The U.S. Department of Labor (DOL) has raised the minimum wage for certain federal contracts related to services and construction (not supplies) as of January 1, 2024. The amount of the increase depends on when your organization’s covered federal contract was signed or modified.
For federal contracts signed, renewed, or extended on or after January 30, 2022:
- Rate for all employees working on or in connection with the federal contract: $17.20 per hour (up from $16.20 for non-tipped employees and $13.75 for tipped employees in 2023).
- Authority: Executive Order 14026 (“Increasing the Minimum Wage for Federal Contractors”), plus the regulations at 29 CFR Part 23 and the newly published rates in the Federal Register at 88 Fed Reg 66906 (September 28, 2023).
For older federal contracts (those signed, renewed, or extended on or after January 1, 2015, through January 29, 2022):
- Rate for non-tipped employees working on or in connection with the federal contract: $12.90 per hour (up from $12.15 in 2023).
- Cash wage for tipped employees working on or in connection with the federal contract: $9.05 per hour (up from $8.50 in 2023).
- Authority: Executive Order 13658 (“Establishing a Minimum Wage for Contractors”), plus the regulations at 29 CFR Part 10 and the newly published rates in the Federal Register at 88 Fed Reg 66903 (September 28, 2023).
For tipped workers, if the amount of the cash wage plus tips is less than the minimum wage for non-tipped workers, the cash wage must be increased accordingly.
If your organization’s federal contract is for supplies (such as the manufacture of tangible objects or the purchase of federal timber), these minimum wages don’t apply to your organization. The minimum wages for federal contractor employees apply only to the following types of federal contracts and subcontracts: (1) procurement contracts for services or construction; (2) contracts for services covered by the Service Contract Act; (3) contracts for concessions; and (4) contracts in connection with federal property or lands related to offering services for federal employees, dependents, and the general public. Only employees who are working on these types of covered federal contracts (or who spend at least 20 percent of their time on work connected to the federal contracts) are entitled to this minimum wage. There are some limited exclusions from each executive order, spelled out in the regulations at 29 CFR 23.40 (for Executive Order 14026) and 29 CFR 10.4 (for Executive Order 13658).
Tips: You must notify affected workers of the applicable minimum wage rate. For service employees on contracts covered by the Service Contract Act and laborers and mechanics on contracts covered by the Davis-Bacon Act, you may meet this requirement by prominently posting the applicable wage determination provided to you by the federal agency for which you are performing the work. For employees covered by the federal Fair Labor Standards Act (FLSA), you’ll need to display the current poster that applies to your federal contract: Worker Rights Under Executive Order 14026: Federal Minimum Wage for Contractors or Worker Rights Under Executive Order 13658: Federal Minimum Wage for Contractors. Currently, these posters display the 2023 rates; when the 2024 posters are published, you’ll need to download fresh copies from the Department of Labor webpage for workplace posters. In addition, depending on the type of work performed by your employees on the federal contract, you may also need to display either the Service Contract Act/Walsh-Healey Public Contracts Act poster (Employee Rights on Government Contracts, for federal contracts involving the provision of services or goods) or the Davis-Bacon Act poster (Notice to all Employees Working on Federal or Federally Financed Construction Projects, for construction workers). Another mandatory federal poster related to minimum wage is Employee Rights Under the Fair Labor Standards Act. For more information about workplace posters, see our Legal Guide, Mandatory Posters.
