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News, trends and analysis in employment law, HR, safety & workers' comp

Sep 16, 2021

Federal contractor minimum wage rises January 1, 2022

Affirmative ActionWage and Hour 

The U.S. Department of Labor (DOL) has raised the minimum wage for certain federal contracts related to services and construction as of January 1, 2022. The minimum wage for federal contracts covered by Executive Order 13658 (“Establishing a Minimum Wage for Contractors”) will rise to $11.25 per hour effective January 1, 2022, up from $10.95 per hour in 2021. The minimum cash wage for tipped employees will rise to $7.90 per hour on January 1, 2022, up from $7.65 per hour in 2021 (86 Fed Reg 51683, September 16, 2021).

Soon we’ll have two sets of minimum wage orders, depending on when federal contracts are signed or modified. As we previously reported, Executive Order 14026 (“Increasing the Minimum Wage for Federal Contractors”) will raise the wage to $15.00 per hour for federal contracts in services and construction that are signed, renewed, or extended on or after January 30, 2022. In addition, tipped workers' cash wage under these contracts must be at least $10.50 per hour. Both rates will be adjusted effective January 1, 2023, and annually after that. At all times, if the amount of the cash wage plus tips is less than the minimum wage for non-tipped workers, the cash wage must be increased accordingly.

If your organization's federal contract is for supplies (physical objects, including federal timber), however, then these minimum wages don’t apply to your organization. The minimum wage applies only to the following types of federal contracts and subcontracts: (1) procurement contracts for services or construction; (2) contracts for services covered by the Service Contract Act; (3) contracts for concessions; and (4) contracts in connection with federal property or lands related to offering services for federal employees, dependents, and the general public. Only employees who are working on those types of covered federal contracts (or who spend 20 percent or more of their time on work connected to the federal contracts) are entitled to this minimum wage.

There are some limited exclusions from Executive Order 13658 which are laid out in the federal regulations at 29 CFR 10.4. These exclusions are mostly mirrored in Executive Order 14026, except that the newer order drops these two exclusions: seasonal recreational services (river running, hunting, fishing, horseback riding, camping, mountaineering activities, recreational ski services, and youth camps) and seasonal recreational equipment rental for the general public on federal lands.

Tips: Not sure whether your organization must comply with these federal contractor minimum wages? If you’re required to comply, the fine print on your contract should mention the relevant executive order for the federal contractor minimum wage in the list of mandatory contract clauses. You can also check with the federal contracting officer, or ask your Vigilant Law Group employment attorney for help.

This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult legal counsel.

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