DOL: $15 Minimum Wage Rule Proposal for Federal Contractors

Following an executive order issued by the White House in April 2021, the Department of Labor (DOL) recently announced a proposed rule to raise the minimum wage for federal independent contractors to $15 per hour. Find out more about this proposal and how it could impact employers and the federal minimum wage.

Biden White House to Raise Hourly Federal Contractor Minimum Wage to $15

President Joe Biden issued an executive order in spring 2021 to increase the hourly minimum wage to $15 for federal contract workers. This represents a change of nearly $5 per hour, as the current hourly minimum wage for federal contract workers is $10.95. 

The administration says that this adjustment has benefits for more than just workers. According to the order, this change “enhances worker productivity and generates higher-quality work by boosting workers’ health, morale, and effort; reducing absenteeism and turnover; and lowering supervisory and training costs.”

Federal Contractor Wage Raise Details

In July 2021, the DOL released a rule proposal to implement this adjustment. The standards and procedures introduced by the agency include:

• Increased Federal Contract Worker Minimum Wage by 2022: Increase the minimum wage for workers performing work on or in connection with covered federal contracts to $15 per hour beginning Jan. 30, 2022.
• Indexed Federal Contract Minimum Wage to Account for Inflation: The executive order also orders the DOL to index the federal contract minimum wage in future years as an inflation measure.
• End of Tipped Minimum Wage for Federal Contract Workers: Additionally, the order promises to eliminate the tipped minimum wage for federal contract workers by 2024.
• Protections for Workers with Disabilities: Ensure a $15 minimum wage for workers with disabilities performing work on or in connection with covered contracts.
• Other Protective Measures: This includes restoring minimum wage protections to outfitters and guides operating on federal lands.

Additionally, the DOL said that it invites comments from the public on the rule proposal, which are due by Aug. 23, 2021. To submit feedback, employers can go to regulations.gov.

Other Recent Department of Labor Developments to Know

The proposed increase to the hourly minimum wage for federal contractors is the most recent labor development from the Biden White House. 

For example, after taking office in January 2021, the Biden administration released a regulatory freeze pending review memorandum, which postponed for 60 days any rulings that had been issued but not yet taken effect. In May 2021, the department officially withdrew a change to an independent contractor rule originally issued by the Trump White House. 

Other developments signal possible changes in the future. This includes adjustments to the overtime threshold, a rate which the DOL acknowledged in June 2021 is currently under review. Right now, the overtime income threshold stands at $35,568/year or $684/week, which means that people who earn less than $35,568/year or $684/week automatically qualify for overtime.

Will Increased Pay for Federal Contractors Impact the Federal Minimum Wage?

It’s too soon to tell. The Biden administration has publicly supported increasing the federal minimum wage to $15 per hour, though these efforts stalled in late February 2021. It’s possible that the White House revisits the issue in later 2021 or early 2022, though nothing is certain at this point—especially given the spread of the Delta variant, which has prolonged the coronavirus crisis. 

With this said, employers should keep in mind that many states continue to raise the minimum wage for private workers. To review these laws, refer to the DOL’s interactive state minimum wage law map.