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Legal developments aimed at government contractors do not always make headline news in mainstream media, but last week’s Executive Order on Increasing the Minimum Wage for Federal Contractors, April 27, 2021 (“Executive Order”), did get widespread attention, perhaps because it is viewed by some in political circles as the next best thing for an administration that sees substantial congressional hurdles for more broadly applicable minimum wage increase legislation. So you have probably heard about about the Executive Order, but how will it impact government contractors?
What does the Executive Order do?
What the Executive Order Requiring Federal Contractors to Pay a $15 Minimum Wage Will Mean
The upcoming rulemaking process should illuminate more.
It will take some time for the full scale and scope of President Biden’s recent executive order directing federal contractors to pay a $15 minimum wage for their workers starting next year to be seen.
Biden issued an executive order on April 27 that builds on one from President Obama in February 2014, which required federal contractors to pay their workers $10.10 per hour. Currently, the minimum wage for workers on federal contracts is $10.95 per hour and the tipped minimum wage is $7.65 per hour.
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Building on a previous executive order (EO) issued by
President Barack Obama that increased the minimum wage for
contractor employees to $10.10 (and automatically increased every
year to keep pace with inflation), President Joe Biden issued a new EO that increases the
minimum wage for those employees to $15 beginning on Jan. 30, 2022,
and adjusts annually to the Consumer Price Index (CPI).
While the new minimum wage must be codified into regulations in
order to be effective, the EO requests that agencies take more
immediate action to require contractors to pay the higher wage.
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On April 27, 2021, President Biden issued a new Executive Order that raises the federal contractor minimum wage to $15 per hour, from the current $10.95 per hour, starting January 30, 2022.
Biden’s new Executive Order is nearly a word for word retread of the Obama Administration’s Executive Order 13658 (originally setting a $10.10 federal contractor minimum wage), with some notable exceptions:
The federal contractor minimum wage is raised to $15 per hour starting January 30, 2022
The current tipped worker federal contractor minimum wage, setting a lower hourly minimum wage just for tipped workers, is phased out by January 1, 2024; and
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