Biden Raises Minimum Wage for Federal Contractors to $15

UPDATE: The US Department of Labor on July 22, 2021, proposed regulations to implement President Biden's executive order increasing the minimum wage for federal contractors. Interested parties may comment on the proposed regulations no later than August 23, 2021.

Author: Michael Cardman, XpertHR Legal Editor

April 28, 2021

President Joe Biden has issued an executive order requiring most federal contractors to pay their workers a minimum wage of $15.

Starting January 30, 2022, federal agencies must incorporate a $15 minimum wage into all new contract solicitations. Starting March 30, 2022, agencies must include a $15 minimum wage in any new contracts. The minimum wage for federal workers currently is $10.95 per hour.

The White House predicted the executive order could spur competitors in the same labor markets as federal contractors to increase their wages in an effort to compete for workers. This could have a cascading effect, the White House said, as employers will then raise wages for workers earning above $15 to recruit and retain talent.

Biden's executive order also will phase out the tipped minimum wage for federal contractors over the next few years. Currently, tipped employees working on federal contracts must be paid a minimum direct cash wage of $7.65 per hour. That will increase to $10.50 per hour in 2022, and then to 85 percent of the inflation-adjusted minimum wage in 2023 before being eliminated in 2024.