The U.S. Department of Labor has announced a new minimum wage rate for certain federal contract workers, with changes set to take effect May 11, 2026.
According to a recent Notice of Rate Change issued by the department’s Wage and Hour Division, the minimum wage for covered workers will increase to $13.65 per hour. Tipped employees working on qualifying federal contracts must be paid at least $9.55 per hour.
The updated wage applies to workers performing on federal contracts or subcontracts entered into between Jan. 1, 2015, and Jan. 29, 2022 — provided those contracts were not renewed or extended on or after Jan. 30, 2022.
The increase stems from Executive Order 13658, issued Feb. 12, 2014, which established a federal minimum wage for employees working on federal government contracts. The order authorizes the Secretary of Labor to adjust the wage annually and requires at least 90 days’ notice before new rates take effect. A final rule outlining enforcement standards was published in October 2014.
While contractor wage requirements have shifted across administrations, Executive Order 13658 remains in effect. Most recently, Executive Order 14236 revoked a later Biden-era order but did not rescind the 2014 mandate.
The notice clarifies that Executive Order 13658 primarily affects contracts covered by the Davis-Bacon Act and the Service Contract Act awarded during the specified 2015–2022 period.
Contractors with qualifying agreements may need to adjust wages before the May 11 deadline. Companies could also need to review and update related documentation, including payroll systems, offer letters, wage notices, compensation policies and tip credit records.
Failure to comply may result in back wage liability, withholding of contract payments or potential disbarment from future federal contracting opportunities.
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Legal and compliance professionals advise federal contractors to treat the wage adjustment as part of a broader compliance review. Organizations may benefit from verifying which contracts remain covered, confirming proper wage classifications and coordinating among HR, payroll, finance and legal teams.
Establishing a structured process to monitor regulatory developments and incorporate changes into compliance calendars can help reduce operational and legal risks as Department of Labor requirements continue to evolve.
Originally reported by Cassie Shamber in JDSUPRA.
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