The U.S. Department of Labor’s Wage and Hour Division (WHD) recently announced that the minimum wage rate for federal contractors will increase, effective January 1, 2024, in most states.
Amount Depends on the Contract
The amount of the increases depends on the contract:
- For contracts entered into, renewed or extended on or after January 30, 2022, the minimum wage will increase $1.00 per hour. Beginning on January 1, 2024, the rate for both tipped and non-tipped workers will rise from $16.20 per hour to $17.20 per hour. (Executive Order 14026)
- For contracts before January 30, 2022, the minimum wage will increase 40 cents per hour. Beginning on January 1, 2024, the hourly rate for non-tipped workers will rise from $12.50 per hour to $12.90 per hour. For tipped workers, the hourly rate will increase from $8.50 to $9.05 per hour. (Executive Order 13658)
Exception in Three States
Recently, a U.S. District Court judge ruled that President Joe Biden didn’t have the power to increase the federal contractor minimum wage to $15 per hour in 2021 in three states, with annual increases in later years. Biden had raised the minimum wage by issuing an Executive Order and the states of Texas, Louisiana and Mississippi filed suit challenging the validity of the mandate.
The ruling blocks federal workers in the three states from receiving the federal contractor minimum wage. The judge sided with the states, ruling that Biden violated the Procurement Act by “unilaterally raising the minimum wage paid by federal contractors to their employees.” The ruling stated that Congress determines minimum wages and “Congress has not authorized the President to raise the minimum wage paid by federal contractors and subcontractors to its employees.” (Texas v. Biden, Southern District of Texas, 9/26/23)
The federal minimum wage for those who don’t work on federal contracts is $7.25 per hour. However, many states have set higher minimum wages.