DOL Wage Hike Adds Contractor Compliance Questions

A recent annual minimum wage increase issued by the U.S. Department of Labor (DOL) is adding another layer of complexity for federal contractors already navigating shifting regulatory ground following the revocation of Executive Order 14026.

Although the Biden-era $15-per-hour federal contractor minimum wage rule has been rescinded, wage compliance obligations have not disappeared. Instead, contractors must conduct a careful, contract-by-contract analysis to determine which legal framework applies — and that determination largely hinges on when the contract was entered into.

Two Distinct Minimum Wage Frameworks Still in Play

Federal contractors are currently navigating two separate minimum wage regimes:

• Executive Order 13658, issued during the Obama administration, which remains in effect and requires annual inflation-based increases issued by DOL; and
• Executive Order 14026, issued under President Joe Biden, which established a $15 per hour minimum wage for covered contractor employees and applied to contracts entered into on or after January 30, 2022 — before being revoked by President Donald Trump.

Contracts Entered Before January 30, 2022

Contracts entered into — or extended through options — before January 30, 2022, remain subject to Executive Order 13658. Under that framework, DOL continues to issue annual inflation-adjusted minimum wage increases.

The latest DOL notice raises the contractor minimum wage applicable to those covered contracts for the current calendar year. Importantly, DOL has taken the position that EO 13658 does not apply to contracts awarded, renewed or extended after January 29, 2022.

For contractors operating under long-term or legacy agreements, the updated DOL minimum wage remains binding for the duration of contract performance, even though the later Biden-era $15 rule has been revoked.

Contracts Entered On or After January 30, 2022

Contracts entered into on or after January 30, 2022, were governed by Executive Order 14026, which set a $15 minimum wage and required annual indexing above that level. However, because EO 14026 has now been revoked, it no longer independently establishes a wage floor for new contracts.

The DOL has stated it is no longer enforcing EO 14026 or its implementing regulation (29 CFR Part 23) and intends to rescind the rule. Still, contractors remain bound by the express terms of their contracts unless and until those provisions are modified by the contracting officer.

Many agreements executed during the Biden administration include Federal Acquisition Regulation clause FAR 52.222-55, referencing minimum wages under EO 14026. Until agencies issue formal contract modifications or class deviations, contractors may remain obligated to comply with those terms.

Other Wage Laws Continue to Apply

Even where EO 14026 no longer governs, minimum wage compliance is not eliminated. Contractors must still look to several other legal sources, including:

• The Fair Labor Standards Act (FLSA): Establishes a federal minimum wage of $7.25 per hour, unless a higher wage applies under another law.
• Service Contract Labor Standards (formerly the Service Contract Act): Requires covered service contractors to pay wages and fringe benefits specified in applicable DOL wage determinations, which often exceed contractor minimum wage rates.
• The Davis-Bacon Act: Mandates prevailing wages for covered federal construction projects, typically well above federal minimum wage levels.
• State and Local Laws: Many states and municipalities impose higher minimum wages that apply independently of federal contracting rules.

Why January 30, 2022 Still Matters

Although EO 14026 has been revoked, January 30, 2022, remains a critical compliance dividing line. That date determines:

• Whether DOL’s most recent annual contractor minimum wage increase applies;
• Whether a contract was ever subject to EO 14026; and
• How agencies may treat option exercises, legacy clauses and enforcement positions.

For contractors with mixed portfolios — including legacy agreements and newer contracts — multiple wage frameworks may apply simultaneously. That reality creates both compliance risk and administrative burden.

Until DOL provides more definitive guidance on the status of existing EO 14026 contract clauses, contractors are advised to coordinate closely with contracting officers before making wage adjustments.

For many employers, wage compliance in 2026 is no longer a matter of simply tracking the federal minimum. Instead, it requires detailed contract review, awareness of overlapping federal labor statutes and careful risk management to minimize exposure under wage-and-hour enforcement regimes.

Originally reported by Joseph E. Ashman and Cameron W. Ellis in Ogle Tree.