Labor Department Proposes Rule Implementing Executive Order Increasing Minimum Wage for Workers on Government Contracts

On July 22, 2021, the U.S. Department of Labor announced a proposed rule to implement Executive Order 14026, Increasing the Minimum Wage for Federal Contractors, signed by President Biden on April 27, 2021. The regulation will increase the minimum wage for workers performing work on or in connection with federal contracts to $15 per hour beginning January 30, 2022. The regulation will eliminate the tipped minimum wage for federal contract workers by 2024 and index the minimum wage to adjust to inflation.  The proposal applies to “new contracts” entered into after January 30, 2022.  However, it also applies to extensions or renewals of existing contracts or contract-like instruments and exercises of options on existing contracts. This rule also includes outfitters and guides on federal lands, revoking a May 2018 executive order from President Trump. 

The proposal covers:

  • procurement contracts for services and construction;
  • contracts for services covered by the Service Contract Act;
  • contracts for concessions;
  • contracts with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public (including leases); and
  • wages of workers under a contract governed by the Fair Labor Standards Act (FLSA), Service Contract Act (SCA) and the Davis-Bacon Act (DBA).  

Comments are due on August 23, 2021.

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