In recently published notices in the Federal Register, the Department of Labor’s Wage and Hour Division announced that beginning January 1, 2023, the applicable minimum wage rate for workers performing work on or in connection with all federal contracts entered into, renewed, or extended:

• on or prior to January 29, 2022 and covered by Executive Order (EO) 13658 (effective on or after January 01, 2015), is
  • currently $11.25 per hour and will increase to $12.15 per hour, and
  • the required minimum wage rate that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $8.50 per hour.
• after January 30, 2022 and covered by EO 14026, is:
  • currently $15.00 per hour and will increase to $16.20 per hour, and
  • the required minimum wage rate that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $13.75 per hour.

Key differences between the executive orders include:

• Coverage of "New Contracts":  Coverage under EO 14026 is triggered by the unilateral exercise of a pre-negotiated option to renew or extend an existing contract on or after January 30, 2022, but coverage under EO 13658 is not triggered.
• Minimum wage for tipped workers:  Beginning January 30, 2022, EO 14026 phases out subminimum wage for tipped workers, raising it to the full minimum wage by 2024. EO 13658 raised tipped worker wages but didn’t phase out subminimum wage for tipped workers.
• Independent agencies:  EO 14026 generally applies to independent agencies. EO 13658 “strongly encouraged” but did not require independent agencies to comply. 
• New exclusion:  EO 14026 does not apply to contracts resulting from a solicitation issued prior to January 30, 2022, and that are entered into on or between January 30, 2022 and March 30, 2022. This exclusion is not applicable to EO 13658. 
• Geographical coverage:  EO 14026 covers contracts in all 50 states and the District of Columbia, and also specific U.S. territories, including Guam and Puerto Rico. EO 13658 applies only to contracts in all 50 states and the District of Columbia. 
• Recreational service contracts:  As of January 30, 2022, contracts in connection with seasonal recreational services and equipment rental offered for public use on federal lands will be subject to the minimum wage requirements of either EO 13658 or EO 14026 depending on the date that the relevant contract was entered into, renewed, or extended (as well as appropriate implementing actions taken by the relevant contracting agency). Prior to January 30, 2022, EO 13658 did not apply to such contracts. 

With the exception of the new minimum wage rates effective January 1, 2023, click here for a side-by-side comparison of the executive orders from the Department of Labor.

Employers with federal contracts or who are subcontractors on federal contracts should review their contract language to determine if they are subject to either EO 13658 or EO 14026 to determine if their minimum wage requirements are impacted.