Federal contractor minimum wage increasing in 2022

The U.S. Department of Labor this month announced the minimum wage rate for federal contractors is rising to $11.25 per hour at the start of 2022. The minimum wage rate for federal contractor tipped employees will increase to $7.90 per hour. The new rates become effective Jan. 1, 2022.

Under a 2014 executive order, the minimum wage rate for federal contractors applies to workers performing work in connection with covered contracts, which includes four major categories of contractual agreements: 

• Procurement contracts for construction covered by the Davis-Bacon Act.

• Service contracts covered by the Service Contract Act.

• Concessions contracts, including any concessions contract excluded from the SCA.

• Contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

Higher minimum wages for federal contractors are also on the way.

An executive order issued earlier this year will increase the minimum wage rate for federal contractor employees to $15 per hour ($10.50 for tipped workers) on Jan. 30, 2022. The $15 per hour rate applies to new contracts entered into on or after Jan. 30, 2022, and to contracts that are renewed or extended on or after that date. 

Not all federal contracts will qualify as “new contracts” under the 2021 executive order, the DOL has said. The contracts that aren’t considered new contracts will instead be subject to the minimum wage requirements of the 2014 executive order.