On June 10, Senators Josh Hawley (R-MO) and Peter Welch (D-VT) introduced the Higher Wages for American Workers Act (S. 2013). The Higher Wages for American Workers Act would amend the Fair Labor Standards Act (FLSA), raising the federal minimum wage to $15 per hour and directing the secretary of labor to adjust the minimum wage annually based on inflation.
Higher Wages for American Workers Act
The bill proposes to increase the federal minimum wage from $7.25 to $15 per hour beginning January 1 of the first year after enactment. Each year after, the secretary of labor is directed to increase the minimum wage annually by “the percentage increase, if any, in the Consumer Price Index for Urban Wage Earners and Clerical Workers.”
Although the federal minimum wage has not been increased since 2009, several states have increased their state minimum wage above the current $7.25 per hour. As of January 1, 2025, 30 states and the District of Columbia have minimum wage laws set above the federal level, and 10 states and the District of Columbia have a minimum wage of $15 per hour or higher. All other states must follow the minimum wage set by Congress through the FLSA.
Looking Ahead
While legislation has been introduced in recent years to increase the federal minimum wage, calls to increase the level to $15 per hour have mostly come from Congressional Democrats. It is therefore notable that Republican Senator Josh Hawley is leading efforts on this issue. It remains to be seen if enough Republicans in the Senate will also support this effort to give the legislation the chance to receive 60 votes to bypass the filibuster and whether House Republicans will take up similar legislation.
CUPA-HR will keep members apprised of further developments related to federal minimum wage laws.
TEQSA CEO Mary Russell said TEQSA needed more power over universities. Picture: Newswire
Institutions will be required to prove that their payroll operations are effective to combat endemic wage underpayment, the university regulator has announced.
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The National Tertiary Education Union (NTEU) has told the Education and Employment Senate Committee that the sector regulator doesn’t have the correct functions to address staff underpayments, amid calls it needs more power.
Union policy and research officer Kieran McCarron said there are two general issues with Tertiary Education Quality and Standards Agency (TEQSA) that impact staff.
“The threshold standards are too high-level and vague, especially when it comes to governance and staffing,” he told the Committee.
“The second issue is that either the enforcement powers are too weak, it’s too complicated for TEQSA to access them, or they’re just simply inappropriate. For example, deregistration is just inappropriate overkill to deal with the issues that our members face.
“Having everyone lose their jobs and the universities shut down doesn’t solve wage theft and it doesn’t help the community, so it’s not an appropriate power.”
He said there needs to be changes to TEQSA so it can “ensure compliance with appropriate penalties,” and better reflect current staff conditions.
TEQSA chief executive Mary Russell told the same Committee her body needs more powers to wrangle universities and help it to deal with staff-related issues, giving an example of a teaching issue that can’t currently be resolved by TEQSA under its existing powers.
“There’s actually already a legislative requirement that any person teaching in higher education needs to be engaged in continuing scholarship and research. That’s your traditional “40:40:20 academic.”
“How is it that at least half of the teaching performed in our universities is performed by casual staff who are hired on an hourly basis and who are only paid for the hours in which they are directly engaged with students?
“How is it being ensured that they’re performing scholarship and research – because they’re not paid to do that. There’s an assumption made that they’ll just do that in their own time, and that’s unpaid work. This is an example of an issue that TEQSA is aware of but doesn’t have any appropriate tools to deal with.”
Wage underpayment and financial management
Wage underpayments and high vice-chancellor pay are the two biggest money-related issues universities have.
The Fair Work Ombudsman Anna Booth later told the Committee her office has recovered $180.9m for 99,000 university employees as of February 28, 2025. The NTEU has estimated wage underpayments, paid or unpaid, are set to exceed $400m.
Fair Work Ombudsman Anna Booth said there are repeating factors as to why universities keep discovering underpaid staff. Picture: Martin Ollman
Ms Booth said the most common “trends” Fair Work sees when dealing with underpayments include: high numbers of casual staff; poor governance and management oversight practices; a lack of centralised human resources functions; pay related issues commonly dealt with by academic managers who lack appropriate expertise; and lack of investment in payroll and time-recording systems.
“Our investigations have largely concerned casual professional and academic staff and have largely included unpaid work – unpaid marking activities, lecture and tutorial attendance, and other student interactions – as well as the application of incorrect classifications, unpaid entitlements and the improper use of piece rates,” she told the Committee.
Universities Australia, which is the vice-chancellor’s membership group, in its submission said debate about VC salaries, which average $1m, are solely political and distract from issues of underfunding degrees and research.
“Debate over vice-chancellor salaries, for example, distracts from the conversation we need to have about funding our universities properly,” chief executive Luke Sheehy wrote.
“Their salaries are set by university councils. I don’t believe they should be the sole focus of parliamentarians, certainly not at the expense of the policies and funding needed to keep our universities strong.”
Greens senator Mehreen Faruqi, who disclosed she is an NTEU member, said she was “pretty outraged” when she read the UA submission.
“I think this debate is fundamental to how universities operate, especially given the exorbitant pay packets of executive staff and VCs on the one hand and the systemic wage theft, rampant casualisation and insecure work on the other,” she said.
Fear and secrecy
NTEU branch president at Federation University Dr Mathew Abbott said constant cuts and restructures throughout the sector has created a workplace culture that fears retribution.
“University staff fear for their livelihoods, and that creates a culture in which staff become more compliant and less likely to speak out,” he said.
“This is something I’ve tried to raise – the psychological toll it takes, the professional toll, and, of course, the impact of this on students.
“When staff are placed under this kind of pressure, along with other issues like workloads and so on, it has a flow-on effect to the quality of the education that we provide to our students.”
He said there is a “culture of secrecy” in university councils and senates, something NTEU member Professor Fiona Probyn-Rapsey from University of Wollongong also said is exacerbated by largely non-staff elected boards.
There were multiple calls made for university council meeting minutes to be available to all university staff.
“We have very little access to what university councils are discussing and how decisions are made. We don’t see minutes, and we barely get any interaction with university council members,” Professor Probyn-Rapsey said.
“They don’t operate in the same way that the rest of the university does – in a collegial manner – or in the way a university should be behaving.”
Management should also let staff have more say in teaching decisions, Professor Andrea Lamont-Mills, University of Southern Queensland NTEU branch president, added.
Professor Andrea Lamont-Mills is associate dean of research at UniSQ. Picture: Newswire
“Staff feel disempowered because they’re not using their expertise – it’s not valued, and their professionalism is not valued,” she said.
“It’s disempowering when you get excluded from decisions that actually impact you, or you have limited input into decisions that directly impact you.
“Our staff are highly skilled and highly knowledgeable, and they want to be part of developing decisions and coming up with solutions, yet they’re disempowered – they’re not able to do that.”
Australia’s universities are some of the most prestigious and highly-ranked in the OECD. Yet the sector is arguably in crisis.
It narrowly escaped a potentially devastating hit to the $47.8 billion in annual revenue generated by international education, with proposed international students caps only just scuppered in parliament’s last sitting fortnight of the year.
But it is again being rocked by headlines around “wage theft” and millions of dollars wasted on consulting fees by some of our biggest universities.
A damning report by the National Tertiary Education Union has labelled this a “crisis of governance” constituting “reckless spending’’ by “the overpaid executive class”.
Ouch.
Yet Australia’s education system is strong by global standards, ranking third globally, and is home to several prestigious universities that consistently rank among the best in the world.
It is unlikely that a sector built on advancing human potential has solely reached this point by maliciously setting out to hurt its own backbone – its faculty.
Rather, systemic problems often indicate structural sectoral flaws, and ineffective means to address them. And Australia’s university system is not immune by any means.
A legacy issue of systemic complexity
We cannot know with certainty if there are indeed some bad actors in this story. Possibly.
But what is undeniably evident are the range of sectoral factors contributing to the sector’s longstanding history of poor record-keeping, including the challenges posed by its complex workforce structure.
Payroll compliance in universities is highly complex due to the combination of intricate awards, unique enterprise agreements, and a history of poor record-keeping.
For instance, universities rely heavily on casual staff, working under often-opaque arrangements. Compensable tasks such as marking essays or tutorial attendance are governed by intricate rules or piece-rate agreements, complicating the tracking of hours and payment.
These layers of complexity create incomplete and inaccurate timesheet data, making it nearly impossible for a human to verify when employees worked and whether they were paid correctly.
And so the resulting payroll errors aren’t just mistakes – they represent a systemic failing with devastating consequences all round.
Underpaid employees face reduced morale, a loss of trust in their employers, and financial stress that often disproportionately affects the most vulnerable. Menwhile, the underpaying universities risk potentially enormous fines and suffer from deep reputational damage, as has been demonstrated recently.
Worse still, is the fact that attempts at resolving these issues are also failing, because they represent nothing more than curative and labour-intensive bandaid “solutions”.
For instance, many universities, after spending millions on consultants to recalculate and backpay impacted employees, have now shifted to hiring large internal teams to manage ongoing compliance efforts.
These teams are tasked with monitoring timesheet accuracy, tracking errors, and managing ongoing remediation efforts, seemingly indefinitely, as if fixing this problem should somehow just be “business as usual”.
Yet treatments should never be “business as usual”, because this is to accept that the problem will never be resolved.
Instead, systemic problems like this one require systemic solutions that assume eliminating the problem is indeed possible.
Fixing the system, not the symptoms
For this to occur, Australia’s tertiary education sector must urgently stop outdated and cumbersome legacy practices and instead embrace preventative long-term solutions that rebuild trust, and support fair and accurate pay for all employees.
In practice, this would involve the adoption of advanced compliance tools and technologies that enable payroll teams to efficiently and accurately monitor payroll end-to-end. This allows teams to rapidly identify errors before, not after, a pay run, and drastically reduce the need for constant manual interventions.
Introducing independent oversight by risk and compliance teams will also help to reduce the risk of a “marking your own homework” approach by human resources and payroll teams, bringing a fresh perspective to compliance checks.
Regular training to keep payroll and compliance teams up to date on changes in legislation, award conditions, and enterprise agreements are also a must in industries like education where payroll practices are complex and dynamic.
And, finally, all of these processes should be consistent across all schools and faculties to avoid disparities and confusion, and reduce errors caused by varying practices.
Any university with the courage to break from centuries of backwards-looking remediation practices and instead embrace a forward-looking, technology-based approach would not only demonstrate bold and refreshing leadership.
It would also help to create enormous goodwill for a sector in desperate need of positive news and, critically, potentially save millions in the process.
Fred van er Tang is chief executive of payroll compliance technology companyPaidRight.
Today 88 per cent of UK universities pay a living wage, marking a significant increase from 2022 when I first published an article on Wonkhe that suggested that several universities were engaged in “civic washing” – claiming civic credentials without the concrete action to back up their claims.
My argument then was that a significant proportion of universities had made public commitments to be “civic” but were not paying the living wage. How, I often asked myself, can you claim to be civic and not treat your lowest paid, and often local, staff with the dignity of a living wage?
The Living Wage Foundation calculates the living wage to be £12.60 (£13.85 in London) according to the cost of living, based on a basket of household goods and services. This is above the statutory minimum wage, which the government brands as the “national living wage.” Employers – including universities – have used the language of the “voluntary living wage” (VLW) where they claim to pay the level determined by the Living Wage Foundation but are not accredited in doing so. This contrasts with the “real living wage” (RLW) which is when an employer is accredited by the Living Wage Foundation as paying the living wage.
To be accredited with the Living Wage Foundation an employer must pay all directly employed staff the living wage and have an agreed plan in place for third party contracted staff such as for outsourced catering, cleaning and security. The requirement placed on subcontracted staff is one of the reasons that universities and other employers pay the VLW as opposed to the RLW.
Real progress
As reported in a series of Wonkhe articles (here and here), over the past four years there has been an increase in the number of universities paying the real and voluntary living wage. In the context of the acute financial crisis impacting many universities this is a massive achievement that should be celebrated. Indeed, I am aware of only one university that has de-credited from the Living Wage Foundation over the past few years.
In 2019 (when I first looked into the living wage issue) only 38 of Universities UK members were accredited with the LWF. Today that has increased to 80 with four accrediting in 2024. However, this does not take into account the universities that pay the VLW. The only way to determine this is to check institutional websites and where no information is available to follow up with a freedom of information request. In 2024, we contacted 61 universities and determined that 39 were paying a voluntary living wage.
This year I decided to update this analysis by focusing on the 22 universities that confirmed they did not pay the RLW or VLW. Two of these were private providers that did not respond to a FOI last year, so I excluded them. The remaining 20 did respond, of which 12 unambiguously acknowledged that they did not pay the living wage, three said they were considering it but currently do not pay the VLW, 2 said no, but added that their pay scales are above the living wage and thus were included in the analysis and three said that they now pay the VLW.
This means that out of 140 universities in my sample, 123 now pay the real or voluntary living wage (88 per cent), up from 82 per cent last year. Whilst this is undoubtedly cause for celebration, it is important to note that the VLW does not require a commitment for subcontractors to be paid a living wage.
As some of you know, I am off to pastures new and thus this will be the last time I update the analysis. However, I am delighted that Citizens UK’s community of practice on higher education has agreed to take on the exercise and I have shared with them all the data from previous years. Perhaps when I return to the UK the university sector will have set a precedent by being wholly accredited with the Living Wage Foundation.
On November 5, the 9th U.S. Circuit Court of Appeals reversed a lower district court’s decision to dismiss a lawsuit challenging the Biden administration’s executive order and the Department of Labor (DOL)’s final rule to increase the minimum wage for federal contractors. The ruling orders the legal challenge to proceed, which could ultimately strike down the executive order and final rule.
In April 2021, the Biden administration published executive order 14026, which directed DOL to issue regulations to increase the minimum wage for federal contractors to $15 per hour beginning on January 30, 2022. Subsequently, in November 2021, DOL issued its final rule to implement the executive order, setting the minimum wage for federal contractors to $15 per hour on January 30, 2022, and requiring the secretary of Labor to annually review and determine the minimum wage amount beginning in January 2023.
The executive order and final rule were challenged by five states: Arizona, Idaho, Indiana, Nebraska and South Carolina. In their suit, the states claimed that the Biden administration violated the Federal Property and Administrative Services Act (FPASA) and exceeded its authority granted under the law by imposing a wage mandate through an executive order. They also argued that DOL violated the Administrative Procedure Act (APA), which governs how federal agencies proceed through the notice-and-comment rulemaking process, when implementing the final rule. The lawsuit was originally dismissed by a federal judge in the U.S. District Court of Arizona, leading the states to appeal to the 9th Circuit.
In the 9th Circuit’s ruling, two of the three judges on the panel sided with the states’ arguments, reversing the dismissal of the case from the lower district court. The majority opinion held that the minimum wage mandate exceeded the president’s authority under FPASA and that DOL’s final rule was subject to arbitrary-or-capricious review under the APA. As such, the circuit court sends the case back to the district court, where the federal judge will proceed with the case and issue a further ruling to uphold or strike down the executive order and final rule. For now, the order and final rule are still in place, but the future of both is uncertain. CUPA-HR will keep members apprised of any updates related to this lawsuit and further laws and regulations impacting federal contractors.
On February 9, the Department of Labor’s Wage and Hour Division (WHD) issued an opinion letter stating that employees with chronic serious health conditions may use Family and Medical Leave Act (FMLA) leave to reduce work hours indefinitely. The WHD opinion letters serve as a means by which the public can develop a clearer understanding of what FMLA compliance entails. This particular letter is the first issued by the Biden administration.
The letter from the WHD and Acting Administrator Jessica Looman comes in response to an employer’s letter asking whether “an employee may use FMLA leave to limit their work schedule for an indefinite period of time if the employee has a chronic serious health condition and a healthcare provider certifies that the employee has a medical need to limit their schedule.” The question only applies to employees who are regularly scheduled to work more than eight hours per day.
The opinion letter specifies that if an employee is regularly scheduled to work more than eight hours per day but has an FMLA-qualifying condition that grants them to take FMLA leave, then the employee is entitled to use the 12 weeks of FMLA leave to reduce their work hours to eight hours per day. It adds that an employee may indefinitely reduce their work hours so long as they don’t surpass the 12 weeks of FMLA leave in a 12-month period that they are entitled to under the law.
The letter also addresses concerns from the employer that the need for a work day limited to eight hours may be “better suited” as a reasonable accommodation granted under the Americans with Disabilities Act (ADA). The letter states that the requirements and protections of the FMLA and ADA are separate and distinct, and that employees may be entitled to use protections granted under both laws at the same time. It further states that an employee who has exhausted all of the afforded FMLA leave for a 12-month period may have additional rights granted under the ADA to continue to work at the reduced level, but it clarifies that the WHD does not “interpret or provide any advice for” the ADA and its requirements.
Finally, the letter states that employees are entitled to the equivalent of 12 standard workweeks of FMLA leave, which may be more than 480 hours (equivalent to working 40 hours per week for 12 weeks) if the regular schedule of the employee is greater than 40 hours per week. The letter uses an example of an employee regularly working 50 hours per week, in which case the employee would be entitled to 600 hours of FMLA leave.
It’s worth noting that the content of the letter is consistent with long-standing guidance and enforcement of the FMLA. The letter may draw increased attention to the issue, however, since the letter is the first provided by the Biden administration’s WHD.
CUPA-HR will continue to monitor for any future WHD opinion letters and will keep members apprised of any significant updates in the future.
On November 24, the Department of Labor (DOL)’s Wage and Hour Division (WHD) issued a final rule implementing President Biden’s Executive Order 14026 (EO), “Increasing the Minimum Wage for Federal Contractors.” The rule increases the minimum wage for federal government contractors for workers who work on or in connection with a covered federal contract to $15 per hour beginning January 30, 2022, and requires the secretary of labor to annually review and determine the minimum wage amount beginning January 1, 2023.
As stated above, the final rule establishes standards and procedures for implementing and enforcing the minimum wage protections of Executive Order 14026. Starting January 30, 2022, all agencies will need to include a $15 minimum wage in new contracts, new solicitations, extensions or renewals of an existing contract, and exercises of an option on an existing contract. Under the EO and final rule, contracts with solicitations issued before January 30, 2022, and entered into, on or between January 30 and March 30, 2022 will be exempt from the wage. If such a contract is subsequently extended or renewed or an option is exercised under the contract, the $15 minimum wage will apply.
Covered Contracts
According to the EO and as finalized in the rule, the $15 minimum wage requirement only applies to the following contracts:
Procurement contracts for services or construction;
Contracts for services covered by the Service Contract Act (SCA);
Contracts for concessions; and
Contracts “entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.”
The new minimum wage clause will NOT need to be included in:
Federal grants;
Contracts or agreements with Indian Tribes under the Indian Self-Determination and Education Assistance Act;
Procurement contracts for construction that are excluded from coverage of the Davis-Bacon Act (DBA);
Contracts for services that are exempt from coverage under the SCA; and
Contracts for the manufacturing of materials, supplies, articles or equipment to the Federal Government.
Covered Workers
The WHD defines a covered worker in the final rule as “any person engaged in performing work on or in connection with a contract covered by the EO, and whose wages under such contract are governed by the [Fair Labor Standards Act (FLSA)], the SCA or the DBA, regardless of the contractual relationship alleged to exist between the individual and the employer.” A worker who performs “on” a covered contract is defined as “any worker who directly performs the specific services called for by the contract’s terms,” and a worker who performs “in connection with” a covered contract is defined as “any worker who performs work activities that, although are not the specific services called for by the contract’s terms, are necessary to the performance of those specific services.”
One exemption to the rule’s minimum wage requirement is provided for FLSA-covered workers performing work “in connection with” covered contracts for less than 20 percent of their working hours in a given workweek.
The final rule also clarifies that certain employees who are exempt from the minimum wage protections under the FLSA are also not entitled to the $15 minimum wage protection of the EO and final rule. In an FAQ page on the EO and final rule, the WHD provides “learners, apprentices, messengers and full-time students employed under certificates pursuant to FLSA sections 14(a) and (b)” as examples of individuals who are excluded from the EO’s minimum wage requirements.
Additional Considerations
As mentioned above, the secretary of labor will be granted authority to annually review and increase the minimum wage beginning January 1, 2023. The minimum wage will be increased by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers to address inflation.
Additionally, the EO and final rule change compensation for tipped employees working on or in connection with a covered contract. Beginning January 30, 2022, such tipped employees must be paid a wage of at least $10.50 per hour. By January 1, 2024, the tip credit must be eliminated for such employees, and they must earn the same minimum hourly rate that other covered employees are entitled to.
CUPA-HR will keep members apprised of any updates and resources to aid institutions as the new minimum wage final rule becomes effective.
