FAR 22.1002-4—Application of the Fair Labor Standards Act minimum wage.
Plain-English Summary
FAR 22.1002-4 establishes the baseline wage floor for employees working on federal service contracts: no contractor or subcontractor may pay any employee working on the contract less than the minimum wage required by section 6(a)(1) of the Fair Labor Standards Act (FLSA), 29 U.S.C. 206. This section applies to service contracts of any dollar amount, so it is not limited by contract size, funding level, or whether the contract is otherwise subject to a separate wage determination. In practice, it means contractors must monitor the current federal minimum wage and ensure that all covered workers on the contract receive at least that amount for hours worked on the contract. The rule is a floor, not a ceiling, and it operates alongside other labor requirements that may require higher wages, such as the Service Contract Labor Standards wage determinations, state or local minimum wage laws, or collective bargaining obligations. Its purpose is to prevent underpayment of service contract workers and to give contracting officers and contractors a clear, universal minimum wage compliance standard.
Key Rules
Applies to all service contracts
The minimum wage requirement applies to any contractor or subcontractor holding a service contract, regardless of dollar value. There is no small-contract exception in this section.
Federal minimum wage floor
Employees working on the contract must be paid at least the minimum wage specified in FLSA section 6(a)(1). Contractors must use the current federal minimum wage rate, not an outdated rate.
Covers contractor and subcontractor employees
The rule binds both prime contractors and subcontractors. Each tier of the contracting chain must ensure that employees working on the contract are paid at or above the required minimum.
Applies to employees working on the contract
The wage floor applies to employees performing work on the service contract. Contractors must identify covered workers and ensure their pay for contract work meets the minimum wage requirement.
Minimum wage is a floor only
This section sets the lowest permissible wage, but it does not override higher wage obligations from other laws, wage determinations, contracts, or agreements. If another requirement is higher, the higher rate controls.
Responsibilities
Contracting Officer
Ensure the contract is administered with awareness that the FLSA minimum wage applies to service contracts of any dollar amount. Monitor compliance issues as they arise and coordinate with labor advisors or enforcement personnel if a contractor appears to be paying below the required minimum.
Contractor
Pay every employee working on the service contract at least the current FLSA minimum wage for covered work. Maintain payroll practices, classifications, and internal controls that prevent underpayment and ensure subcontractors are also compliant.
Subcontractor
Pay its employees working on the contract at least the required minimum wage and follow the same compliance standard as the prime contractor. Keep accurate payroll records and coordinate with the prime contractor when needed to confirm compliance.
Agency
Administer service contracts in a way that supports labor compliance, including oversight, complaint handling, and referral of suspected violations. Ensure acquisition personnel understand that this requirement applies regardless of contract dollar amount.
Employees working on the contract
Receive at least the applicable federal minimum wage for covered work. If underpayment occurs, they may raise concerns through internal channels, the contracting agency, or enforcement authorities.
Practical Implications
Contractors must check the current federal minimum wage rate regularly; using an outdated rate is a common compliance failure.
This rule applies even to very small service contracts, so contractors cannot assume low-dollar contracts are exempt.
If state or local minimum wage laws are higher than the federal rate, contractors must pay the higher amount for covered work.
Prime contractors should flow this requirement down to subcontractors and verify subcontractor payroll compliance, because liability and performance problems can arise from a lower-tier violation.
Accurate timekeeping and payroll records are essential to show that employees working on the contract were paid at least the required minimum wage.
Official Regulatory Text
No contractor or subcontractor holding a service contract for any dollar amount shall pay any of its employees working on the contract less than the minimum wage specified in section 6(a)(1) of the Fair Labor Standards Act ( 29 U.S.C. 206 ).