DOL Sets New Minimum Wage for Federal Contractors

The following article first appeared in the News & Analysis section of Littler Mendelson’s website. It is reposted here with permission.

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In 2014 President Obama issued Executive Order 13658, creating a minimum wage for work performed on or in connection with certain federal contracts that is higher than the minimum wage applicable to employers subject to just the Fair Labor Standards Act.

In 2021 President Biden issued Executive Order 14026, establishing an even higher minimum wage applicable to certain government contracts entered into on or after Jan. 30, 2022 and providing that EO 13658 “is superseded, as of Jan. 30, 2022, to the extent it is inconsistent with this order.” 

On March 14, 2025, President Trump issued Executive Order 14236, revoking President Biden’s EO 14026 without addressing the continuing viability of President Obama’s EO 13658.

Following this executive action, there has been uncertainty as to whether the minimum wage previously established pursuant to EO 13658 would once again apply or whether the higher federal minimum wage applicable to federal contracts has been abolished entirely.

Since neither Biden’s EO 14026 nor Trump’s EO 14236 revoked EO 13658, there is an argument that EO 13658 applies to covered government contracts entered into on or after March 14, 2025.

Waiting for Guidance

Employers have been waiting for the U.S. Department of Labor to offer guidance on this issue, which has now been provided, albeit obliquely, in a notice published in the Federal Register on Feb. 9.

In this notice, DOL’s Wage and Hour Division announced an increase in the minimum wage payable to workers performing work on or in connection with contracts covered by EO 13658 to $13.65 per hour and an increase in the required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts to $9.55 per hour.

These increases will become effective 90 days after the date on which the notice is published in the Federal Register.

DOL is expressing its position that EO 13658 does not apply to contracts awarded, renewed, or extended after Jan. 29, 2022.

Far more significant than the announcement of this annual adjustment to the federal contractor minimum wage, however, is DOL’s statement that: “At this time, Executive Order 13658 remains in effect and generally applies to contracts … awarded between Jan. 1, 2015, and Jan. 29, 2022, and not renewed or extended on or after Jan. 30, 2022.”

DOL is thus expressing its position that EO 13658 does not apply to contracts awarded, renewed, or extended after Jan. 29, 2022.

Unfortunately, the notice does not provide any rationale for this conclusion. While the department’s conclusion is reasonable, it is not the only possible conclusion given President Trump’s failure to either revoke EO 13658 or otherwise explicitly address its continuing applicability. 

Potential Liability

Because work covered by EO 13658 is very often also covered by either the Service Contract Act or Davis Bacon Act, which establish prevailing wages that are typically higher than the minimum wage established by EO 13658, the continuing viability of EO 13658 will be of limited importance for many federal contractors. 

Nevertheless, there may be instances in which an employer will wish to pay workers less than the federal contractor minimum wage for work that would be within the scope of EO 13658, if this executive order applies to contracts awarded, renewed, or extended after Jan. 29, 2022.

If DOL has erred, employers could be liable for failing to pay the higher wage.

If DOL has erred in concluding that EO 13658 does not apply to contracts awarded, renewed, or extended after Jan. 29, 2022, employers could be liable for failing to pay the higher wage.

Formal rulemaking by DOL to address this continuing uncertainty would be welcome. Any remaining ambiguity could also be resolved by an executive order revoking EO 13658.

Barring such further clarification, federal contractors should consult with their legal counsel regarding compliance with federal contractor prevailing wage and minimum wage requirements.

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About the author: David Goldstein is a Littler shareholder and co-chair of the firm’s Government Contracting Practice Group.