New Regulations Likely Cause On-Base Closures

The McDonald’s at Naval Base Kitsap-Bremerton, will close March 31, reports the Army Times.

Six restaurants located on military installations, including three McDonald’s outlets and two name-brand eateries, have closed recently or are planning to shortly, with new minimum wage requirements for workers on federal contracts believed to have played a role in the decisions.  Washington State already has the highest minimum wage in the U.S. at $9.32/hr.

Last week McDonald’s restaurants closed at Naval Weapons Station Charleston, S.C., and at Naval Support Activity, Bethesda, Md.  An I Love Country, has notified Navy Exchange Service Command that it will close next week at Naval Station Pearl Harbor, Hawaii.

Two other contractors, a sandwich eatery and a pizza parlor, have asked to terminate their Army and Air Force Exchange Service contracts to operate at two other installations.

These decisions most likely are related to Labor Department rules governing fast food workers on federal contracts, along with a recently signed executive order increasing the minimum wage for employees working on new federal contracts beginning Jan. 1, a source told the publication. Pres. Obama’s executive order established $10.10/hr. as the federal minimum wage for contractors.  The rules also require payment of new, additional “health and welfare” fringe benefits at a rate of $3.81 per hour to those employees.

The Labor Department rules, issued last fall, require federal contractors operating under the Service Contract Act to pay fast food workers a higher minimum wage, as well as additional health and other benefits. It is not yet clear what the impact of President Obama’s executive order will be for contracts on military installations.