A new complication for wage and hour compliance.
In a new Executive Order entitled, “Additional Rescissions of Harmful Executive Orders and Actions,” President Trump rescinded 18 Executive Orders, including Executive Order 14026, “Increasing the Minimum Wage for Federal Contractors.”
Executive Order 14026 was issued by President Biden in 2021 and required covered contractors to pay a minimum wage to employees who worked on or in connection with covered contracts. The minimum wage started at $15 an hour in January 2022 and increased annually. At the time of rescission, the minimum wage was $17.75 an hour.
Contractors with agreements that require compliance with EO 14026 should stay alert for notices from the Federal Acquisition Regulatory Council or the contracting agency regarding this change. Ultimately, contractors will no longer need to pay the required minimum wage or post the notice required by the U.S. Department of Labor. Of course, contractors should consider the effect on employee relations and other applicable wage obligations before reducing pay rates for employees affected by this change.
In addition, contractors should be mindful that President Trump did not rescind Executive Order 13658, issued by President Obama in 2015, which also established a minimum wage for federal contractors.
EO 13658 applies generally to covered contracts entered on or before January 31, 2022, whereas EO 14026 applied generally to covered contracts entered after that date. Contracts dated before January 31, 2022, that have been amended or modified should have been updated to require compliance with EO 14026. The Final Rule implementing EO 14026 makes clear that contractors would be required to comply with either EO 13658 or EO 14026, depending on the timing of contract execution or modification.
Thus, for contracts that pre-date January 31, 2022, and that have not been amended or modified, compliance with EO 13658 may continue to be necessary. The current minimum wage applicable to that executive order is $13.30 an hour.
For assistance regarding this new development, please contact a member of Constangy’s EEO/Contractor Compliance, Reporting & Analytics practice group.
PartnerCara co-chairs Constangy’s practice groups relating to EEO/Contractor Compliance, Reporting & Analytics, and DEI Compliance. She advises employers on proactive strategies to help avoid litigation and has defended employers ...
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