Starting January 30, 2022, new federal contracts that are not procurement contracts must include a clause requiring federal contractors to pay at least $15 per hour to workers performing work on or in connection with the federal contract. That minimum wage rate will increase annually based on changes to the Consumer Price Index. The federal government predicts that this requirement may impact over half a million firms. Federal contractors with procurement contracts (i.e., those contracts governed by the federal acquisition rules) will start to see this clause included in new contracts once the Federal Acquisition and Regulatory Council issues the required FAR clause.

This change flows from a new U.S. Department of Labor (DOL) rule implementing and enforcing Executive Order 14026, “Increasing the Minimum Wage for Federal Contractors,” signed by President Biden April 27, 2021. The new rule adds part 23 to Title 29 of the Code of Federal Regulations and amends existing rules (codified at 29 CFR part 10) to clarify that they will continue to apply to covered contracts entered into, extended, or renewed through January 29, 2022.

Relationship to Prior Executive Orders

Executive Order 14026 and the new rule build on the foundation established by President Obama’s Executive Order 13658, “Establishing a Minimum Wage for Contractors,” which President Obama signed February 12, 2014. The 2014 Order set an initial minimum wage, to increase each year thereafter in accordance with the...

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