President Unilaterally Raises Minimum Wage for Federal Contracts

02/13/2014

On February 12, 2014, President Obama signed his promised Executive Order increasing the minimum wage to $10.10 per hour for workers under new and renegotiated federal contracts. The Executive Order also increases the minimum wage for tipped workers starting January 1, 2015. The new wage rates will raise with inflation each year. Covered workers include those in the construction and service industries.

The related issues are many; but two immediate concerns for employers are: 1) the likelihood that workers on different projects / contracts will have different wages; and 2) contractors may be forced to raise the pay of workers whose wages are at or near $10 an hour to maintain the differential from newer or less skilled employees.

Contractors with unionized workforces tied to the minimum wage may be forced to renegotiate collective bargaining agreements. How else this will indirectly affect the construction and service industries remains to be seen.

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