Federal Contractor Minimum Wage Ruling: $17.75 Per Hour Stands

On February 4, 2025, a U.S. appeals court upheld President Joe Biden’s executive order requiring a minimum wage for federal contractors, which increased to $17.75 per hour on January 1, 2025. The decision affirms that covered federal contractors must comply with this wage floor, which applies to contracts governed by the Service Contract Act (SCA) and Davis-Bacon Act (DBA), among others.

This mandate originated from Executive Order 14026, issued in 2021, establishing an annual inflation-based adjustment to the minimum wage for federal contract workers. The most recent increase follows this adjustment process.

The ruling emphasizes compliance obligations for businesses with federal contracts, which may affect contract pricing and payroll structures. Employers should ensure their payroll systems align with this recent ruling.

While legal challenges may continue, this ruling reinforces the federal government’s authority to set and enforce wage standards for contract workers. Under the current administration, there is also the potential for policy shifts, and employers will need to monitor regulatory developments and be prepared to adjust compensation practices accordingly.

Trump Rescinds SCA Nondisplacement Executive Order

Upon taking office on January 20, 2025, one of President Trump’s first acts was to sign an executive order that rescinded 78 of President Biden’s executive orders or actions. Many actions affected issues relating to the federal workforce or climate change, but one item also addressed the Service Contract Act.

Included in the list of 78 rescissions was Executive Order 14055, the Nondisplacement of Qualified Workers Under Service Contract. Biden’s EO 14055 reversed a Trump rescission of an EO implemented during the Obama Administration.

EO 14055 enabled employees working on predecessor contracts covered by the Service Contract Act and meeting other requirements, who would otherwise be terminated due to the contract’s end, to be offered by the successor “a right of first refusal of employment under this contract in positions for which those employees are qualified.”

The likely immediate impact is that the non-displacement clause will no longer be included in new solicitations or contracts. Further information is needed to understand the impact on existing contracts or option years.

OFCCP Publishes Guide on Combatting Harassment in the Construction Industry

The Office of Federal Contract Compliance Programs (OFCCP) has released A Guide to Combatting Harassment in the Construction Industry, a resource designed to help federal construction contractors address harassment at worksites. The guide is in a question-and-answer format, making it accessible and easy to navigate for both contractors and workers.

This guide details the legal responsibilities of contractors to ensure workplaces are free from harassment, as mandated by Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). It explains what constitutes harassment, offers examples, and highlights that unlawful behavior can come from supervisors, coworkers, or third parties, including vendors, clients, and subcontractors.

This guide, to support compliance and create safer workplaces, emphasizes several best practices, including:

• Communicating anti-harassment policies to all personnel.
• Training should be offered that contains examples of harassment and guidance on prevention.
• Posting Equal Employment Opportunity (EEO) policies at job sites.
• Developing and implementing robust complaint and investigation procedures.
• Taking immediate and appropriate action when harassment is reported.

The guide can serve as a tool to support contractors in ensuring compliance and fostering safe, respectful, and equitable workplaces across the construction industry. The guide can be found at: https://www.dol.gov/sites/dolgov/files/OFCCP/Construction/files/OFCCP-Harassment-in-Construction-Guide-508c.pdf 

OFCCP Reinstates Monthly Employment Reports for Federal Construction Contractors

The Office of Federal Contract Compliance Programs (OFCCP) announced reinstating the Monthly Employment Utilization Report (Form CC-257) for federal construction contractors and subcontractors. The first report, covering March 2025, will be due by April 15, 2025, with subsequent reports due monthly by the 15th (or the next business day if the 15th falls on a weekend or holiday).

Key details include:

• The report is required for federally funded construction contracts and subcontracts exceeding $10,000.
• Contractors must report workforce data by race/ethnicity, gender, and trade for each Standard Metropolitan Statistical Area (SMSA) or Economic Area (EA).
• The reports aim to address employment discrimination in construction, enhance OFCCP enforcement and compliance assistance, and allow contractors to monitor and improve equal employment opportunities.

To support compliance, OFCCP has published a Frequently Asked Questions (FAQ) section on its CC-257 Report webpage, addressing common contractor concerns about the new requirements. Additionally, the agency plans to provide further compliance assistance, including a webinar, in early 2025.

The new requirements follow the final approval of Form CC-257 in September 2024 and complement earlier changes to contractor obligations. However, the policy’s future may depend on the decisions of the incoming presidential administration.

Trump Nominates Lori Chavez-DeRemer as Labor Secretary

President-elect Donald Trump has named Rep. Lori Chavez-DeRemer (R-Ore.) his choice for Secretary of Labor. A former one-term congresswoman, Chavez-DeRemer has built a reputation as a pro-labor Republican, co-sponsoring legislation like the Protecting the Right to Organize (PRO) Act to strengthen union rights and expand penalties for labor law violations. Her nomination has been endorsed by major labor groups, including the Teamsters, but has drawn criticism from conservatives for her union-friendly policies.

Chavez-DeRemer, who represented Oregon’s 5th Congressional District, built a reputation for bipartisan collaboration and advocacy for worker rights by supporting bills to strengthen public-sector unions and safeguard workers’ Social Security benefits. Additionally, she emphasized apprenticeship programs and workforce development, showing her commitment to improving opportunities for American workers.

Her nomination signals a potential shift in the Trump administration’s approach to labor policy, emphasizing workforce development and labor-management cooperation. The confirmation process will determine how her leadership will shape labor relations and business practices.

If confirmed, Chavez-DeRemer could shift the Department of Labor toward expanded training programs. With ongoing legal challenges to Biden-era overtime and contractor wages regulations, Chavez-DeRemer’s stance on defending or revising these rules will be closely monitored.

Court Strikes Down DOL’s Overtime Salary Threshold Rule

The U.S. District Court for the Eastern District of Texas recently invalidated the Department of Labor’s (DOL) final rule that increased overtime exemption salary thresholds under the Fair Labor Standards Act (FLSA). The court ruled that the regulation exceeded the agency’s statutory authority. The decision nullifies the salary threshold increase that took effect in July 2024 and the planned increase for January 2025. The nationwide ruling reverts the threshold to $684 per week ($35,568 annually) and $107,432 annually for highly compensated employees.

The court determined that the DOL’s rule improperly emphasized salary thresholds, effectively overshadowing the requirement to evaluate whether employees perform exempt duties. This ruling aligns with a Fifth Circuit Court decision limiting the DOL’s authority to set salary thresholds that “replace or swallow” statutory exemptions. The now-vacated rule raised the salary threshold to $844 per week ($43,888 annually) on July 1, 2024, with a planned increase to $1,128 per week ($58,656 annually) on January 1, 2025.

For now, employers are no longer required to adjust salaries to meet the previously planned increases under the vacated DOL rule. However, reviewing current pay practices and evaluating the potential reinstatement of exempt status for employees affected by the July 2024 changes is essential. Employers should consult legal counsel to ensure compliance with wage laws, especially in states with stricter requirements.

The DOL may appeal the decision, but with the impending presidential transition in January 2025, the likelihood of the rule being reinstated appears low. Employers should monitor further developments and adjust their compliance strategies accordingly.

USDOL Publishes AI Principles to Protect Workers

The U.S. Department of Labor (USDOL) has introduced a set of principles and best practices to guide employers and AI developers in safeguarding workers’ rights and well-being amidst the rapid adoption of artificial intelligence. Directed by President Biden’s executive order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, the guidance outlines how AI can be ethically and transparently integrated into workplaces, ensuring that both businesses and employees benefit from technological advances.

The guidelines highlight several essential principles, with a primary focus on empowering workers. This involves including workers in designing and implementing AI systems that impact their roles. Ethical development is also prioritized, ensuring AI systems are created with solid safety measures and anti-bias standards. Furthermore, transparency in AI usage is vital; companies should inform workers about AI applications, mainly when they influence employment decisions.

Other principles include ensuring data responsibility, whereby employers are urged to collect only necessary data, protect it diligently, and avoid sharing it without explicit consent. The DOL also advocates for support during transitions in cases where AI may replace specific roles, recommending that employers provide retraining or alternate positions for affected workers.

The guidance underscores the potential of AI to improve job quality, enhance safety, and promote equitable practices in the workplace, but it warns against its unchecked use. With these guidelines, the DOL aims to help employers and developers navigate AI integration responsibly, balancing innovation with the rights and protections of American workers.

You can see a copy of the guide here; https://www.dol.gov/sites/dolgov/files/general/ai/AI-Principles-Best-Practices.pdf

Prevailing Wage Seminars: Compliance Training Dates Announced for FY25

The U.S. Department of Labor’s Wage and Hour Division (WDH) offers free compliance seminars to help contracting agencies, contractors, unions, workers, and other stakeholders understand the requirements for paying prevailing wages on federally funded construction and service contracts.

These seminars continue the Department’s efforts to increase awareness and improve compliance with federal labor standards, offering stakeholders an opportunity to stay informed and ensure compliance with federal wage regulations.

New seminar Dates, which will begin at 11:00 EST and run until 5:30 EST, are:

• November 13-14, 2024
• March 18-19, 2025
• June 25-26, 2025
• September 24-25, 2025

The two-day seminars will cover the labor standards protections outlined in the Davis-Bacon Act (DBA) and the Service Contract Act (SCA), including how the Department sets and administers prevailing wages. In addition, conference participants will learn about the following:

• Executive Order 13495, “Nondisplacement of Qualified Workers”
• Executive Order 13658, “Establishing a Minimum Wage for Contractors”
• Executive Order 14026, “Increasing the Minimum Wage for Federal Contractors”
• The process of obtaining wage determinations and adding classifications
• Compliance assistance and enforcement processes
• The process for appealing wage rates, coverage, and compliance determinations

Participants can attend sessions on both days or select sessions most relevant to their interests. The first day will focus primarily on DBA compliance, while the second will cover the SCA.

Although the seminars are free, registration is required at: https://www.dol.gov/agencies/whd/government-contracts/construction/seminars. Registered participants will receive additional details and a link to attend the online workshops.

For more information on prevailing wage compliance, the WHD has also updated its video library with resources on the DBA, the SCA, and the relevant executive orders.

OFCCP Revises Scheduling Letter for Federal Construction Contractors

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has issued a revised Construction Scheduling Letter, effective October 1, 2024. This letter will impact federal and federally assisted construction contractors and subcontractors through July 31, 2027. OFCCP says that the revised letter offers improved clarity and more efficient data requests, but others say it increases contractors’ reporting burden.

Contractors must provide payroll data beyond base pay and report details on employee lay-offs. Contractors must also disclose the use of technology-based tools such as artificial intelligence, algorithms, or automated systems. For companies with direct federal contracts, additional requirements related to Section 503 (addressing individuals with disabilities) and VEVRAA (for protected veterans) can apply.

The new scheduling letter applies to contractors undergoing construction compliance reviews on or after October 1, 2024. A copy of the Scheduling Letter can be found at: https://www.dol.gov/sites/dolgov/files/OFCCP/FCCM/Construction%20Scheduling%20Letter%20Effective%20Oct%201%202024%20508c.pdf

Understanding the Davis-Bacon Act and Its Role Under DOE Loan Programs

The U.S. Department of Energy (DOE) Loan Programs Office (LPO) released a guide earlier this year to explain how LPO financing programs are subject to Davis-Bacon labor standards, the Davis-Bacon requirements that apply, and a summary of those requirements.

The Davis-Bacon Act (DBA), enacted in 1931, sets the standard for contractors and subcontractors working on federally funded construction projects exceeding $2,000. The Davis-Bacon and Related Acts (DBRA) apply these requirements to projects financed by the federal government.

Projects financed by LPO must comply with DBRA. This requirement includes most projects, though some, like those under specific programs such as the Tribal Energy Finance Program, may follow different guidelines unless they opt into tax benefits under the Inflation Reduction Act (IRA), where prevailing wage compliance is required.

The Inflation Reduction Act links tax incentives to prevailing wage standards, drawing a clear connection between these two laws. This connection means contractors must adhere to wage decisions determined by geographic location and construction classification, ensuring wages reflect local economies.

By tying tax incentives under the IRA to Davis-Bacon wage standards, contractors must prioritize fair wages in their planning to qualify for benefits. This balance ensures that projects under the Inflation Reduction Act support the workforce and sustainability initiatives.

The LPO Davis-Bacon guide can be found at: https://www.energy.gov/lpo/articles/ensuring-prevailing-wages-closer-look-davis-bacon-act