EO 14026 requirements
The new minimum wage increase applies to and will impact any new solicitation, and any new or renewed contract or contract-like instrument governed by the FLSA, SCA, or DBA if it is:
- A procurement contract for services or construction.
- A service contract covered by the SCA.
- A concessions contract.
- A contract with the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.
With respect to the FLSA, the EO applies only to procurement contracts or contract-like instruments that exceed the micro-purchase threshold, as defined in 41 U.S.C. section 1902(a). The current micro-purchase threshold is $10,000. For contracts or contract-like instruments covered by the SCA or the DBA, the EO applies only to the thresholds specified in those statutes. The SCA applies to contractors and subcontractors performing services under a federal contract in excess of $2,500. The DBA applies to contractors and subcontractors performing federally funded or assisted contracts in excess of $2,000 for construction, alteration, or repair of public buildings or public works.
The minimum wage requirements imposed by the EO are separate and distinct legal obligations from the DBA and SCA prevailing wage requirements. For practical purposes, this means that if a contract is subject to the DBA or SCA and, based on the classification of work performed, the prevailing wage rate on the applicable DBA or SCA wage determination is less than the EO’s minimum wage, the contractor must pay the EO minimum wage. If the applicable DBA or SCA rate is higher than the EO rate, the contractor must pay the higher prevailing rate to the DBA- or SCA-covered employee in order to comply with the DBA or SCA. Additionally, the minimum wage requirements of the EO are separate and distinct from the wage rates under FLSA section 14(c). If the commensurate wage rate paid to that employee is less than the EO minimum wage, the contractor must pay no less than the higher EO minimum wage rate. If the commensurate wage due is higher than the EO minimum wage, however, the contractor must pay the employee the higher commensurate wage.
Significantly, the EO is inapplicable to grants, contracts, contract-like instruments, or agreements with Indian Tribes under the Indian Self-Determination and Education Assistance Act (Public Law 93-638), as amended, or any contracts or contract-like instruments expressly excluded by the regulations issued pursuant to section 4(a) of the EO.