Update Applicable to:
All federal contractors.
On April 27, 2021, President Biden issued an executive order raising the minimum wage of federal contractors to $15 per hour.
What are the details?
Beginning January 30, 2022, agencies must incorporate the new rate into contract solicitations, implementing the wage into new contracts by March 30, 2022, according to the order.
Organizations must also implement the $15 per hour wage into existing contracts if they are extended.
This increase builds upon a previous executive order from former President Obama that raised federal contractor minimum wage to $10.10 per hour.
According to the White House fact sheet, the following measures are included in the executive order:
- Increase the hourly minimum wage for federal contractors to $15. The rate will be indexed for inflation every year after 2022.
- Eliminate the tipped minimum wage for federal contractors by 2024. Currently, tipped employees can receive sub-minimum wages if they receive tips that make up the difference. By 2024, tipped employees will receive the same rate as other federal contract workers.
- Ensure a $15 minimum wage for federal contract workers with disabilities. This provision was included to ensure equity among workers.
- Restore minimum wage protections to outfitters and guides operating on federal lands. This reverses an executive order issued by the previous administration.
The White House fact sheet can be found here.
What do employers need to do?
Applicable employers should update their payroll practices to reflect the increase in the minimum wage.