The U.S. Department of Labor (DOL) has released a notice in the Federal Register announcing the annual rate adjustment for federal contracts covered by Executive Order 13658. Although newer federal contracts were previously subject to a higher minimum wage under Executive Order 14026, the revocation of that order in March 2025 has shifted many contractors back to the requirements of Executive Order 13658 for certain federal service and construction agreements. As a result, contractors must conduct a contract-specific analysis to determine which minimum wage standard applies and ensure ongoing compliance.
New 2026 Wage Rates
Effective May 11, 2026, the minimum wage rates for covered federal contractors will increase based on annual inflation data. The adjusted rates apply to workers performing work “on or in connection with” covered federal contracts.
| Worker Category | Current Rate (until May 10, 2026) | New Rate (Effective May 11, 2026) |
| Non-Tipped Employees | $13.30 per hour | $13.65 per hour |
| Tipped Employees | $9.30 per hour | $9.55 per hour |
- Tipped Employee Credit: If a tipped employee’s cash wages ($9.55) plus tips do not equal at least the standard minimum wage ($13.65), the contractor must increase the cash wage to make up the difference.
- Inflation Calculation: The DOL determines these annual increases using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Who Is Covered?
Executive Order 13658 generally applies to the following types of federal contracts:
- Procurement contracts for construction covered by the Davis-Bacon Act (DBA).
- Service contracts covered by the Service Contract Act (SCA).
- Concessions contracts, such as those for food or lodging on federal property.
- Contracts related to federal property or lands where services are offered to federal employees or the general public.
“New” vs. “Existing” Contracts
Executive Order 13658 generally applies to covered federal contracts awarded between January 1, 2015, and January 29, 2022, that were not subsequently renewed or extended during the effective period of Executive Order 14026. Contracts awarded outside that timeframe may instead be governed by the Fair Labor Standards Act (FLSA), the Service Contract Act, the Davis-Bacon Act, or other applicable wage determinations. Given the layered regulatory history, contractors should not assume a uniform minimum wage rate applies. Each agreement must be evaluated individually.
Next Steps for Employers
Federal contractors should take immediate steps to ensure they remain compliant by the May deadline:
- Identify Covered Contracts: Review current federal contracts to determine which, if any, are subject to Executive Order 13658.
- Audit Payroll Systems: Update payroll software to reflect the new $13.65 (standard) and $9.55 (tipped) rates for all hours worked on covered contracts starting May 11, 2026.
- Update Required Postings: Contractors must display the Executive Order 13658 Minimum Wage Poster in a prominent and accessible place at the worksite. An updated version is expected to be released by the DOL prior to the effective date.
- Notify Subcontractors: Prime contractors are responsible for ensuring that their subcontractors also comply with these minimum wage requirements.
