Proposed rules out for US $15 minimum wage rule for federal contracts

The U.S. Department of Labor on July 22 (Chamorro Standard Time) announced a Notice of Proposed Rulemaking to establish standards and procedures to implement and enforce Executive Order 14026, “Increasing the Minimum Wage for Federal Contractors,” signed by President Joseph R. Biden Jr. on April 27.

Among its provisions, the Executive Order will increase the minimum wage for workers performing work on or in connection with covered federal contracts to $15 per hour beginning Jan. 30, 2022 – and from Jan. 1, 2023 “an amount determined by the Secretary of Labor.” The rule says the federal contract minimum wage in future years will be indexed to an inflation measure; and ensure a $15 minimum wage for workers with disabilities performing work on or in connection with covered contracts. Comments are possible for 30 days. Regulations are due to be issued by Nov. 24. See 2021-15348.pdf (federalregister.gov)

The U.S. Davis-Bacon Act mandates workers be paid certain determined wages, benefits, and overtime, also known as the “prevailing wage.”

The higher of any wage rate will apply, a U.S. DOL spokesperson told the Journal. “Contractors will have to be in compliance with the highest applicable standard applicable to their contract.  In other words, if the applicable wage determination for the project requires that a sheet metal worker be paid $13.50 an hour and the EO is also applicable to the contract with a required minimum wage of $15, then the contractor will be required to pay $15 per hour,” the spokesperson said.

However, the $15 minimum wage is almost certainly moot in the Guam construction industry for skilled workers, whether on federal contracts or not – as wages have risen and continue to rise due to skilled labor shortages.

A minimum wage of $10.95 for calendar year 2021 applies to all Guam contracts subject to the Davis-Bacon Act, as other areas have their own wage rates. But federal wage determination rates for Guam superseded that for certain occupations, which for example, took a plumber to $17.41 an hour.  

Paid sick leave and union rates can be other variables.

According to the U.S. Bureau of Labor Statistics, the mean (or average) hourly wage in Guam as of May 2020 (released June 15 this year) was $18.01, 33% below the national average of $27.07.

The mean hourly wage for Guam for Construction and Extraction was $15.71.

The bureau also said, “In the Guam area, above-average concentrations of employment were found in many of the occupations within the construction and extraction group. For instance, cement masons and concrete finishers were employed at 4.3 times the national rate in Guam and construction and maintenance painters at 3.8 times the U.S. average.”

Statistics were from the Occupational Employment and Wage Statistics survey of the Guam Department of Labor.

According to the BLS, the mean or average hourly wage for Guam for Food Preparation and Serving Related in Guam in May 2020 was $10.29, less than this year’s Davis-Bacon minimum wage of $10.95, and less than the $15 minimum in the proposed rule.

The Journal sought clarification on what is meant in the proposed rule by “food service worker” and whether that would refer to staff in a restaurant, or catering staff, or both.

U.S. DOL’s spokesperson told the paper, “The proposed rule is still receiving public comments, so there is no decision here yet. But under the Obama [Minimum Wage Executive Order], the minimum wages were expanded to cover workers who assist in administering the contract work and do not have to be performing work specified (U.S. DOL’s emphasis) in the contract, like [Service Contract Act] workers, or laborers and mechanics in [the Davis-Bacon Act]. 

“Executive Order 14026 improves the economic security of families and makes progress toward reversing decades of income inequality. Our proposed regulations to implement President Biden’s Executive Order will ensure taxpayer dollars uphold the dignity of work and provide a living wage to workers on federal contracts, including cleaning, maintenance, nursing and food service workers whose efforts are critical to the nation’s pandemic recovery,” the spokesperson said.

Guam’s minimum wage of $8.75 an hour will become $9.25 an hour on Sept. 1. This was originally intended to become law on March 1, but Gov. Lourdes A. Leon Guerrero signed legislation to delay that.

Leon Guerrero announced her support for EO 14026.

The minimum wage in the Northern Mariana Islands is $7.25.

Wage surveys in Guam that U.S. DOL conducts were mandated by the National Defense Authorization Act. U.S. DOL does not conduct wage surveys in the NMI or American Samoa, or anywhere else. The surveys are only mandated in Guam.

(See below news story and comment from U.S. DOL on the latest Guam wage survey.)

Current wage statistics in the NMI are those released through an occupational wage survey mandated since 2018 for the Contract Worker or CW-1 Program, and a related report from the Central Statistics Division of the NMI Department of Commerce. The Department of Commerce’s 2021 Prevailing Wage Study Report, conducted in February and issued in May surveyed all employees in both the private and public sector in the NMI.

The NMI’s mean hourly wage was $13.53 and the mean hourly wage for Construction and Extraction occupations was $9.87. Food Preparation and Serving Related Occupations had a mean hourly wage of $8.23. As to employers in the NMI, 53 or 10% are listed in the Construction and Extraction category and 80 or 15.2% in Food Preparation and Serving Related Occupations.

While there are U.S. contractors providing services to the U.S. military – in Tinian for example, and companies subcontracting to them, or with direct relationships, it is difficult to predict the current overall effect in the NMI of the proposed rule without further research.

Many of the ongoing construction or remediation projects in Tinian are performed by U.S. military personnel. Any future Requests for Proposals for the Tinian divert airfield are unlikely to appear before 2022, so effects on contractors and NMI companies through that huge federal contract are potentially limited at this time.

The NMI is the recipient of millions of construction funding – for the $254 million the U.S. Department of Housing and Urban Developments awarded the NMI in grant funding for the Community Development Block Grant Disaster Recovery action plan for post-typhoon recovery.

The proposed rule is more than 200 pages. Readers in the public and private sector are encouraged to read it carefully, particularly sections on grants and apprenticeships.

This is a developing story, and the Journal will publish updates as information becomes available.

In other U.S. DOL news:

US DOL surveying Guam construction companies on prevailing wages

The U.S. Department of Labor’s Wage and Hour Division is surveying Guam’s building, residential, heavy and highway construction companies to participate in a prevailing wage survey. Such surveys are carried out to determine prevailing wages for federal or federally funded projects, and as mandated through the Davis-Bacon Act and other acts.

As to why surveys are carried out with companies doing work throughout Guam, and not solely on federal properties, the U.S. DOL spokesperson said, “The federal government does not want to be a party to a contract for construction that undercuts the local prevailing wage practices; therefore, we survey what contractors are paying their workers in particular classifications of work in the private construction industry to ascertain “area practice.”  \

The survey has no bearing on the new proposed rule, the spokesperson said.

 

Company withholds overtime, sees penalties

  • UMS Heavy Equipment Rental Inc. of Chalan Pago Ordot “failed to pay dump truck drivers and operators of other heavy equipment legally required overtime when they worked more than 40 hours in a workweek.”

The company also failed to pay operators for time spent working before and after scheduled shifts, including time spent inspecting and preparing their trucks prior to leaving the UMS yard, traveling to job sites and traveling back to the yard. When UMS did record and pay for overtime hours, the company paid workers in cash at straight-time rates. “The FLSA requires payment at one and one-half times workers’ regular rates of pay for hours they work beyond 40 in a workweek,” according to a July 19 release from U.S. DOL.

The investigation led the division to recover $17,308 in back wages for 20 employees. The division also assessed $7,250 in civil penalties “due to the willful nature of the violations.”

 

Palau Red Cross receives extra time post-Typhoon Surigae

The International Federation of Red Cross And Red Crescent Societies issued an update for Palau, extending relief efforts two months from July 31 to Sept. 30 to allow for final distribution activities. “Community rapid damage assessment teams and state government actors could not distribute essential household items and cash and voucher assistance as planned in July,” the update said.

According to the report, “State governments, local youth and communities were occupied with the annual the Belau Games in May and June. State elections also took place in Koror state, where 50% of the targeted population resides. As the Typhoon Surigae response is the first operation led by Palau Red Cross in many years, the National Society needed more time to distribute, monitor and conduct a lesson learned exercise.”

 

And also …

 

Wanted: The Guam Visitors Bureau is seeking volunteers to redesign and paint one of the oldest murals on Guam, the one near the John F. Kennedy High School on the road that leads down to Tumon from the corner opposite Kmart. The mural was first painted in 2015, according to Journal files.

Contact Hank Rice, project coordinator, at 671.888.0540/[email protected] 

Wanted: The Marianas Visitors Authority is seeking bands for the Hafa Adai & Tirow Summer Jam on July 31 in Saipan and is offering cash prizes for participation.  

Contact MVA Community Projects Specialist Ed Diaz at 670.664.3200/[email protected]