administrator, Wage and Hour Division.

Appendix A: Data Used To Determine Executive Order 13658 Minimum Wage 
Rate Effective January 1, 2021.

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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2018Q3 to 2019Q2.............................................   246.155   246.336   246.565   247.038   245.933   244.786   245.133   246.218   247.768   249.332   249.871   249.747   247.0735
2019Q3 to 2020Q2.............................................   250.236   250.112   250.251   250.894   250.644   250.452   251.361   251.935   251.375   249.515   249.521   251.054   250.6125
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    Annual Percentage Increase...............................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........     1.432%
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Appendix B: Updated Version of the Executive Order 13658 Poster

BILLING CODE 4510-27-P

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[GRAPHIC] [TIFF OMITTED] TN31AU20.000


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[FR Doc. 2020-19037 Filed 8-28-20; 8:45 am]
BILLING CODE 4510-27-C