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WHD Issues Final Rule Implementing Minimum Wage Increase

December 22, 2021

The Department of Labor’s Wage and Hour Division (WHD) published the Final Rule to increase the minimum wage for federal contractors beginning January 20, 2022. The final rule implements Executive Order (EO) 14026, “Increasing the Minimum Wage for Federal Contractors,” signed by President Biden on April 27, 2021.

The EO states that federal contractors must pay a $15 minimum wage to employees working on federal contracts, promoting economy and efficiency in Federal procurement by increasing the hourly minimum wage paid by the parties that contract with the Federal Government. Currently, workers are paid a minimum wage of $10.95 per hour for performing work on covered federal contracts.

The final rule establishes standards and procedures for implementing and enforcing the minimum wage protections of the EO.  U.S. Secretary of Labor Marty Walsh noted that “implementing this Executive Order improves the economic security of these workers and their families, many of whom are women and people of color.”

The rule applies in all 50 states, the District of Columbia, and specified U.S. territories and requires all agencies to use the $15.00 minimum wage on new contract solicitations. Additionally, agencies must implement the new higher wage rate into existing contracts when parties exercise their extension option. After 2022, the minimum wage will also be subject to annual inflation increases set forth by the Secretary of Labor.