FAR 52.222-16—Approval of Wage Rates.
Plain-English Summary
FAR 52.222-16, Approval of Wage Rates, governs when a contractor must obtain written approval before paying construction laborers and mechanics straight-time wages or overtime rates that are higher than the wage rates in the applicable Construction Wage Rate Requirements minimum wage determination included in the contract. The clause is designed to give the Government control over wage-rate increases above the required minimums on covered construction work, while still ensuring workers are paid properly for overtime actually worked. It applies only when the contractor proposes to pay rates above the contract’s wage determination for corresponding classifications, and it requires approval by the head of the contracting activity or an expressly designated representative. The clause also allocates financial risk: if the contractor pays more than the approved rate, the excess is the contractor’s responsibility and is not reimbursable by the Government. In practice, this clause matters because it affects labor pricing, payroll compliance, subcontractor oversight, and whether overtime can be used on the job without prior Government authorization.
Key Rules
Approval required for higher rates
If the contractor wants to pay straight-time wages above the applicable Construction Wage Rate Requirements minimum wage determination for a laborer or mechanic classification, the wage rate must be submitted in writing for approval before use. The same approval requirement applies to overtime rates based on those higher straight-time rates.
Only certain officials may approve
Approval must come from the head of the contracting activity or a representative expressly designated for this purpose. A project-level or informal approval is not enough unless it comes from an authorized official under this clause.
Contractor bears excess cost
Any amount paid to a laborer or mechanic above the agency-approved wage rate is at the contractor’s expense. The Government will not reimburse the contractor for amounts paid beyond the approved rate.
Overtime refusal does not waive pay duty
If the Government refuses to authorize overtime, the contractor still must pay employees the required overtime rates for any overtime actually worked. Government disapproval of overtime use does not eliminate wage-and-hour obligations under applicable law or the contract.
Applies to laborers and mechanics on covered work
The clause is limited to laborers and mechanics engaged in work under the contract. It is tied to construction wage determinations, so it is a labor-rate control provision for covered construction labor rather than a general pricing clause for all contract labor.
Responsibilities
Contracting Officer / Head of the Contracting Activity / Designated Representative
Review written requests for wage rates above the applicable construction wage determination and approve or deny them in writing. Ensure that only properly authorized officials grant approval and that the contract administration record reflects the approved wage rates.
Contractor
Submit any proposed straight-time wage rates and related overtime rates above the applicable wage determination for written approval before paying them. Pay no more than the approved rate if reimbursement is expected, and absorb any excess paid above the approved rate. Continue to pay required overtime for overtime actually worked even if the Government does not authorize overtime use.
Subcontractors
Follow the same approval and payment rules when performing covered construction work under the contract. Coordinate proposed wage increases or overtime-related rates through the prime contractor so they can be submitted for Government approval as required.
Agency
Maintain the applicable Construction Wage Rate Requirements minimum wage determination in the contract and ensure the approval process is administered consistently. Protect the Government from unauthorized reimbursement claims for wage amounts above approved rates.
Practical Implications
Contractors should check the wage determination before setting payroll rates, because paying above the listed rates without approval can create unreimbursable costs.
The clause creates a documentation issue as much as a pay issue: if the approval is not in writing and from the right official, the contractor may not be able to recover the extra wages.
Prime contractors need to control subcontractor wage decisions, since unauthorized higher rates paid by subs can still become a cost problem on the job.
Government refusal to authorize overtime use does not mean employees can be paid less than legally required for overtime actually worked; contractors must separate permission to use overtime from the obligation to pay overtime wages.
A common pitfall is assuming that a labor rate approved for one classification or one period automatically applies to all similar work; approval must match the specific rates and circumstances covered by the clause.
Official Regulatory Text
As prescribed in 22.407 (b) , insert the following clause: Approval of Wage Rates (May 2014) All straight time wage rates, and overtime rates based thereon, for laborers and mechanics engaged in work under this contract must be submitted for approval in writing by the head of the contracting activity or a representative expressly designated for this purpose, if the straight time wages exceed the rates for corresponding classifications contained in the applicable Construction Wage Rate Requirements minimum wage determination included in the contract. Any amount paid by the Contractor to any laborer or mechanic in excess of the agency approved wage rate shall be at the expense of the Contractor and shall not be reimbursed by the Government. If the Government refuses to authorize the use of the overtime, the Contractor is not released from the obligation to pay employees at the required overtime rates for any overtime actually worked. (End of clause)