The Wage and Hour Division of the U.S. Department of Labor published its final rule implementing regulations under Executive Order 14026 (Increasing the Minimum Wage for Federal Contractors). These regulations require that certain contracts include a clause requiring covered employees to be paid no less than $15 per hour. In addition to applying to new contracts, the final rule requires that existing contracts be updated to include the minimum wage contract clause when an agency exercises an option to purchase additional services.

The final rule automatically adjusts the minimum wage each year based on changes to the cost of living, phases out the minimum wage for tipped workers by 2024, and eliminates the subminimum wage for disabled employees whose wages are based on special certificates pursuant to the Fair Labor Standards Act.

Contracts covered by the final rule include the following:

• Davis-Bacon Act construction contracts
• Service contracts covered by the Service Contract Act
• Contracts for concessions
• Contracts in connection with federal property related to offering services to federal employees, their dependents, or the general public

Contractors with these types of contracts should stay alert for amendments when options are exercised and for the applicable contract clause in new or renewed contract awards.