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Federal Contractor $15 Minimum Wage Will Apply Beginning January 30, 2022

President Joseph Biden has fulfilled a promise to significantly increase the minimum wage for federal contractor workers working “on or in connection with” a covered federal contract. He has issued an executive order raising the minimum wage for these workers from $10.95 an hour to $15 an hour beginning 2022.

When announcing the “Executive Order on Increasing the Minimum Wage for Federal Contractors,” President Biden said the higher wage “will benefit many women and people of color who likely have children and are the breadwinners in their households …. It will help improve the economic security of their families and narrow racial and gender disparities in income.”

As with many executive orders, the details will be left to implementing regulations to be issued by the U.S. Department of Labor (DOL) and a Federal Acquisition Regulation (FAR) amendment to be issued by the FAR Council. The order provides, “Such regulations shall include both definitions of relevant terms and, as appropriate, exclusions from the requirements of this order.” For example, the regulations are expected to provide guidance and illustrations regarding the meaning of “working on or in connection with” a covered federal contract (like the regulations implementing a similar executive order from President Barack Obama).

New Wage Rate Does Not Apply to All Federal Contractors, Workers

The $15 wage rate applies to the following types of federal contracts:

  • Procurement contracts for services or construction;

  • Service Contract Act (SCA) contracts;

  • Concession contracts;

  • Contracts related to federal property and the offering of services the general public, federal employees, and their dependents; and

  • The wages of workers under such contracts are governed by the Fair Labor Standards Act, the SCA, or the Davis-Bacon Act.

Significantly, the executive order does not apply to:

  • Grants;

  • Contracts or agreements with Indian Tribes under the Indian Self-Determination and Education Assistance Act; or

  • Any contracts specifically excluded by the implementing regulations.

For those who remember President Obama’s executive order raising the federal contractor wage to $10.10 an hour, Biden’s order is substantially the similar.

New Wage Primarily Applies to “New” Solicitations as of January 30, 2022

In addition to applying only to new contracts and contract solicitations as of January 30, 2022, the $15 wage also will apply to any:

  • Extension or renewal of an existing contract; and

  • Exercise of an option on an existing contract.

Despite the “new contract” limitation, the executive order “strongly” encourages federal agencies to require the $15 wage for “all existing contracts and … solicitations issued between the date of this order and the ]effective dates set forth in this section, and contracts … entered into between the date of this order and the effective dates set forth in this section ….”

Similarly, “agencies are strongly encouraged” to require the new wage “where agencies have issued a solicitation before the effective date … and entered into a new contract … resulting from such solicitation within 60 days of such effective date.”

Thus, it is possible to see a provision requiring a $15 minimum wage in solicitations issued and contracts awarded prior to January 30, 2022.

Next Steps

The executive order directs the DOL to issue regulations by November 24, 2021. Federal contractors will have the opportunity to comment on proposed regulations once published in the Federal Register.

Within 60 days of the final regulations, the FAR Council must amend the FAR to incorporate the order’s directives into federal procurement solicitations and contracts.

Preparing for the $15 Minimum Wage

The new minimum wage may not be an issue for some contractors because the contractor is already paying at or above $15 per hour, the contractor does not have a covered contract, or many of its employees are not working “on or in connection with” a covered federal contract.

Thus, a starting point will be to determine if a contractor has or anticipates entering into a covered contract and whether the employees are likely to be providing work directly or indirectly related to such contract are or will be earning $15 per hour by January 30, 2022.

Jackson Lewis P.C. © 2022National Law Review, Volume XI, Number 119

About this Author

Laura Mitchell, Jackson Lewis, Management Representation lawyer, Contractual Drafting Attorney

Laura A. Mitchell is a Principal in the Denver, Colorado, office of Jackson Lewis P.C. She represents management exclusively in all areas of employment law, focusing on affirmative action and government contractor compliance.

Ms. Mitchell is a Principal in the firm’s Affirmative Action and OFCCP Defense practice group, representing government and non-government contractors in Office of Federal Contract Compliance Programs (OFCCP) matters, preparing for and defending OFCCP audits, and counseling employers on issues stemming...

Leslie Stout-Tabackman, Labor Employment Attorney, Shareholder, Jackson Lewis Law Firm

Leslie Stout-Tabackman is a Principal in the Washington, D.C. Region office of Jackson Lewis P.C. She has a broad-based practice counseling and representing employers on compliance with federal and state workplace laws and regulations, and designing and implementing sound practices and policies.

Ms. Stout-Tabackman regularly counsels and represents clients with matters before the U.S. Department of Labor’s (DOL) Wage and Hour Division, including Fair Labor Standards Act (FLSA) issues and prevailing wage and benefits issues arising under the Service Contract Act...

F. Christopher Chrisbens, Jackson Lewis, litigation attorney, employment law, intellectual property legal counsel, OFCCP compliance lawyer
Of Counsel

F. Christopher Chrisbens is Of Counsel in the Denver, Colorado, office of Jackson Lewis P.C. Over his years as a litigation attorney, manager, trainer and workplace investigator, Mr. Chrisbens has developed a diverse array of employment law skills serving employers in a variety of legal and corporate settings.

Mr. Chrisbens began his career as a litigator and appellate practitioner in Los Angeles, California, and later returned to Boulder, Colorado where he was partner in a Boulder firm practicing in the areas of commercial...