On April 27, 2021, President Biden issued his latest executive order (the EO), which requires all federal agencies to incorporate a $15 per hour minimum wage into nearly every federal contract effective January 2022.
Beginning on January 30, 2022, all agencies will incorporate the $15 minimum wage in new contract solicitations, and the wage will be implemented in all new contracts beginning on March 30, 2022. In an effort to keep the minimum wage at a sustainable level for workers, the EO institutes an index for the wage to keep pace with inflation and cost of living increases. At present, the minimum wage for federal contract employees is $10.95 per hour, and the tipped minimum wage is $7.65 per hour.
The EO also eliminates the tipped minimum wage for federal contractors, which must be phased out by agencies and contractors by 2024. Until now, federal contractors employing tipped workers could pay sub-minimum wages as long as tips closed the gap up to the minimum wage. Under the EO, the tipped minimum wage will increase to $10.50 per hour beginning January 30, 2022, reach 85 percent of the federal contractor minimum wage on January 1, 2023, and then match the federal contractor minimum wage effective January 1, 2024.
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