The U.S. Department of Labor has announced an upcoming increase to the minimum wage applicable to certain federal contractors under Executive Order 13658.
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Beginning May 11, the required minimum hourly wage for covered non-tipped contractor employees will rise from $13.30 to $13.65. The minimum cash wage for tipped employees will increase from $9.30 to $9.55 per hour.
The Department of Labor is responsible for updating the wage rate annually, using a formula generally tied to inflation.
While the number of covered contracts has declined in recent years, the agency noted that some contracts remain subject to the order and must comply with the new wage thresholds.
The new wage rates take effect May 11 and apply to contractors whose agreements remain covered by Executive Order 13658. Employers with qualifying contracts must ensure payroll systems, subcontractor agreements and compliance documentation reflect the updated wage floor.
Currently, the minimum wage for contractors covered by the Executive Order is $13.30. The rate for tipped employees is currently $9.30.
On May 11, the minimum wage rates will increase to $13.65 for non-tipped employees and $9.55 for tipped employees.
Covered contractors should also review notice-posting requirements and ensure subcontractors are informed of the change. Failure to comply can result in withholding of contract payments, termination or potential debarment from future federal work.
Federal contractor minimum wage rules have shifted under successive administrations.
President Barack Obama issued Executive Order 13658, which established a minimum wage for certain federal contracts entered into between Jan. 1, 2015, and Jan. 29, 2022, provided those contracts were not renewed or extended after Jan. 29, 2022.
President Joe Biden later issued Executive Order 14026, Increasing the Minimum Wage for Federal Contractors, which applied to certain contracts entered into on or after Jan. 30, 2022, and set a higher wage rate.
However, President Donald Trump rescinded Executive Order 14026 on March 14, 2025, while leaving Executive Order 13658 in place.
As a result, Executive Order 13658 remains operative and governs any contracts that:
The Department of Labor has acknowledged that “the number of contracts subject to Executive Order 13658 has significantly decreased over the past several years,” but “anticipates that there will still be some existing contracts . . . that would not have” been covered by Executive Order 14026 and that therefore remain covered by Executive Order 13658.
Although the population of covered contracts is shrinking, contractors operating under long-term agreements — particularly in construction, service and maintenance sectors — may still be affected.
Companies should conduct a contract-by-contract review to determine whether agreements fall within the qualifying date range and whether any renewals or extensions have altered coverage status.
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Additionally, contractors that previously adjusted wages upward under Executive Order 14026 should verify whether rescission of that order affects their wage structure or if other federal, state or local minimum wage laws impose higher standards.
With enforcement authority resting with the Department of Labor, covered employers are encouraged to update compliance protocols before the May 11 effective date to avoid potential penalties.
As federal procurement rules continue to evolve, contractors should monitor regulatory updates closely and seek legal guidance where necessary to ensure ongoing compliance with wage and hour obligations.
Originally reported by JD Supra.
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