On November 24, 2021, the United States Department of Labor published a final rule “Increasing the Minimum Wage for Federal Contractors.” This rule supplements and provided regulations to implement Executive Order 14026 (the “Executive Order”) signed by President Biden on April 27, 2021. This order raised the minimum wage for certain categories of contractors to $15.00 beginning January 2022, with subsequent years increasing by an amount determined by the Secretary of Labor.
What is the current minimum wage for the covered federal contractors?
As of January 1, 2025, the minimum wage is $17.75 per hour for hourly workers. For tipped workers, the minimum wage increased to $9.30 per hour.
What federal contracts are covered by the Executive Order?
The Executive Order applies to workers performing work on or in connection with federal contracts that are entered into, renewed, or extended (pursuant to an option or otherwise) on or after January 30, 2022, in the following four categories:
- Procurement contracts for construction covered by the Defense Base Act;
- Service contracts covered by the McNamara-O’Hara Service Contract Act (the “SCA”);
- Concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b); and
- Contracts in connection with federal property or lands and related to offering services for federal employees, their departments, or the general public.
What should federal contractors do?
Employers who have contracts with the federal government should first check to see if this rule and the Executive Order covers their contracts. If they do, then these employers should make sure all employees are paid at least the minimum wage. Here at Gravel & Shea, we will continue to monitor any other executive orders or rules that affect government contracts.
Please contact Heather Hammond (hhammond@gravelshea.com) at Gravel & Shea PC if you have questions or would like assistance.
