DOL Announces Federal Contractor Minimum Wage Rates for 2025
The US Department of Labor (“DOL”) just issued its annual pair of notices announcing the minimum wage rates that must be paid to federal contractor employees who work “on or in connection with” certain covered federal contracts.
There are two announcements (both published on September 30, 2024) because there are two Executive Orders (“EO”) that set minimum wage rates. The newer of the EOs (no. 14026) issued by President Biden in 2021 now covers most employees since it has been in place since January 30, 2022 in new contracts or added to existing contracts when options have been exercised. The older EO (no. 13658) was issued during the Obama Administration and is applicable to a relatively small number of long-term contracts.
Come January 1, 2025, the new contractor minimum wage rates for contracts covered by the “new” Biden-era EO will be:
$17.75 per hour. There is no separate, lower rate applicable to tipped employees. The announcement was published in the Federal Register at 89 FR 79644 (September 30, 2024) and can be found online here: https://www.federalregister.gov/documents/2024/09/30/2024-22100/minimum-wage-for-federal-contracts-covered-by-executive-order-14026-notice-of-rate-change-in-effect
The new contractor minimum wage rates for contracts covered by the legacy Obama-era order (EO 13658) will be:
$13.30 per hour. The Obama EO continues to have a lower wage rate for tipped employees subject, which will be $9.30 per hour in 2025. The announcement was published in the Federal Register at 89 FR 79641 (September 30, 2024) and can be found online here: https://www.federalregister.gov/documents/2024/09/30/2024-22099/minimum-wage-for-federal-contracts-covered-by-executive-order-13658-notice-of-rate-change-in-effect
Like many other wage and hour laws, DOL requires that these rates be posted so that employees can know what they are. DOL says it will make those posters available on the Wage and Hour Division website on January 1, 2025. Funny, that’s the same day the posters have to go up.
In the meantime, here’s the URL for the 2024 Biden EO poster: https://www.dol.gov/sites/dolgov/files/WHD/posters/WH1091.pdf And here’s the link for the 2024 Obama EO poster: https://www.dol.gov/sites/dolgov/files/WHD/posters/mw-contractors.pdf These posters will be obsolete come December 31, 2024.
There’s a patchwork of federal, state and, local laws that establish minimum wages depending on where you are and what type of work is being performed. First, there are the rates we’ve discussed in this blog—they apply to nonexempt employees who work on or in connection with covered federal contracts. Covered contracts include service contracts subject to the Service Contract Act (“SCA”), construction contracts covered by the Davis-Bacon Act (“DBA”), federal concessions contracts, and contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.
For covered contracts, the prevailing wages in the Wage Determination (“WD”) incorporated into your contract may supplant the EO minimum wages but only if they exceed the minimum wage rates under the applicable Executive Order adopted in your contract. Don’t assume that current SCA or DBA rates exceed the new contractor minimum wage rates. The WDs in many, mostly rural localities, have some rates that fall below the contractor minimum wage. Between now and January 1—make sure the lowest wage rates paid to your covered workers exceeds the new minimum rate or your WD rates, whichever are higher.
Bear in mind that you also have to determine whether state or local minimum wages exceed the contractor minimum wages under the EOs or SCA/DBA rates. If they do – that’s the minimum wage that must be paid in that jurisdiction regardless of the federal rates. Most state and local minimum wages continue to be less than the federal contractor rate. However, the rates are higher in some localities. For example, the highest rate in Seattle will be $20.76 per hour in 2025. In Denver, the top rate for 2025 will be $18.81 an hour. The top rate presently is $20.96 in San Francisco.
Our bottom line is that you should go through this exercise and get ready for 2025 now.