On January 1, 2023, the minimum wage for government contractors under Executive Order 14026 increased from $15.00 per hour to $16.20 per hour. We wrote about Executive Order 14026 and its requirements previously here. There continues to be confusion as to when and how Executive Order 14026 applies, so here are a few key components that government contractors should keep in mind.
- Federal Acquisition Regulation (FAR) 52.222-55, Minimum Wages for Contractors Under Executive Order 14026 (distinguished from the former FAR provision with the same number but different name) should have been modified into applicable contracts or subcontracts that were solicited, renewed or extended after January 31, 2022.
- From the effective date of the modification that incorporated the new provision through December 31, 2022, the applicable minimum wage was $15.00 per hour.
- Effective January 1, 2023, the minimum wage became $16.20 per hour. The Department of Labor (DOL) may issue increases to the minimum wage that will be effective each year on January 1.
- At this point, a contract for services or construction should contain the new FAR clause. If it does not, the obligation to pay the higher minimum wage does not apply. However, to avoid possible investigations by the DOL and disgruntled employees, we recommend bringing the issue to the attention of the contracting officer or prime contractor immediately and retroactively applying the wage requirements.
- You may request a price adjustment for the actual difference in wages and fringe benefits you have to pay as a result of a change, and you should do so within thirty (30) days of the change in wage rate.
- This requirement applies to non-exempt workers on contracts subject to the Davis Bacon Act and Service Contract Act, as well as any non-exempt employee working in connection with a covered contract.
If you have any questions about whether the new government contractor minimum wage requirement applies to your contracts, please contact Nichole Atallah, the author of this blog, or another member of PilieroMazza’s Labor & Employment Group.
