DOL Rule Increases Federal Contractor’s Minimum Wage

Volume: 20 | Issue: 71
November 23, 2021

In April of 2021, President Biden issued Executive Order 14026 to increase the hourly minimum wage to $15.00 for employees working for federal contractors and subcontractors. The Department of Labor (DOL) has now adopted a final rule to implement the President’s Order. The rule becomes effective January 30, 2022.

Under the new rule, every covered worker performing work on or in connection with a contract covered by Executive Order 14026 must be paid no less than $15.00 per hour beginning January 30, 2022. For tipped employees, the minimum wage must increase to at least $10.50 an hour.

Executive Order 14026 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.

Beginning on January 1, 2023, the rule allows the Secretary of Labor to make additional increases to the minimum wage for federal contractors based upon inflation. Additionally, because the Executive Order seeks to phase out the minimum wage distinction for tipped employees, on January 1, 2023, the minimum wage for federal contractors’ tipped employees will increase to 85 percent of the Executive Order minimum wage rate; it will then increase to 100 percent of the Executive Order minimum wage rate, as annually adjusted, beginning January 1, 2024.  

Contractors are required to provide notice of the change in the minimum wage by posting information in the workplace.

For more information on this new rule, visit the DOL’s webpage. As always, KZA attorneys are available to assist you with any questions you may have. 

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.

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