On November 22, 2021, the U.S. Department of Labor (DOL) announced publication of the Final Rule, "Increasing the Minimum Wage for Federal Contractors" implementing President Biden's Executive Order 14026 (the Order), signed on April 27, 2021. The Order provides that the federal government's procurement interests in economy and efficiency are promoted when it contracts with sources that adequately compensate their workers. The Order raises the minimum wage paid by those contractors to workers performing work "on or in connection with" covered federal contracts to $15 per hour beginning January 30, 2022. Beginning January 1, 2023, and annually thereafter, the required minimum wage will be an amount determined by the Secretary of Labor. The Final Rule establishes standards and procedures for implementing and enforcing the minimum wage protections of the Order, and is effective on January 30, 2022.
The Order applies to new contracts entered into on or after January 30, 2022, and also covers existing contracts that are renewed or extended (pursuant to an exercised option or otherwise) on or after January 30, 2022. The Order covers work performed "on or in connection with" covered contracts and applies to federal contracts performed within the 50 states, the District of Columbia, and specified U.S. territories, consistent with coverage of the Service Contract Act (SCA).
The minimum wage requirement applies to four major categories of contractual agreements:
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