The U.S. Department of Labor’s Wage and Hour Division has announced an increase in the minimum wage for federal contract and subcontract workers covered by Executive Order 14026. Effective January 1, 2025, the minimum hourly wage for these workers will rise from $17.20 to $17.75.
Key Points of the Wage Increase
- The new $17.75 minimum wage applies to all workers performing work on or in connection with covered federal contracts.
- This rate applies to both tipped and non-tipped employees, as well as workers with disabilities.
- Contracts entered into, renewed, or extended before January 30, 2022, generally remain subject to Executive Order 13658, which raises the minimum wage from $12.90 to $13.30 per hour.
Next Steps
Employers should review their existing and upcoming federal contracts to determine which wage rate applies and, if necessary, adjust their budgets to accommodate the increased labor costs. Payroll systems and processes must be updated to reflect the new minimum wage for eligible employees.
Prime contractors should also ensure that their subcontractors comply with the new minimum wage requirements.
