The federal government, led by the U.S. Department of Labor, is moving forward on implementing the provisions of President Biden’s Executive Order 14026, which was signed in April 2021. Most new federal government contracts or contract extensions awarded after January 30, 2022 will require contractors—and subcontractors—to pay their service and construction workers at least $15/hour.

TAKEAWAYS

• New contracts (broadly defined) and contract options/extensions executed after January 30, 2022 are subject to the new minimum hourly wage rate of $15/hour. Previously awarded contracts are subject to a minimum wage rate of $11.25 as of January 1, 2022 by operation of a prior Executive Order entered by President Obama in February 2014, until such time as an option or new contract subject to the $15 rate is executed.

• A new contract clause directs, as a condition of payment under the contract, that all workers must be paid the applicable, effective minimum wage, which will be subject to annual increases directed by the Secretary of Labor. Paying less than the required minimum wage may delay payment by the federal government of invoices submitted under a covered, prime government contract.

• The new contract clause requires the prime contractor to include the minimum wage clause in any lower-tier subcontracts and to ensure compliance by any subcontractor or lower-tier subcontractor with the new minimum wage requirements, whether or not the requisite contract clause is included in...

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