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President Biden Increases Federal Contractor Minimum Wage

by Sarah Skillin Woodard

On April 27, 2021, President Biden signed an Executive Order on Increasing the Minimum Wage for Federal Contractors to pay a $15 minimum wage to workers who are working on federal contracts. The White House Fact Sheet states: “Starting January 30, 2022, all agencies will need to incorporate a $15 minimum wage in new contract solicitations, and by March 30, 2022, all agencies will need to implement the minimum wage into new contracts.” The higher rate must also be incorporated into existing contracts at the time of renewal. The text of the Order makes clear that the mandate only applies to entities contracting with the federal government for:

  1. procurement or construction,
  2. services covered under the Service Contract Act,
  3. concessions, or
  4. services in connection with federal property or lands and for the benefit of federal employees, their dependents, or the general public.

The Secretary of Labor is instructed to issue regulations implementing the Order by November 24, 2021, with revisions to the Federal Acquisition Regulations to occur within 60 days thereafter.

Importantly, the Order states that the mandate does not apply to grants. While charitable nonprofits often perform services for the federal government pursuant to contracts – for example, concessions or groundskeeping employing persons with disabilities – the vast majority of agreements between the government and nonprofits are grants that are exempted from the Order.

This analysis is straightforward: New Executive Order Requires Many Federal Contractors to Increase Minimum Wage for Workers by 2022, Robert K. Magovern and Matthew J. Howell, Cozen O’Connor. Also, Biden Signs Executive Order Requiring Federal Contractors to Pay a $15 Minimum Wage NextGov,

Please consult an accountant or your federal contracting representative for more information or visit this federal acquisitions website.

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