22.1904 Annual Executive Order Minimum Wage Rate
Source: FAR 22.1904 on acquisition.gov
FAR 22.1904 requires annual publication of the E.O. minimum wage and allows contractors to request price adjustments only for specific increased labor costs resulting from these changes, with strict calculation and documentation requirements.
Overview
FAR 22.1904 establishes the procedures for the annual adjustment and publication of the Executive Order (E.O.) minimum wage rate for federal contractors, as well as the process for contractors to request price adjustments due to changes in the minimum wage. The section details how the new wage rate is announced, where it is published, and how contractors may seek price adjustments for increased labor costs resulting from the updated wage. It also clarifies what costs are eligible for adjustment and provides calculation examples.
Key Rules
- Annual Publication of E.O. Minimum Wage
- The Administrator must notify the public of the new E.O. minimum wage rate at least 90 days before it becomes effective, publish it on SAM.gov, and include a general notice on relevant wage determinations.
- Contractor Price Adjustment Requests
- Contractors may request price adjustments only after the new wage rate becomes effective, and only for increased labor costs (including certain associated costs) directly resulting from the wage increase.
- Calculation of Price Adjustments
- The adjustment is the lowest amount calculated by subtracting the current wage (E.O., service/construction wage determination, or actual wage paid) from the new E.O. wage rate; if the result is zero or negative, no adjustment is made.
- Limitations on Adjustments
- Only specific labor-related costs are eligible for adjustment; no duplicate adjustments are allowed with other wage-related clauses.
Responsibilities
- Contracting Officers: Ensure proper notification, publication, and application of wage adjustments; avoid duplicate adjustments.
- Contractors: Monitor wage updates, request adjustments only for eligible costs, and provide accurate calculations and documentation.
- Agencies: Oversee compliance with publication and adjustment procedures.
Practical Implications
- This section ensures transparency and fairness in wage adjustments for federal contracts, helping contractors manage labor costs when the E.O. minimum wage changes. Contractors must carefully calculate and document eligible adjustments and be aware of the limitations to avoid compliance issues or denied requests.
(a) For the E.O. minimum wage rate that becomes effective on January 30, 2022, and annually thereafter, the Administrator will-
(1) Notify the public of the new E.O. minimum wage rate at least 90 days before it becomes effective by publishing a notice in the Federal Register;
(2) Publish and maintain on Wage Determinations at SAM.gov, https://www.sam.gov" target="_blank">https://www.sam.gov, or any successor site, the E.O. minimum wage rate; and
(3) Include a general notice on wage determinations which are issued under the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute. The notice will provide information on the E.O. minimum wage and how to obtain annual updates.
(b)
(1) The contractor may request a price adjustment only after the effective date of a new annual E.O. minimum wage determination published pursuant to paragraph (a). Prices will be adjusted only for increased labor costs (including subcontractor labor costs) as a result of the annual E.O. minimum wage, and for associated labor costs (including those for subcontractors). Associated labor costs shall include increases or decreases that result from changes in social security and unemployment taxes and workers’ compensation insurance, but will not otherwise include any amount for general and administrative costs, overhead, or profit.
(2) The wage rate price adjustment under this clause is the lowest amount calculated by subtracting from the new E.O. wage rate the following: the current E.O. minimum wage rate; the current service or construction wage determination rate under the contract (if the wage rate is applicable to that worker); or the actual wage currently paid the worker. If the amount is zero or below, there will be no increase paid for this worker.
|
(i) Example 1 - New E.O. wage rate is $16.10. |
|
|
Previous E.O. wage rate is $15.70. The current service or construction wage determination rate applicable to this worker under the contract is $15.75. |
Analysis: The calculation is $16.10 - $15.80 = $.30. The price adjustment for this worker is $.30. |
|
The actual wage currently paid to the worker is $15.80. |
|
|
(ii) Example 2 - New E.O. wage rate is $15.50. |
|
|
Previous E.O. wage rate is $15.10. The current service or construction wage determination rate applicable to this worker under the contract is $15.75. |
Analysis: The calculation is $15.50 - $15.80 = -$.30. There is no price adjustment for this worker. |
|
The actual wage currently paid to the worker is $15.80. |
|
(3) The contracting officer shall not adjust the contract price for any costs other than those identified in paragraph (b)(1) of this section, and shall not provide duplicate price adjustments with any price adjustment under clauses implementing the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute.