Biden Administration Issues an Executive Order to Raise the Minimum Wage to $15 for Federal Contractors

Joe
April 28, 2021
4 min read

On Tuesday, April 27, 2021, President Biden issued an Executive Order requiring federal contractors to pay a $15 minimum wage to hundreds of thousands of workers who are working on federal contracts.

The move brings the minimum wage for contractors up from the current $10.95, under rules set during the Obama administration.

The current minimum wage for federal contractors who are tipped is $7.65 an hour. That will be phased out by 2024 under the new directive. The $15 wage will be mandatory in new contracts by the end of March 2022.

Senior administration officials estimate that hundreds of thousands of workers who do contract work for the federal government — including cleaning staff, maintenance workers, nursing assistants in veteran care facilities, cafeteria and food workers, and laborers — would see wage increases as a result of the policy change.

Officials believe that these policy changes will not cost jobs, citing an analysis by the president’s Council of Economic Advisers. Rather, the administration officials said they believed it would increase worker productivity and lower other costs involved in supervising and training workers.

This Executive Order will:

  • Increase the hourly minimum wage for federal contractors to $15. Starting January 30, 2022, all agencies will need to incorporate a $15 minimum wage in new contract solicitations, and by March 30, 2022, all agencies will need to implement the minimum wage into new contracts.  Agencies must also implement the higher wage into existing contracts when the parties exercise their option to extend such contracts, which often occurs annually.
  • Continue to index the minimum wage to an inflation measure so that every year after 2022 it will be automatically adjusted to reflect changes in the cost of living.
  • Eliminate the tipped minimum wage for federal contractors by 2024. Federal statute allows employers of tipped workers to pay a sub-minimum wage as long as their tips bring their wage up to the level of the minimum wage. The Obama-Biden executive order raised the wages for tipped workers but didn’t completely phase out the subminimum wage for these workers. This executive order finishes that work and ensures that tipped employees working on federal contracts will earn the same minimum wage as other employees on federal contracts.
  • Ensure a $15 minimum wage for federal contract workers with disabilities. To ensure equity, this executive order extends the required $15 minimum wage to federal contract workers with disabilities.
  • Restore minimum wage protections to outfitters and guides operating on federal lands by revoking President Trump’s executive order 13838 “Exemption From Executive Order 13658 for Recreational Services on Federal Lands.”

If you have questions or concerns about how this minimum wage increase may impact your organization, contact us at solutions@gsanational.com or call 1-800-250-2741 ext. 170.

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