Federal Contractor Minimum Wage Increase Effective January 2022

December 03, 2021

President Biden’s executive order raising the hourly minimum wage for certain federal contractors from $10.95 an hour to $15 an hour will take effect January 30, 2022, and beginning January 1, 2023, will increase annually by an amount determined by the Secretary of Labor.

Coverage:  Only workers who are non-exempt under the Fair Labor Standards Act and perform work on or in connection with a covered contract must be paid $15 per hour for the hours they work on the contract.  In addition, DOL is phasing out lower wages and tip credits for tipped employees on covered contracts.  By 2024, tipped employees must receive the full federal contractor wage rate.

Geographic coverage expanded:  The Final Rule applies coverage to workers outside the 50 states and expands the definition of “United States” to include U.S. territories.

For more information regarding the Final Rule and for full details on Executive Order 14026 visit DOL’s Wage and Hour Division website

Looking ahead:  Employers should anticipate additional labor and wage and hour changes.  DOL is reportedly revisiting a regulation to raise the salary threshold that triggers exemption from time-and-a-half overtime payment, and a slew of recommendations is expected from the imminent White House Task Force on Worker Organizing and Empowerment report.