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 Department of Labor Wage and Hour Division
 AGENCY: Wage and Hour Division, Department of Labor.
 ACTION: Notice.
 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, beginning January 1, 2019. Executive Order 13658, Establishing a Minimum Wage for Contractors (the Executive Order or the 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 as determined by the Secretary of Labor (the Secretary) in accordance with the methodology set forth in the Order. The Secretary's determination of the Executive Order minimum wage rate also affects the minimum hourly cash wage for tipped employees performing work on or in connection with covered contracts. The Secretary is required to provide notice to the public of the new minimum wage rate at least 90 days before the rate takes effect. The applicable minimum wage under the Executive Order is currently $10.35 per hour, in effect since January 1, 2018. Pursuant to the Executive Order and its implementing regulations in the Code of Federal Regulations, notice is hereby given that beginning January 1, 2019, 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 $10.60 per hour. Notice is also hereby given that, beginning January 1, 2019, 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 $7.40 per hour.
 DATES: These new rates shall take effect on January 1, 2019.
 FOR FURTHER INFORMATION CONTACT: Melissa Smith, 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 
                    ( print page 44907)
                    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), explain that the applicable minimum wage determined by the Secretary for each calendar year shall be: (i) Not less than the amount in effect on the date of such determination; (ii) 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 (iii) 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 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; 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). 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 $10.35 and $7.25 per hour, respectively. The Department announced these rates on September 15, 2017, 82 FR 43408, and the rates took effect on January 1, 2018. II. The 2019 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, 2019, 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 2018 and the last two quarters of 2017 (
                    *i.e.,*
                     July 2017 through June 2018). The Department then compared that data to the average CPI-W for the preceding year, which consists of the first two quarters of 2017 and the last two quarters of 2016 (
                    *i.e.,*
                     July 2016 through June 2017). 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 2.337 percent. The Department then applied that annual percentage increase of 2.337 percent to the current Executive Order hourly minimum wage rate of $10.35, which resulted in a wage rate of $10.592 (($10.35 × 0.02337) + $10.35); 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, 2019 is therefore $10.60 per hour. III. The 2019 Executive Order Minimum Cash Wage for Tipped Employees As noted above, section 3 of the Executive Order provides a methodology to determine the amount 
                    ( print page 44908)
                    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 $10.60 is $7.42. 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, 2019 is therefore $7.40 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, 2019. 
                    *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. Dated: August, 22, 2018. Bryan Jarrett, Acting Administrator, Wage and Hour Division.
 Appendix A: Data Used To Determine Executive Order 13658 Minimum Wage Rate Effective January 1, 2019 *Data Source:*
                         Consumer Price Index for Urban wage Earners and Clerical Workers (CPI-W) (United States city average, all items, not seasonally adjusted). Quarter 3
Quarter 4
Quarter 1
Quarter 2
Annual Average2016Q3 to 2017Q2
234.771
234.904
235.495
235.732
235.215
235.390
236.854
237.477
237.656
238.432
238.609
238.813
236.61232017Q3 to 2018Q2
238.617
239.448
240.939
240.573
240.666
240.526
241.919
242.988
243.463
244.607
245.770
246.196
242.1427Annual Percentage Increase












2.337%
 Appendix B: Updated Version of the Executive Order 13658 Poster


BILLING CODE 4510-27-P [FR Doc. 2018-19166 Filed 8-31-18; 8:45 am] BILLING CODE 4510-27-C