Advocacy Submits Comment Letter on Increasing the Minimum Wage for Federal Contractors

On August 27, 2021, the U.S. Small Business Administration’s Office of Advocacy (Advocacy) submitted comments to the Department of Labor’s Wage and Hour Division (DOL) on its proposed rule, which increases the minimum wage for federal contractors to $15.00 per hour beginning January 30, 2022.[1]

Advocacy is concerned that this proposed rule will result in financial hardship for affected small businesses that are not normally considered government contractors, such as concessionaries, lease holders, and seasonal recreational businesses who have contracts and permits on Federal property or lands.  Many of these small businesses will be unable to pass on these increased wage costs to the federal government like traditional federal contractors.

In this proposed rule, DOL has provided an Initial Regulatory Flexibility Analysis (IRFA), indicating that the proposed rule will have a significant economic impact on a substantial number of small entities.  However, the agency has also provided a certification that the rule will not have such an impact. As the agency itself has provided evidence of the rule’s impact, the certification under Section 605 lacks a factual basis and is invalid.

Advocacy also believes that DOL’s IRFA underestimates the small business compliance costs including increased wages under this regulation.  Advocacy recommends that DOL prepare and make available for public comment a supplemental IRFA that adequately assesses the small business compliance costs of this regulation and includes consideration of significant alternatives that would accomplish the objectives of the regulation while minimizing the economic impacts to small entities.

Comment Letter

Fact Sheet

[1] Increasing the Minimum Wage for Federal Contractors, 86 Fed. Reg. 38816 (July 22, 2021)