Biden Issues Executive Order Raising Minimum Wage for Federal Contractors
President Biden issued an Executive Order (Order) requiring federal contractors to pay a $15 minimum wage by January 30, 2022, to employees working on covered federal contracts. The Order aims to promote economy and efficiency in Federal procurement by increasing the hourly minimum wage paid by the parties that contract with the Federal Government.
This Order builds on former President Obama’s 2014 Executive Order 13658, requiring federal contractors to pay employees working on federal contracts $10.10 per hour, subsequently indexed to inflation. Currently, workers performing work on covered federal contracts are entitled to a minimum wage of $10.95 per hour, and the tipped minimum wage is $7.65 per hour.
By January 30, 2022, all agencies must implement the $15.00 minimum wage into new contract solicitations, and by March 30, 2022, all new contracts must reflect the minimum wage. Additionally, agencies need to implement the new higher wage into existing contracts when parties exercise their option to extend.
The change applies to a wide range of federal workers from cleaning and maintenance, nurses, cafeteria, and other food service workers and tipped workers previously left out. The federal contractor minimum wage applies to contracts covered by the Davis-Bacon Act, the Service Contract Act, and others. Furthermore, the Order extends the required $15 minimum wage to federal contract workers with disabilities.
The U.S. Department of Labor Wage and Hour Division and the Federal Acquisition and Regulatory Council will initiate the rulemaking to implement and enforce this Order. After 2022, the minimum wage will also be subject to annual inflation increases set forth by the Secretary of Labor.
The fact sheet detailing the executive actions can be reviewed at https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/27/fact-sheet-biden-harris-administration-issues-an-executive-order-to-raise-the-minimum-wage-to-15-for-federal-contractors/