The Contractor Minimum Wage Marches Higher (As Much As $17.20) Effective January 1, 2024

… So I'd like to know where, you got the notion
Said I'd like to know where, you got the notion
To rock the boat (don't rock the boat, baby)
Rock the boat (don't tip the boat over)
Rock the boat (don't rock the boat, baby)
Rock the boat

--Rapture D. Stewart / Eric L. Seats, lyrics to Rock the Boat, The Hues Corporation

According to two notices issued by the US. Department of Labor (“DOL”) on September 28, 2023, the minimum wage rate applicable to the employee of many federal contractors is set to go up effective January 1, 2024. if those employees work on (or in connection with) contracts covered by one of the two executive orders (“EOs”).  There are two federal register notices because there are two different contractor minimum wage executive orders . See  https://www.federalregister.gov/documents/2023/09/28/2023-21115/minimum-wage-for-federal-contracts-covered-by-executive-order-14026-notice-of-rate-change-in-effect;   https://www.federalregister.gov/documents/2023/09/28/2023-21114/minimum-wage-for-federal-contracts-covered-by-executive-order-13658-notice-of-rate-change-in-effect. Given that these requirements apply to contracts covered by the Fair Labor Standards Act, pretty much every federal service or construction contract is covered by one of the EOs.  

The new contractor minimum wage rates are:

  • $17.20 per hour for contracts covered by the “new” Biden-era minimum wage provisions (specifically, Executive Order 14026). This covers contracts renewed or extended after January 30, 2022.

  • The lower rate for tipped employees are gone from EO. 14026.

  • A lower minimum wage of $12.90, a legacy from the Obama-era, still applies to certain “older grandfathered” contracts (specifically, Executive Order 13658). For tipped employees subject only the EO 13658, the minimum wage is $9.05 per hour.

As we noted in a prior blog, the Court’s decision in the case of Texas v. Biden issued by Judge Drew Tipton of the U.S. District Court for the Southern District of Texas bars the enforcement of President Biden’s Executive Order against the states of Texas, Louisiana and Mississippi and their agencies. Judge Tipton ruled that the President exceeded his authority when he issued the minimum wage Executive Order because, in the Court’s view, the Procurement Act does not, by itself, authorize a President to impose a minimum wage….So, for now, Executive Order 14026 is a dead letter in contracts to which the states of Texas, Louisiana, or Mississippi are parties. https://www.awrcounsel.com/blog/2023/10/4/deep-in-the-heart-of-texas-injunction-bars-federal-contractor-minimum-wage.

If you are confused about these two EOs and their scope, welcome to the club. We blogged on that issue too last summer  https://www.awrcounsel.com/blog/2023/7/16/one-of-these-things-is-not-like-the-other-confusion-over-the-two-different-contractor-minimum-wage-executive-orders-clauses-with-the-same-far-section-number.

Updated and corrected June 10, 2024 to clarify that the Court’s order in Texas v. Biden is limited to the states of Louisiana, Missiissippi, or Texas and their agencies.

By Daniel Abrahams, Executive Orders, Davis-Bacon Act, FLSA, Service Contract Act, Wage & HourDaniel Abrahams