On Aug. 31, 2020, the DOL announced that the minimum wage rate for federal contractor employees will increase to $10.95 per hour on Jan. 1, 2021. This Legal Update video explains further while full text appears below.
On Aug. 31, 2020, the U.S. Department of Labor (DOL) announced that the minimum wage rate for federal contractor employees will increase from $10.80 to $10.95 per hour on Jan. 1, 2021. The minimum wage rate for federal contractor employees is subject to annual adjustments as required by Executive Order 13658 (the Order).
Tipped Employees
Tipped employees covered by the Order will also see their cash wage increase from $7.55 to $7.65 per hour on Jan. 1, 2021.
A covered tipped employee’s tips when combined with the $7.65 per hour cash wage must be at least equal to the applicable minimum wage rate for federal contractor employees. Federal contractors must subsidize a covered tipped employee’s wages if his or her tips and cash wage are less than the required minimum wage rate.
Affected Contracts
The Order applies to:
- All contracts for construction covered by the Davis-Bacon Act;
- Contracts for services covered by the Service Contract Act;
- Concessions contracts, such as contracts to furnish food, lodging, automobile fuel, souvenirs, newspaper stands, and recreational equipment on federal property; and
- Contracts to provide services, such as child care or dry cleaning, in federal buildings for federal employees or the general public.
A few limited exclusions apply to some workers. The DOL has published resources employers can use to review the Order’s requirements.
Important Dates:
Oct. 7, 2014
- Executive Order 13658 increases the minimum wage rate for certain federal contractor employees.
Jan. 1, 2020
- $10.80 minimum wage for federal contractor employees
- $7.55 cash wage for federal contractor tipped employees
Jan. 1, 2021
- $10.95 minimum wage for federal contractor employees
- $7.65 cash wage for federal contractor tipped employees
