Federal contracts will soon have to include provisions that ensure all employees working under those contracts receive at minimum $15 an hour for their work, under an executive order President Joe Biden intends to sign April 27.
“These workers are critical to the functioning of the federal government: from cleaning professionals and maintenance workers who ensure federal employees have safe and clean places to work, to nursing assistants who care for the nation’s veterans, to cafeteria and other food service workers who ensure military members have healthy and nutritious food to eat, to laborers who build and repair federal infrastructure,” the fact sheet on the order states.
Currently, federal contractors must make at least $10.95 an hour, under an executive order signed during the Obama administration that raised the contractor minimum wage and mandated that the minimum be indexed based on inflation.
Biden’s order will include that same provision, meaning that every year after 2022, the minimum for contract workers will increase based on the changes to cost of living.
Wages will not change the moment the order is signed, but rather will be brought up to the $15 minimum over the next year.
All federal contract solicitations will have to include a $15 minimum wage clause by Jan. 30, 2022, and all contracts awarded on or by March 30, 2022 will have to include such a provision.
For federal contractors that are already working under an existing contract, wages must be increased to a $15 minimum the next time their employer exercises its option to extend the contract, which usually occurs on an annual basis.
The order also eliminates the ability for contractors to pay their employees below the minimum wage on the expectation that they will receive tips to compensate for the lower base pay, a practice most commonly used in restaurant service.
Contract workers with disabilities, who are sometimes exempt from minimum wage requirements under law, would also be required to receive at minimum $15 an hour.
Outfitters and guides working on federal lands, who were previously exempt from minimum wage provisions under the Trump administration, would also be subject to Biden’s mandated $15 minimum.
“This executive order will promote economy and efficiency in federal contracting, providing value for taxpayers by enhancing worker productivity and generating higher-quality work by boosting workers’ health, morale and effort,” the fact sheet states.
“At the same time, the executive order ensures that hundreds of thousands of workers no longer have to work full time and still live in poverty. It will improve the economic security of families and make progress toward reversing decades of income inequality. Extensive, high-quality research shows that higher minimum wages have the intended effect of raising wages without significantly reducing employment outcomes. Higher minimum wages increase earnings growth for workers at the bottom of the income distribution, and those gains persist for years. A higher minimum wage, and an elimination of the tipped minimum wage, will benefit many women and people of color who likely have children and are the breadwinners in their households.”
Biden telegraphed his intention to raise the minimum wage for federal contractors alongside government employees just two days after his inauguration, promising a 100-day deadline for developing a plan to mandate higher contractor pay. This order comes just inside that promise at 95 days.
The Department of Labor’s Wage and Hour Division and the Federal Acquisition and Regulatory Council will be responsible for creating and issuing a rule to enforce the provisions of this order.