The U.S. Department of Labor (DOL) issued a memorandum on January 13th, 2022, which provides guidance on the application of Executive Order 14026 (EO 14026) which increased the federal contractor minimum wage. In short, the guidance highlights the differences between EO 14026 and Executive Order 13658 (EO 13658), which was issued in 2014. Previously, EO 13658 established minimum wage for federal contractors. Earlier, on April 27th, 2021, the Biden Administration had issued EO 14026 with the goal of increasing the minimum wage for contractors by January 30th, 2022.
Background of EO 13658
On February 12th, 2014, President Barack H. Obama signed EO 13658 requiring contractors to pay at least the established minimum wage to workers under federal contracts. Specifically, the order established a minimum wage of $10.10 ($4.90 for tipped workers) with annual increases based on inflation. At the present time, the minimum wage rate for federal contractors is $11.25 ($7.90 for tipped workers).
Increases to the Federal Contractor Minimum Wage
Subsequently, on April 27th, 2021, President Joseph R. Biden signed EO 14026, which increased the minimum wage established by EO 13658. In effect, the increase established an initial minimum wage of $15.00 ($10.50 for tipped workers). EO 14026 will take effect on January 30 and will, likewise, increase annually based on inflation. In general, the DOL’s memorandum shows that both executive orders share many similarities. However, they do have some key differences relating to coverage and applicability.
Comparison of EO 13658 and EO 14026
Whereas EO 13658 applies to non-extended contracts awarded before January 29th, 2022, EO 14026 applies to contracts awarded or extended after January 30. Furthermore, coverage under the latter EO is triggered by the unilateral exercise of a pre-negotiated option to renew or extend an existing contract on or after January 30. Comparatively, the former EO is not. Other key differences between the orders include:
- Recreational service contracts: EO 14026 covers contracts in connection with seasonal recreational services and equipment rental offered for public use on federal lands. Meanwhile, EO 13658 did not, depending on the date the contract was entered, renewed, or extended.
- Minimum wage for tipped workers: Beginning January 30, EO 14026 phases out subminimum wage for tipped workers, raising it to the full minimum wage by 2024. The earlier EO 13658 raised tipped worker wages but didn’t wholly phase out subminimum wage for workers.
- Independent agencies: EO 13658 “strongly encouraged” but did not require independent agencies to comply. Markedly, EO 14026 generally applies to independent agencies.
- New exclusion: On the other hand, EO 14026 does not apply to contracts resulting from solicitation issued prior to January 30. Specifically, this refers to those contracts subsequently entered into on or between January 30 and March 30.
- Geographical coverage: EO 13658 applies to contracts in all 50 states and the District of Columbia. EO 14026 covers those areas but also specific U.S. territories, including Guam and Puerto Rico.