On April 27, President Joe Biden issued an executive order increasing the minimum wage for federal contractors, which would require federal contractors to pay a $15 minimum wage to workers working on or in connection with a federal government contract.

Beginning Jan. 30, 2022, the EO requires all agencies to incorporate a $15 minimum wage in new contract solicitations and to implement the minimum wage into new contracts by March 30, 2022. Agencies must also implement the higher wage into existing contracts when the parties exercise their option to extend such contracts, which generally occurs annually. The minimum wage will continue to be indexed for inflation. 

The EO directs the U.S. Department of Labor’s Wage and Hour Division and the Federal Acquisition and Regulatory Council to issue regulations to implement the EO’s provisions by Nov. 24, 2021. 

In response to President Biden’s EO, Ben Brubeck, ABC vice president of regulatory, labor and state affairs, stated: 

“ABC has long held that the market should determine wages in the construction industry, where well-paying merit shop construction jobs sustain the careers of 87.3% of the workforce. In general, ABC’s government contractor members pay wage rates substantially higher than $15 per hour under the requirements of the Davis-Bacon Act and, to a lesser extent, the Service Contract Act. The primary concern with this executive action is not the wage rate itself, but rather the unlawful and unprecedented power grab by the executive branch to set a new minimum wage in direct contravention of the DBA and SCA.” 

In Feb. 2014, the Obama-Biden administration’s Executive Order 13658 required federal contractors to pay employees working on federal contracts $10.10 per hour, subsequently indexed to inflation. Currently, the minimum wage for workers performing work on covered federal contracts is $10.95 per hour.

Additional information about this EO can be found in this analysis from ABC general counsel Littler Mendelson.  

ABC will continue to provide updates on this important issue in Newsline.