Executive Order 14026 Increasing the Minimum Wage for Federal Contractors

On April 27, 2021, president Joe Biden signed Executive Order 14026(White House EO 14026) proposing an increase to the minimum wage for workers performing work on federal contracts to $15 per hour beginning January 30, 2022.

The Executive Order applies to federal contractors and specifies that the $15 wage rate will apply to workers on four specific types of federal contracts:

• Service Contract Act (SCA) covered contracts
• Procurement contracts for construction covered by the Davis-Bacon Act (DBA), but not the Davis-Bacon Related Acts
• Concessions contracts – meaning a contract under which the federal government grants a right to use federal property, including land or facilities, for furnishing services. The term “concessions contract” includes, but is not limited to, a contract the principal purpose of which is to furnish food, lodging, automobile fuel, souvenirs, newspaper stands, or recreational equipment, regardless of whether the services are of direct benefit to the government, its personnel, or the general public
• Contracts related to federal property and the offering of services to the general public, federal employees, and their dependents

The Final Rule specifies that the wage requirement will apply to new contracts and contract solicitations as of January 30, 2022. Despite the “new contract” limitation, the regulations encourage federal agencies to require the $15 wage for all existing contracts issued between the date of the Executive Order (April 27, 2021) and the effective date of January 30, 2022.

Executive Order 14026 Notes:

• The EO 14026 hourly minimum wage in effect from January 30, 2022 through December 31, 2022 is $15.00 ($10.50 for tipped employees). That rate will increase annually based on inflation, beginning January 1, 2023.)
• If the contract is entered into on or after January 30, 2022, or the contract is renewed or extended (pursuant to an exercised option or otherwise) on or after January 30, 2022, Executive Order 14026 generally applies to the contract. Coverage is triggered by the exercise of an option on or after January 30, 2022.
• Executive Order 14026 applies to contracts with the Federal Government requiring performance in the 50 States, the District of Columbia, and specified US territories, including Guam and Puerto Rico.

GSA National’s Government Contract subject matter specialists are here to assist with any questions you may have regarding the Executive Order and how it may impact your federal contract. Please contact our team of government contract subject matter specialists with any questions.

Related Webinar:

EXECUTIVE ORDER 14026 – A REVIEW OF THE MINIMUM WAGE INCREASE FOR FEDERAL CONTRACTORS

With the Department of Labor recently issuing its final rule on EO 14026, GSA National is please to introduce this webinar session designed to provide a high-level understanding of the Executive Order as it relates to government contracts. Our industry experts will provide special insight into expectations, including wage determinations, and health and welfare allocations.

This session is geared toward Government Contractors, brokers, and HR practitioners who work in the government contracts arena #GovCon.