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FAR Issues Final Rule

December 14, 2015

Last week, the Federal Acquisition Regulation (FAR) which is administered by the Department of Defense (DoD), the General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA) issued the final rule to implement Executive Order (E.O.) 13658, Establishing a Minimum Wage for Contractors. The final rule has significant implications for employers who have workers that will perform work under covered federal contracts or subcontracts.

The final rule implements E.O. 13658 by increasing the federal minimum wage for contract workers which was increased to $10.10 an hour in 2015 and for which will increase to $10.15 per hour starting January 1, 2016 due to changes to the Consumer Price Index.

The final rule identifies important terms used in the E.O., explaining the contractors’ obligations including a thorough description of the types of covered contracts such as those covered by the Davis-Bacon Act and the Service Contract Act as well as concession contracts or any contract in connection with a Federal contract.

In addition, the rule requires that contractors provide notice to anyone, including their employees, who enter into a lower-tier contract. Notices need to specify that, as a condition of payment, the wages paid for work covered under the contract must comply with the minimum hourly wage rates.

Employers should be watchful about checking whether their contracts will be subject to the terms of the final rule which will apply to new contracts with the federal government as well as with replacements for expiring contracts that result from solicitations issued on or after Jan. 1 and to contracts that are awarded outside the solicitation process on or after Jan. 1.