As previewed, on April 27, 2021 President Biden issued an Executive Order directing the minimum wage for certain federal contractors be increased to $15 per hour. The Executive Order on Increasing the Minimum Wage for Federal Contractors states that the minimum wage for certain hourly workers be increased to $15 per hour for new or renewed contracts beginning January 30, 2022. The Executive Order also dictates that wages for tipped workers be increased to $10.50 per hour, beginning January 30, 2022 (again for new or renewed contracts).
As justification for the increase, the Executive Order explains that
[r]aising the minimum wage enhances worker productivity and generates higher-quality work by boosting workers’ health, morale, and effort; reducing absenteeism and turnover; and lowering supervisory and training costs. Accordingly, ensuring that Federal contractors pay their workers an hourly wage of at least $15.00 will bolster economy and efficiency in Federal procurement.
The executive order supersedes the Obama-era Federal Minimum Wage Executive Order but seems to have similar applicability – contracts for concessions, and those governed by the Service Contract Act, Davis Bacon Act as well as contracts in “connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.”
Pursuant to the Executive Order, the Secretary of Labor, “shall, consistent with applicable law, issue regulations by November 24, 2021, to implement the requirements of this order.” As such, we will need to await the regulations before have the full understanding of applicability and implementing obligations.
As always, we will bring you updates as soon as they become available.