Companies must meet minimum wage pay under federal contracts

Companies will have to pay a minimum wage to employees working on federal contracts, according to a new interim procurement rule.

The minimum wage will be $10.10, beginning in January. Each year afterward, the Labor Secretary can keep it the same or increase the wage amount.

The new interim rule is based on an executive order that President Barack Obama signed Feb. 12. Obama issued the order in an effort “to increase efficiency and cost savings in the work performed by parties who contract with the federal government.”

“Raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs. These savings and quality improvements will lead to improved economy and efficiency in government procurement,” the order states.

The interim rule requires contracting officers to modify contracts by adding in the minimum wage clause. They are also strongly encouraged to add such a clause to indefinite-delivery, indefinite-quantity contracts.

Officials are accepting comments on the interim rule until Feb. 13 as they develop the final rule.