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4477
Phone: 281.880.6525

Federal Contractors Get a Small

Minimum Wage Increase in 2017

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The U.S. Department of Labor's Wage and Hour Division (WHD) has
announced that the minimum wage rate for federal contractors will increase
from $10.15 per hour to $10.20 per hour, effective January 1, 2017.

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Background Information
On February 12, 2014, President Obama signed Executive Order 13658 which
established a minimum wage rate for federal contractors. The executive order
required parties who contract with the federal government to pay workers
performing work on or in connection with covered federal contracts at least:

$10.10 per hour beginning January 1, 2015; and

An amount determined by the Secretary of Labor in accordance with the

methodology in the executive order, beginning January 1, 2016, and
annually thereafter. The rate was increased to $10.15 per hour, effective
January 1, 2016.

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Tipped Employees
The executive order also requires annual adjustments to the minimum cash
wage rate for tipped employees. The WHD has announced that the minimum
cash wage for tipped employees performing work on or in connection with a
federal contract will increase from $5.85 per hour to $6.80 per hour, effective
January 1, 2017.
The contractor must increase the cash wage paid to a tipped employee to
make up the difference if a worker's tips combined with the required cash
wage of at least $6.80 per hour do not equal the hourly minimum wage rate
for contractors as noted above. Certain other conditions must also be met.

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Minimum Wage for Non-Federal Contractor Employees

The minimum wage amount listed
above is only for federal contractor
employees. Under the Fair Labor
Standards Act, the federal minimum
wage for covered non-exempt, nonfederal contractor employees is $7.25
per hour. Many states also have their
own minimum wage laws.
What if your business operates in a
state that's subject in both state and
federal minimum wage laws?
Employees are entitled to the higher
of the two amounts.

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"Raising the pay of low-wage workers increases their morale and the
productivity and quality of their work, lowers turnover and its
accompanying costs, and reduces supervisory costs. These savings
and quality improvements will lead to improved economy and
efficiency in Government procurement.
White House Executive Order 13658

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What Employers in Some States Must Pay

Examples of states with minimum wage per-hour rates higher than the federal
rate are California ($10.00), Massachusetts ($10.00), Oregon ($9.75),
Connecticut and Rhode Island ($9.60), New York ($9.00), Maryland ($8.75),
South Dakota ($8.55), Michigan ($8.50), New Jersey ($8.38), Florida ($8.05),
and Maine ($7.50).
Some states have different minimum wage rates for large and small
employers. For example, large employers in Minnesota (defined as enterprises
with annual receipts of $500,000 or more) have a minimum wage rate of
$9.50 per hour while small employers (enterprises with annual receipts of less
than $500,000) have a minimum wage rate of $7.75 per hour. In Ohio,
employers with annual gross receipts of $297,000 or more must pay $8.10 per
hour and those with annual gross receipts under $297,000 must pay $7.25 per
hour.

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Nevada requires employers that provide no health insurance benefits to pay

$8.25 per hour and employers that do provide health insurance benefits to
pay $7.25 per hour.
An employer of a tipped employee is required to pay $2.13 an hour in direct
wages if that amount plus the tips received equals at least the federal
minimum wage, the employee retains all tips and the employee customarily
and regularly receives more than $30 a month in tips. Many states also have
their own laws related to tipped employees. Again, if an employee is subject
to both federal and state laws, he or she is entitled to the law that provides
the greater benefits. Some states (including California, Oregon, Nevada,
Montana, Minnesota and Alaska) require employees to pay tipped employees
the full state minimum wage.
Contact your payroll advisor if you have questions about the minimum wage
in your situation.

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Phone : 281.880.6525
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