On November 24, 2021, the Department published the final rule, “Increasing the Minimum Wage for Federal Contractors,” This final rule introduced regulations to implement Executive Order 14026, “Increasing the Minimum Wage for Federal Contractors,” which was signed by President Joseph R. Biden Jr. on April 27, 2021. Executive Order 14026 states that the Federal Government’s procurement interests in economy and efficiency are promoted when the Federal Government contracts with sources that adequately compensate their workers. The Executive Order raises the minimum wage paid by those contractors to workers performing work on or in connection with covered federal contracts to $15.00 per hour, beginning January 30, 2022; and beginning January 1, 2023, and annually thereafter, an amount determined by the Secretary of Labor (Secretary). The Department’s final rule established standards and procedures for implementing and enforcing the minimum wage protections of Executive Order 14026, and became effective on January 30, 2022.

On September 30, 2024, the Department of Labor published a notice in the Federal Register announcing that, beginning January 1, 2025, the Executive Order 14026 minimum wage rate will increase to $17.75 per hour (Minimum Wage for Federal Contracts Covered by Executive Order 14026, Notice of Rate Change in Effect as of January 1, 2025). This Executive Order minimum wage generally 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 DBA;

  • Service contracts covered by the SCA;

  • Concessions contracts, including any concessions contract excluded from the SCA by the Department’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 dependents, or the general public.

Additionally, as of January 1, 2024, contractors may no longer credit employee tips toward the Executive Order 14026 minimum wage, and tipped employees covered by Executive Order 14026 will be entitled to the full Executive Order minimum wage rate. Contractors covered by Executive Order 14026 must ensure that workers receive no less than the minimum wage rates in effect during each calendar year in which a covered contract is performed.

Contracts in the four categories described above that were entered into, extended, or renewed prior to January 30, 2022, are generally subject to a lower minimum wage rate established by Executive Order 13658, “Establishing a Minimum Wage for Contractors.” Questions relating to Executive Orders 13658 and 14026 may be directed to the Wage and Hour’s Division of Government Contracts Enforcement at (202) 693-0064.
 

Additional Information

 

On February 17, 2022, the U.S. Court of Appeals for the Tenth Circuit enjoined enforcement of the minimum wage requirements of the final rule implementing Executive Order 14026 as to "contracts or contract-like instruments entered into with the federal government in connection with seasonal recreational services or seasonal recreational equipment rental for the general public on federal lands."  On June 18, 2024, in light of its subsequent conclusion that Executive Order 14026 was lawfully issued, the court lifted its injunction for this category of contracts, except for the contracts specifically held by the named Plaintiffs in that case.

As a result of the Tenth Circuit's orders, and in recognition of the steps needed to ensure effective implementation of the minimum wage requirements of Executive Order 14026 upon the lifting of the injunction, the Executive Order 14026 contract clause must be included in "contracts or contract-like instruments entered into with the federal government in connection with seasonal recreational services or seasonal recreational equipment rental for the general public on federal lands" that are entered into, renewed, or extended (pursuant to an option or otherwise) on or after August 17, 2024.  The Executive Order 14026 contract clause should not be included in any of these seasonal recreational service or equipment rental contracts that were entered into, renewed, or extended while the injunction was in place or during this 60-day transitional implementation period (i.e., from February 17, 2022 until August 17, 2024).

Based on an order issued by the U.S. District Court for the Southern District of Texas on September 26, 2023, the minimum wage requirements of the final rule implementing Executive Order 14026 are not currently being enforced as to contracts or subcontracts to which the states of Texas, Louisiana, or Mississippi (including their agencies) are a party.