On April 27, President Biden ordered a raise in the minimum wage that federal contractors are expected to pay their workers.
This will increase the minimum wage paid to employees working on or in connection with federal government contracts to $15.00 per hour, supposedly scheduled to become effective Jan. 30, 2022.
This is a substantial increase from the current minimum wage of $10.95 applicable to most federal contracts. It also applies to federal subcontractors.
In each subsequent year after the new minimum wage officially goes into effect, it will be subject to Consumer Price Index-based increases that will be published by the Secretary of Labor at least 90 days before they are to take place.
Under the order, the Secretary of Labor is expected to issue implementing regulations by Nov. 24. The the Federal Acquisition Regulatory Council is directed to amend contract rules to provide the new minimum wage provisions in federal procurement solicitations, contracts, and contract-like instruments within 60 days after issuance of the Labor Department’s implementing regulations.
Does this mean that the new hourly minimum wage for federal contracts will not be imposed until early next year? Not necessarily, says Scott Arnold, an attorney with the law firm of Blank Rome.
With respect to contracts that are already existing, or that are entered into between April 27, 2021, and Jan. 30, 2022, agencies are strongly encouraged, to the extent permitted by law, to ensure that the hourly wages paid under such contracts “are “consistent with” the minimum wage that does not actually go into effect until Jan. 30, 2022.
To the extent that federal agencies heed this encouragement, these contractors will need to pay the new wage prior to 2022, in Arnold’s view.
