How Will a $15/hr Minimum Wage for Federal Contractors Impact Your Operation?

The wage and hour requirements of the Fair Labor Standards Act can have a compounding effect on certain classes of outfitters. And President Biden’s minimum wage Executive Order is creating a considerable amount of concern among the outfitting community.

While the rule developed to implement the E.O. is not final and there are a lot of unanswered questions (many of which AO and our affiliated partners are asking the Department of Labor), you can still take steps to prepare yourself. America Outdoors is assembling the necessary resources to help members to navigate wage and hour issues when operating on federal lands.

America Outdoors anticipates that this rule will take effect for federal contractors upon renewal or assignment of a permit following January 30, 2022.

Are you exempt from federal minimum wage requirements?

If you have a federal permit to operate on public lands and waters, you should assess whether your operation is exempt from the wage and hours requirement of the Fair Labor Standards Act. In Spring 2021, America Outdoors conducted an online webinar exploring the FLSA with Tracey Knutson, attorney-at-law. You can review that webinar in the AO video library. Through this webinar, you can assess whether you meet the seasonality exemption to the FLSA. You can also assess whether your operation is based on federal lands or not, which will also qualify you for an exemption.

Under the Obama Administration, America Outdoors commissioned the development of a 47-page Wage and Hour Handbook for outfitters and guides. This handbook is available to members in the AO library. While it references a previous Executive Order that has notable differences from this one, it can still be a great asset to outfitters seeking to re-configure your payroll systems:

The Wage and Hour Handbook covers the following topics:

  • Explanation of Wage Calculation for operators on and off federal land including hours worked, rate of pay, overtime rate and hours, and lodging and meal deductions.

  • Applicability of Minimum Wage and Overtime Requirements, including the seasonal/recreational exemption for employers not on federal lands.

  • Tracking Employee Hours

  • Ways to Reduce Labor and Overtime Costs, including partial overtime exemptions, tip credits, fluctuating workweeks, and scheduling strategies.

A Timeline of Past and Anticipated Actions

April 30, 2021 - E.O. 14026 is published in federal register, establishing a $15/hr minimum wage for federal contractors and rescinding the Trump-era E.O. exempting outfitters and guides.

July 22, 2021 – Department of Labor releases a Proposed Rule Increasing the Minimum Wage for Federal Contractors. 30-day comment period goes into effect.

August 27, 2021 – Comment period closes. A dozen outfitters associations including America Outdoors join a comment letter.

November 24, 2021 – Deadline for DOL to publish final rule in federal register

January 30, 2022 – Minimum wage rule implementation date – agencies are directed to have all necessary forms amended to include a clause requiring compliance with the federal minimum wage

Concerns for Outfitters with the Executive Order

There is significant nuance in understanding how, and to what extent, this E.O. will be implemented. America Outdoors has identified several oversights and points of confusion:

  • On extended multi-day trips, where guides may be working daily for five to thirty consecutive days, the order lacks clarity and guidance on when guides are on duty or off. In fact, the rule does not address overtime considerations at all.

  • Seasonal recreational establishments with permits should be uniquely considered, as permits to operate are not contracts in the traditional sense. A permit to operate is more similar to a license to operate and access public lands than it is to a procurement contract.

  • The applicability of this rule to subcontractors for outfitters should be clarified. Although the preamble to the proposed rule includes at least some helpful discussion of “subcontract” and “subcontractor,” the final regulations should include specific language limiting the scope of subcontract and subcontractor, as well as clarifying the obligations of the prime contractor.

  • For concession contracts or contracts on federal lands, the rule will affect not only the wages of those operation in connection with a federal contract but also the entire employee pool. The analysis of the orders’ impact on small businesses did not consider, for example, those that may be more likely to have employees splitting time between federal and non-federal work.

  • The proposed timing of annual adjustments will create uncertainty regarding budget and pricing for small business concessioners.

Issues Raised by Outfitters Associations for Proposed Rule

In the prosed regulation, which is essentially a draft of the final rule and is designed to implement the E.O., we sought clarification on a number of issues.

  • Although the preamble to the Proposed Rule includes at least some helpful discussion of “subcontract” and “subcontractor,” the final regulations should include specific language limiting the scope of subcontract and subcontractor, as well as clarifying the obligations of the prime contractor.

  • The Department should acknowledge that, for concession contracts or contracts on federal lands, the rule will have the practical outcome of affecting wages that are not on or in connection with a federal contract, and it must consider this reality in its assessment of the impacts of the Proposed Rule’s minimum wage requirements, particularly on small businesses that may be more likely to have employees splitting time between federal and non-federal work.

  • The proposed timing of annual adjustments will create uncertainty regarding budget and pricing for small business concessioners.

What if my permit renews between now and the implementation deadline?

Read your permit carefully, including all attachments.

The Executive Order speaks to this scenario, encouraging agencies to require the new minimum wages between the issuance of the E.O. and the date it will come into effect (January 20, 2022):

“where agencies have issued a solicitation before the effective date for the relevant action… and entered into a new contract or contract-like instrument resulting from such solicitation within 60 days of such effective date, such agencies are strongly encouraged but not required to ensure that the new higher minimum wages are paid in the new contract or contract-like instrument.” 

The National Park Service has carried out this recommendation in at least one instance. The following language was included in a prospectus for a concession in Glen Canyon National Recreation Area:

“The Concessioner is responsible for providing all personnel and employee training necessary to provide the required and authorized services. The minimum wage for federal contractors established by Executive Order 14026 will apply to the Draft Contract.”

What’s Next?

When the proposed rule is finalized, America Outdoors will update this article with answers to our inquiries and additional guidance so you will have what you need to be well prepared.

Access to Documents

You may have noticed that some documents and videos mentioned in this article are password protected. These are member-only resources. If you do not know your login information, please contact America Outdoors.

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