Updated as of 3/24/2025
On March 14, 2025, President Trump issued Executive Order (EO 14236). This action rescinds a total of 18 executive orders from the Biden administration, including EO 14026, which had significantly increased the federal contractor minimum wage of $17.75 per hour. The rescission raises questions about wage obligations for federal contractors, particularly considering ongoing legal proceedings and regulatory uncertainties.
Background on Federal Contractor Minimum Wage
The concept of a federal contractor minimum wage was first introduced by President Obama in 2014 under EO 13658. This order sets an initial minimum wage of $10.10 per hour for covered contracts, with annual adjustments based on the Consumer Price Index (CPI). EO 13658 remained in effect for contracts entered before January 30, 2022, unless they were renewed, extended, or modified, at which point President Biden’s EO 14026 took precedence.
Executive Order 14026 in 2021, raised the minimum wage to $17.75 per hour as of January 1, 2025, while also eliminating the lower minimum wage for tipped workers. Contracts entered into, renewed, extended, or modified after January 30, 2022, were required to comply with the higher wage requirements.
Technically, the U.S. Department of Labor (DOL) rule implementing EO 14026 is still on the books. The DOL, represented by the U.S. Department of Justice (DOJ), has been defending the rule against legal challenges, including a recent March 13, 2025, filing by the DOJ in the 5th U.S. Circuit Court of Appeals supporting the rule. However, given the rescission of the EO, it is likely that the DOL will repeal the rule and/or that the DOJ will withdraw its defense of it in court.
With the revocation of the Biden EO, uncertainty now arises regarding the applicable minimum wage for federal contractors. Employers are questioning whether contracts previously subject to the Biden EO now default to the $13.30 hourly wage ($9.30 for tipped workers) established by the Obama EO 13658 which has not been rescinded or whether they revert to the general federal minimum wage of $7.25 per hour unless otherwise dictated by state law.
Next Steps for Employers
Until further guidance is issued by the Department of Labor (DOL), federal contractors should take the following steps:
- Review Existing Contracts: Identify contracts that were subject to the Biden EO and determine whether they may still fall under the Obama EO, prevailing wage laws, or whether they now have no federal minimum wage obligation beyond the Fair Labor Standards Act (FLSA) requirement of $7.25 per hour. The best practice may be to pay the Obama EO rate or where applicable the prevailing wage rate.
- Monitor DOL Guidance: Stay updated on any clarifications issued by the Department of Labor regarding the transition from the Biden EO to the new framework. If the DOL moves to repeal the rule associated with the Biden EO, this could have additional implications for covered contracts.
- Assess State and Local Wage Laws: Many states and local jurisdictions impose higher minimum wages than the federal standard. Contractors should ensure compliance with all applicable wage laws.
- Consult Legal Counsel: Given the legal ambiguity surrounding contracts previously covered by the Biden EO, employers should seek legal guidance on how best to proceed while awaiting formal federal direction.
- Communicate with Contracting Agencies: Engage with contracting officers to understand any agency-specific guidance or expectations regarding wage requirements under existing and future contracts.
How HR Works Can Help
Current HR Works clients may contact their designated HR consultant for additional information. Virtual Helpline clients may contact the Virtual Helpline for additional guidance and support.
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