by This week, the U.S. Department of Labor’s Wage and Hour Division released notices increasing the 2024 minimum wage rates for federal contractors. Annual rate increases result from two Executive Orders regarding minimum wage rates for employees working on federal contracts. Executive Orders 13658 and 14026 contain provisions requiring annual inflation-based minimum wage increases paid to certain federal contract workers.
The federal contracts covered by the wage requirements are:
- 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 by the DOL’s regulations; and
- Contracts concerning federal property or offering services for federal employees, their dependents, or the general public.
The Changes: For federal contracts entered into, renewed, or extended on or after January 30, 2022, the minimum wage for federal contractors will increase from $16.20 per hour to $17.20 per hour, effective January 1, 2024.
For federal contracts entered into before January 30, 2022, and not renewed or extended after that date, the minimum wage for employees working on the contract will increase from $12.50 per hour to $12.90 per hour, effective January 1, 2024.
For more information on identifying which employees are subject to federal contractor minimum wage rates, see the Frequently Asked Questions provided by the agency when the Executive Orders were issued: https://www.dol.gov/agencies/whd/government-contracts/eo14026/frequently-asked-questions.
The Federal Court Challenge: There are a few states where these rate changes may not apply, depending on the progress of a case in Texas. On September 26, 2023, a federal judge in Texas ruled that the federal government lacked the power to order federal contractors, via executive order, to pay workers a minimum wage or to require annual adjustments for inflation thereafter. The judge blocked the plan from being enforced in Louisiana, Mississippi, and Texas. No other states are affected by the court order at this time.
