10/08/2024 | News release | Distributed by Public on 10/08/2024 11:02
Federal contractors may need to be prepared to increase pay for employees working on, or in connection with, covered federal government contracts. The hourly minimum wage for employees performing work on federal contracts will rise from $17.20 to $17.75 on Jan. 1, 2025, the Department of Labor (DOL) has announced. The new minimum wage rate will apply in full to tipped and non-tipped employees alike, as well as to workers with disabilities.<_o3a_p>
Contracts entered into, renewed, or extended prior to Jan. 30, 2022, generally remain subject to the minimum wage rate under Executive Order 13658. The operative minimum wage for those contracts will increase from $12.90 to $13.30 per hour.<_o3a_p>
There are a number of pending lawsuits challenging the Biden Administration's authority to impose the minimum wage increase for federal contractors. It is unlikely these cases will be resolved prior to Jan. 1. Employers should not count on a reprieve before the mandated wage hike takes effect.<_o3a_p>
Executive Order 14026, signed by President Joe Biden on April 27, 2021, increased the minimum hourly wage for employees working on federal government contracts and provided for annual increases to the minimum wage. The DOL issued regulations implementing EO 14026 and the Federal Acquisition Regulatory Council (FARC) amended the federal procurement regulations accordingly. On Sept. 30, 2024, the DOL published formal notice in the Federal Register of the new rate to take effect Jan. 1, 2025.<_o3a_p>
EO 14026 applies to employees of entities that contract with the federal government who work on or in connection with a covered federal government contract - an estimated 500,000 employers. <_o3a_p>
Meanwhile, ongoing lawsuits contend that President Biden exceeded his authority under the Procurement Act when he issued EO 14026 and the DOL likewise lacked authority to implement the EO's mandated minimum wage increases. Litigation is pending in three federal circuit courts of appeal:<_o3a_p>
Legal challenges to EO 14026 are ongoing, and courts have been inconsistent on whether President Biden exceeded his authority under the Procurement Act. The Supreme Court may decide to resolve the matter definitively. The outcome of the presidential election may also be determinative, as a new presidential administration may opt to change course. <_o3a_p>
To navigate the uncertain legal terrain, federal contractors should:<_o3a_p>