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Federal Register / Vol. 86, No. 138 / Thursday, July 22, 2021 / Proposed Rules
grounds for termination of the right to proceed with the contract work and, in such event, for the Federal Government to enter into other contracts or arrangements for completion of the work, charging the contractor in default with any additional cost. Paragraph d also provides that a breach of the contract clause may be grounds to debar the contractor as provided in 29 CFR
part 23.
Proposed paragraph e provides that contractors may not discharge any portion of their minimum wage obligation under the Executive order by furnishing fringe benefits, or with respect to workers whose wages are governed by the SCA, the cash equivalent thereof. As noted earlier, Executive Order 14026 increases the hourly minimum wage paid by contractors with the Federal Government. 86 FR 22835. By repeatedly stating that it is increasing the hourly minimum wage, without any reference to fringe benefits, the text of the Executive order makes clear that a contractor cannot discharge its minimum wage obligation by furnishing fringe benefits. This is consistent with the Departments interpretation in the regulations issued to implement Executive Order 13658, see 79 FR
60688, and the SCA, which does not permit a contractor to meet its minimum wage obligation through the furnishing of fringe benefits, but rather imposes distinct minimum wage and fringe benefit obligations on contractors. 41
U.S.C. 67031-2. Similarly, the FLSA
does not allow a contractor to meet its minimum wage obligation through the furnishing of fringe benefits. Although the DBA specifically includes fringe benefits within its definition of minimum wage, thereby allowing a contractor to meet its minimum wage obligation, in part, through the furnishing of fringe benefits, 40 U.S.C.
31412, Executive Order 14026 contains no similar provision expressly authorizing a contractor to discharge its Executive order minimum wage obligation through the furnishing of fringe benefits. Consistent with the Executive order, paragraph e would accordingly preclude a contractor from discharging its minimum wage obligation by furnishing fringe benefits.
Proposed paragraph e also prohibits a contractor from discharging its minimum wage obligation to workers whose wages are governed by the SCA
by providing the cash equivalent of fringe benefits, including vacation and holidays. As discussed above, the SCA
imposes distinct minimum wage and fringe benefit obligations on contractors. 41 U.S.C. 670312. A

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contractor cannot satisfy any portion of its SCA minimum wage obligation through the provision of fringe benefit payments or cash equivalents furnished or paid pursuant to 41 U.S.C. 67032.
29 CFR 4.177a. Consistent with the treatment of fringe benefit payments or their cash equivalents under the SCA, proposed paragraph e would not allow contractors to discharge any portion of their minimum wage obligation under the Executive order to workers whose wages are governed by the SCA through the provision of either fringe benefits or their cash equivalent.
Proposed paragraph f provides that nothing in the contract clause would relieve the contractor from compliance with a higher wage obligation to workers under any other Federal, State, or local law, or under contract, nor shall a lower prevailing wage under any such Federal, State, or local law, or under contract, entitle a contractor to pay less than the Executive order minimum wage. This provision would implement section 2c of the Executive order, which provides that nothing in the order excuses noncompliance with any applicable Federal or state prevailing wage law, or any applicable law or municipal ordinance establishing a minimum wage higher than the minimum wage established under the order. 86 FR 22836. For example, if a municipal law required a contractor to pay a worker $15.75 per hour on January 30, 2022, a contractor could not rely on the $15.00 Executive order minimum wage to pay the worker less than $15.75 per hour.
Proposed paragraph g sets forth recordkeeping and related obligations that are consistent with the Secretarys authority under section 5 of the order to obtain compliance with the order, and that the Department views as essential to determining whether the contractor has paid the Executive order minimum wage to covered workers. The obligations in paragraph g are identical to the obligations that the Department derived in the Executive Order 13658
rulemaking. See 79 FR 60689. The Department originally derived these obligations from the FLSA, SCA, and DBA. Paragraph g1 lists specific payroll records obligations of contractors performing work subject to the Executive order, providing in particular that such contractors shall make and maintain for three years, work records containing the following information for each covered worker:
name, address, and social security number; the workers occupations or classifications; the rate or rates paid to the worker; the number of daily and weekly hours worked by each worker;

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any deductions made; and total wages paid. The records required to be kept by contractors pursuant to proposed paragraph g1 are coextensive with recordkeeping requirements that already exist under, and are consistent across, the FLSA, SCA, and DBA; as a result, compliance by a covered contractor with the proposed payroll records obligations would not impose any obligations to which the contractor is not already subject under the FLSA, SCA, or DBA.
Paragraph g1 further provides that the contractor performing work subject to the Executive order shall make such records available for inspection and transcription by authorized representatives of the WHD.
Proposed paragraph g2 requires the contractor to make available a copy of the contract for inspection or transcription by authorized representatives of the WHD. Proposed paragraph g3 provides that failure to make and maintain, or to make available to the WHD for transcription and inspection, the records identified in paragraph g1 will be a violation of the regulations implementing Executive Order 14026 and the contract. Paragraph g3 additionally provides that in the case of a failure to produce such records, the contracting officer, upon direction of the Department, or under their own action, shall take action to cause suspension of any further payment or advance of funds until such violation have ceased. Proposed paragraph g4 requires the contractor to permit authorized representatives of the WHD to conduct the investigation, including interviewing workers at the worksite during normal working hours.
Proposed paragraph g5, provides that nothing in the contract clause will limit or otherwise modify a contractors recordkeeping obligations, if any, under the FLSA, SCA, and DBA, and their implementing regulations, respectively.
Thus, for example, a contractor subject to both Executive Order 14026 and the DBA with respect to a particular project would be required to comply with all recordkeeping requirements under the DBA and its implementing regulations.
Proposed paragraph h requires the contractor to both insert the contract clause in all its covered subcontracts and to require its subcontractors to include the clause in any lowertiered subcontracts. Paragraph h further makes the prime contractor and any upper-tier contractor responsible for the compliance by any subcontractor or lower tier subcontractor with the contract clause.
Proposed paragraph i, which the Department derived from the SCA

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