Department of Labor Announces Annual Increase to Minimum Wage for Federal Contractors
On August 31, 2020, the Department of Labor’s Wage and Hour Division published its annual update to the minimum wage for federal government contractors. As of January 1, 2021, employees performing services on or in connection with certain types of government contracts will be entitled to a minimum wage of $10.95 per hour. The minimum cash wage for employees who are eligible for the tip credit will increase to $7.65 per hour. The current minimum wages for 2020 are $10.80 and $7.55 per hour, respectively.
The increased minimum wage stems from Executive Order 13658, which in 2014 established a special minimum wage for certain federal contractors. Each year, the Wage and Hour Division is required to update the contractor minimum wage levels based on the CPI-W consumer price index for urban wage earners and clerical workers. Employees are entitled to the heightened minimum wage if they work on or in connection with a construction contract covered under the Davis-Bacon Act, a service contract covered under the Service Contract Act, a concessions contract, or a contract to provide services to federal employees or the general public on federal lands or property.
Contractors should ensure that any employees covered by Executive Order 13658 are paid the required amounts.