[Federal Register Volume 87, Number 189 (Friday, September 30, 2022)]
[Notices]
[Pages 59468-59472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20905]


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DEPARTMENT OF LABOR

Wage and Hour Division


Minimum Wage for Federal Contracts Covered by Executive Order 
13658, Notice of Rate Change in Effect as of January 1, 2023

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, 2023. Beginning on that date, the 
Executive Order 13658 minimum wage rate that generally must be paid to 
workers performing work on or in connection with covered contracts will 
increase to $12.15 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 $8.50 per hour. 
Covered contracts that are entered into on or after January 30, 2022, 
or that are renewed or extended (pursuant to an option or otherwise) on 
or after January 30, 2022, are generally subject to a higher minimum 
wage rate established by Executive Order 14026 of April 27, 2021, 
Increasing the Minimum Wage for Federal Contractors.

DATES: These new Executive Order 13658 rates shall take effect on 
January 1, 2023.

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). Alternative formats are available upon request by calling 
1-866-487-9243. If you are deaf, hard of hearing, or have a speech 
disability, please dial 7-1-1 to access telecommunications relay 
services.

SUPPLEMENTARY INFORMATION: 

I. Executive Order 13658 Background and Requirements for Determining 
Annual Increases to the Minimum Wage Rate

    Executive Order 13658 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.
    Executive Order 13658 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 Executive Order 13658 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 the 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 the 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, Executive Order 13658 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\ WDOL.gov has since moved to https://sam.gov/content/wage-determinations. This website is the authoritative and single website 
for obtaining appropriate Service Contract Act and Davis-Bacon Act 
wage determinations for each official contract action.
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    Section 3 of Executive Order 13658 requires contractors to pay 
tipped employees covered by the order performing on or in connection 
with covered contracts an hourly cash wage

[[Page 59469]]

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. When a contractor 
is using a tip credit to meet a portion of its wage obligations under 
the Executive Order, 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 13658 minimum wage and the cash wage required 
for tipped employees are currently $11.25 and $7.90 per hour, 
respectively. The Department announced these rates on September 15, 
2021, and the rates took effect on January 1, 2022. 86 FR 51683

II. Effect of Executive Order 14026

    On April 27, 2021, President Joseph R. Biden, Jr. signed Executive 
Order 14026, Increasing the Minimum Wage for Federal Contractors. 86 FR 
22835. Executive Order 14026 establishes a higher hourly minimum wage 
of $15.00 per hour, beginning on January 30, 2022, and, beginning 
January 1, 2023, and annually thereafter, an amount determined by the 
Secretary in accordance with the order. This higher hourly minimum wage 
applies to the same types of contracts with the Federal Government that 
are covered by Executive Order 13658. However, Executive Order 14026 
only applies to contracts with the Federal Government that are entered 
into on or after January 30, 2022, or that are renewed or extended 
(pursuant to an exercised option or otherwise) on or after January 30, 
2022. For some amount of time, the Department therefore anticipates 
that there will be some existing contracts with the Federal Government 
that do not qualify as a covered ``new contract'' for purposes of 
Executive Order 14026 and thus will remain subject to the minimum wage 
requirements of Executive Order 13658.
    The Department anticipates that, in the relatively near future, 
essentially all covered contracts with the Federal Government will 
qualify as ``new'' contracts under Executive Order 14026 and be subject 
to its higher minimum wage rate. Until such time, however, Executive 
Order 13658 and its regulations at 29 CFR part 10 must remain in place. 
Accordingly, the Department will continue announcing annual updates to 
Executive Order 13658's minimum wage rates for existing contracts still 
covered by Executive Order 13658.\2\
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    \2\ Based on an order issued by the U.S. Court of Appeals for 
the Tenth Circuit on February 17, 2022, the minimum wage 
requirements of the final rule implementing Executive Order 14026 
are not currently being enforced as to ``contracts or contract-like 
instruments entered into with the federal government in connection 
with seasonal recreational services or seasonal recreational 
equipment rental for the general public on federal lands.'' The 
final rule's requirements remain in effect for all other contracts 
subject to the rule.
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III. The 2022 Executive Order 13658 Minimum Wage Rate

    Using the methodology set forth in Executive Order 13658 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 13658 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 13658 minimum wage rate 
beginning January 1, 2023, the Department 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 2022 and the last 
two quarters of 2021 (i.e., July 2021 through June 2022). This produced 
an average index level of 277.2779.\3\ The Department then compared 
that data to the average CPI-W for the preceding year--257.0463--which 
consists of the first two quarters of 2021 and the last two quarters of 
2020 (i.e., July 2020 through June 2021). 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 7.871 percent ((277.2779 / 257.0463)--1). The Department then 
applied that annual percentage increase of 7.871 percent to the current 
Executive Order hourly minimum wage rate of $11.25, which resulted in a 
wage rate of $12.135 (($11.25 x 0.07871) + $11.25); however, pursuant 
to the Executive Order, that rate must be rounded to the nearest 
multiple of $0.05.
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    \3\ In 1988, the reference base for the CPI-W was changed from 
1967=100 to 1982-84=100. The 1982-84 period was chosen to coincide 
with the updated expenditure weights which were based on the 
Consumer Expenditure Surveys for the years 1982, 1983 and 1984.
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    The new Executive Order 13658 minimum wage rate that must generally 
be paid to workers performing on or in connection with covered 
contracts beginning January 1, 2023 is therefore $12.15 per hour. A 
poster reflecting this new Executive Order 13658 minimum wage rate is 
set forth at Appendix B.

IV. The 2022 Executive Order 13658 Minimum Cash Wage for Tipped 
Employees

    As noted above, section 3 of Executive Order 13658 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 13658 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 13658 minimum 
wage. Seventy percent of the new Executive Order 13658 minimum wage 
rate of $12.15 is $8.505 ($12.15 x 0.70). 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, 2023, is 
therefore $8.50 per hour.

V. Appendix

    The Appendix to this notice provides a chart of the CPI-W data 
published by BLS that the Department used to calculate the new 
Executive Order

[[Page 59470]]

13658 minimum wage rate based on the methodology explained herein.

Martin J. Walsh,
Secretary of Labor.

Appendix A: Data Used to Determine Executive Order 13658 Minimum Wage 
Rate Effective January 1, 2023

    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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2020Q3 to 2021Q2.....   252.636   253.597   254.004   254.076   253.826   254.081   255.296   256.843   258.935   261.237   263.612   266.412   257.0463
2021Q3 to 2022Q2.....   267.789   268.387   269.086   271.552   273.042   273.925   276.296   278.943   283.176   284.575   288.022   292.542   277.2779
Annual Percentage      ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........     7.871%
 Increase............
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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] TN30SE22.001


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[FR Doc. 2022-20905 Filed 9-29-22; 8:45 am]
BILLING CODE 4510-27-C