Federal Contractor Minimum Wage Change and Infrastructure Bill Proposals

May 05, 2021
Inside HR
Wage & Hour
Read time: 3 mins

President Biden signed an executive order on April 27 to increase the minimum wage for federal contractors and subcontractors to $15 per hour, beginning Jan. 30, 2022. By March 2022, the new minimum wage must also be written into any new contracts. The Secretary of Labor will conduct an annual review and publish any changes at least 90 days prior to any increase, beginning Jan. 1, 2023. Tipped employees of federal contractors or subcontractors will also see an increase to minimum wage. Any tipped worker earning below the designated hourly rate, between wages and tips, must be supplemented by employers to comply with the following schedule:

  • By Jan. 30, 2022 – $10.50 per hour
  • By Jan. 1, 2023 – 85 percent of the wage earned by federal contractors and subcontractors, rounded up to the nearest 5 cents. For example, if the federal contractor hourly rate is set at $15.25, tipped employees will need to earn at least $13.00 per hour ($15.25 x 0.85 = $12.96, rounded up to $13.00).
  • By Jan. 1, 2024 – A wage equal to the wage paid to all other federal contractors and subcontractors

Although this change only applies to the majority of federal contractors and subcontractors at this point, all employers should begin evaluating what this change could mean for budgets, employment and retention, and recruiting efforts. Federal contractors holding contracts or agreements with Indian tribes under the Indian Self-Determination and Education Assistance Act, any contracts specifically excluded in the language of the Bill, and those funded with federal grant money are not required to comply.

In addition to the most recent executive order, President Biden’s April 28 address to Congress included some agenda items employers should be aware of:

  • The American Jobs Plan proposes to bring outsourced jobs back to the United States and create new jobs by making vast improvements to the country’s infrastructure.
  • The PRO (Protecting the Right to Organize) Act was mentioned as a way to enhance The American Jobs Plan with support for organized labor.
  • Support for increasing the minimum wage to $15 per hour for all employees.
  • The Paycheck Fairness Act would add to protections offered under the Equal Pay Act of 1963 and the Fair Labor Standards Act to close the pay gap between men and women.
  • The American Families Plan proposes benefits for families, including lower health care premiums and prescription costs, resources to assist with the cost of childcare, and 12 weeks of paid Family and Medical Leave to include additional qualifying reasons to support caring for family members.
  • The Equality Act aims to end discrimination against the LGBTQ community by protecting rights related to gender identity.

Although these proposals are still working through the House and Senate, there is strong support for portions of each. MRA will continue to monitor their progression and keep members informed of any changes. For more information, contact our HR Hotline at 866.474.6854 or email InfoNow@mranet.org.