The new minimum wage is set to take effect in early 2022. Agencies will have to include the $15 wage floor in any new contract solicitations starting on January 30, 2022 and have this minimum wage in new contracts by March 30, 2022.
President Joe Biden issued an executive order requiring federal contractors to establish a $15 minimum wage for their employees by early 2022.
Agencies will have to include the $15 wage floor in any new contract solicitations starting on January 30, 2022 and have this minimum wage in new contracts by March 30, 2022, according to an administration fact sheet.
For contractors already working for the government, agencies should include this minimum wage into contracts when contracts are extended.
Biden signaled his intent to push toward a $15 minimum wage days after taking office. He asked his staff to help him issue an executive order for contractors to get a $15 minimum wage and emergency paid leave in first 100 days in office, a deadline approaching on April 30. The forthcoming executive order doesn't take aim at emergency paid leave.
In 2014, then President Barack Obama ordered an increase to the minimum rate for contractors to $10.10 an hour. Currently the minimum wage for contractors is $10.95 an hour, since it's been indexed by an inflation measure.
The new rate will also be indexed annually, but Biden's executive order will also do away with the tipped minimum wage for contractors, which the Obama-era executive order left intact. It will also requires people with disabilities to be paid that same $15 minimum wage, and it revokes a Trump executive order that carved certain recreational workers from the minimum wage requirement.
The new policies will be put into law through rulemaking done by the wage and hour division of the Labor Department and the Federal Acquisition and Regulatory Council.
There are more than 4 million people working as federal contractors. It's not clear how many will see a pay hike under the executive order. The administration's fact sheet called out cleaning service employees, food service workers and nursing assistants as job categories that will see benefits from the change.
“Federal contractors, like all Americans, deserve a fair wage for their labor and I applaud these steps by the Biden-Harris Administration to raise their minimum wage,” Rep. Don Beyer (D-Va.) said in a statement. "This will put money in workers’ pockets and help improve the standard of living for thousands of American families, many of whom I represent."
Republican leaders on the House Oversight and Goverment Reform Committee spoke out against the move.
"Raising the minimum wage for federal contractors doesn’t make them work faster or more efficiently. This isn’t rewarding performance. This is just going to come from the pockets of taxpayers and worsen the ever-growing pile of debt," said Rep. James Comer (R-Ky.) the ranking member of the committee.