[Federal Register Volume 89, Number 189 (Monday, September 30, 2024)]
[Notices]
[Pages 79641-79644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-22099]


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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, 2025

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, 2025. 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 $13.30 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 $9.30 per hour. 
Covered contracts that are entered into on or after January 30, 2022, 
or that are renewed or extended (pursuant to an

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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, 2025.

FOR FURTHER INFORMATION CONTACT: Daniel Navarrete, 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:
    <bullet> Not less than the amount in effect on the date of such 
determination;
    <bullet> 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
    <bullet> 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 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 $12.90 and $9.05 per hour, 
respectively. The Department announced these rates on September 28, 
2023, and the rates took effect on January 1, 2024. See 88 FR 66903.

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

[[Page 79643]]

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 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. District Court for the 
Southern District of Texas on September 26, 2023, the minimum wage 
requirements of the final rule implementing Executive Order 14026 
are not currently being enforced as to contracts or subcontracts to 
which the states of Texas, Louisiana, or Mississippi (including 
their agencies) are a party. Additionally, due to a pair of orders 
issued by the U.S. Court of Appeals for the Tenth Circuit, the 
requirements of the final rule implementing Executive Order 14026 
should not be applied 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,'' if such contracts were 
entered into, renewed, or extended between February 17, 2022 and 
August 16, 2024. The final rule's requirements remain in effect for 
all other contracts subject to Executive Order 14026 and its 
implementing regulations.
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III. The 2025 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.
    To determine the Executive Order 13658 minimum wage rate beginning 
January 1, 2025, 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 2024 and the last two 
quarters of 2023 (i.e., July 2023 through June 2024). This produced an 
average index level of 303.729.\3\ The Department then compared that 
data to the average CPI-W for the preceding year--294.367--which 
consists of the first two quarters of 2023 and the last two quarters of 
2022 (i.e., July 2022 through June 2023). 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 3.180 percent ((303.279 / 294.367) -1). The Department then applied 
that annual percentage increase of 3.180 percent to the current 
Executive Order hourly minimum wage rate of $12.90, which resulted in a 
wage rate of $13.310 (($12.90 x 0.03180) + $12.90). 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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    Accordingly, 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, 2025, is $13.30 per hour.

IV. The 2025 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 $13.30 is $9.31 ($13.30 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, 2025, is 
therefore $9.30 per hour.

V. Appendices

    Appendix A to this notice provides a chart of the CPI-W data 
published by BLS that the Department used to calculate the new 
Executive Order 13658 minimum wage rate based on the methodology 
explained herein. A poster reflecting the new Executive Order 13658 
minimum wage rate will be publicly available on the WHD website on 
January 1, 2025.

Jessica Looman,
Administrator, Wage and Hour Division.

Appendix A: Data Used To Determine Executive Order 13658 Minimum Wage 
Rate

    Effective January 1, 2025.

    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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2022Q3 to 2023Q2..............................................   292.219   291.629   291.854   293.003   292.495   291.051   293.565   295.057   296.021   297.730   298.382   299.394   294.367
2023Q3 to 2024Q2..............................................   299.899   301.551   302.257   302.071   301.224   300.728   302.201   304.284   306.502   307.811   308.163   308.054   303.729
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  Annual Percentage Increase..................................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........    3.180%
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[FR Doc. 2024-22099 Filed 9-27-24; 8:45 am]
BILLING CODE 4510-27-P