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DOL Issues Proposed Rule Implementing Minimum Wage Increase for Federal Contractors

By Trina Fairley Barlow, Kris D. Meade, Rebecca Springer, Monica DiFonzo Sterling & Jillian Ambrose on August 2, 2021
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On July 21, 2021, the Department of Labor (“DOL”) announced that it is seeking public comment on a proposed rule which would require federal contractors to pay a $15.00 per hour minimum wage by January 30, 2022. The rule would implement President Biden’s April 27, 2021 Executive Order 14026 (“EO 14026”), which mandated an increase in the minimum wage of workers on federal government contracts (and associated subcontracts). Currently, the minimum wage for workers on federal contracts is $10.95 per hour and the tipped minimum wage is $7.65 per hour.  EO 14026 builds on President Obama’s 2014 Executive Order 13658, which established a $10.10 per hour federal contractor minimum wage that would increase annually. The final rule covering EO 14026 is scheduled to be issued by November 24, 2021, and the new minimum wage obligations are slated to go into effect on January 30, 2022.

The proposed rule provides some clarity on a key question left unanswered by the EO itself:  the definition of a worker who performs work “in connection with the contract” and therefore is covered by the EO. The rule specifies that a “worker” performs “on” a contract if the worker directly performs the specific services called for by the contract. It further specifies that a worker performs “in connection with” a contract if “the worker’s work activities are necessary to the performance of a contract but are not the specific services called for by the contract.”

The proposed rule excludes workers who are entitled to the federal minimum wage prescribed by the Fair Labor Standards Act and who are performing in connection with a contract for less than 20 percent of their work hours in a given workweek. This means that, generally, a contractor’s employees who do not perform work on its federal contracts will not be covered by these minimum wage requirements. The proposed rule also excludes from its minimum wage requirements federal grants, contracts with Indian Tribes, procurement contracts excluded from the Davis-Bacon Act, service contracts excluded from the Service Contract Act, contracts that are not performed in the United States, and contracts for manufacturing or furnishing materials, supplies, articles, or equipment to the federal government.

It also includes some exemption for very low-value contracts, depending on the type of contract. The minimum wage requirements will, however, apply to subcontractors and their lower-tier subcontractors, with no exemption based on the size or value of the subcontract.

Comments must be submitted on or before August 23, 2021, but the DOL suggests submitting comments as soon as possible.

Photo of Trina Fairley Barlow Trina Fairley Barlow

Trina Fairley Barlow is co-chair of the firm’s Labor and Employment Group and a member of the firm’s Government Contracts Group. She devotes a substantial portion of her practice to helping government contractors navigate and comply with the myriad laws, regulations, and Executive…

Trina Fairley Barlow is co-chair of the firm’s Labor and Employment Group and a member of the firm’s Government Contracts Group. She devotes a substantial portion of her practice to helping government contractors navigate and comply with the myriad laws, regulations, and Executive Orders which impact employers who are also government contractors. Trina’s experience includes advising federal contractors on the requirements of the Service Contract Act, as well as the Davis Bacon Act, and assisting clients with developing compliance strategies that reduce legal risks. In addition, Trina has defended and advised clients in False Claim Act (FCA) whistleblower retaliation cases and has led large internal investigations that frequently encompass a complex combination of labor and employment, government contracts, and ethics and compliance issues. In connection with such investigations and in other contexts, clients also frequently call upon Trina to assist them with developing compliant policies and internal practices that achieve business objectives while simultaneously reducing potential legal risks and exposure.

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Photo of Kris D. Meade Kris D. Meade

Kris D. Meade is co-chair of Crowell & Moring’s Labor & Employment Group. He is also a member of the firm’s Management Board and Executive Committee. He counsels and represents employers in the full range of employment and traditional labor law matters, including…

Kris D. Meade is co-chair of Crowell & Moring’s Labor & Employment Group. He is also a member of the firm’s Management Board and Executive Committee. He counsels and represents employers in the full range of employment and traditional labor law matters, including individual and class action lawsuits filed under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, ERISA, and companion state statutes. Kris represents employers in connection with union organizing campaigns, collective bargaining, labor arbitrations, and unfair labor practice litigation. In 2020, Chambers USA recognized Kris as a leading labor and employment lawyer.

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Photo of Rebecca Springer Rebecca Springer

Rebecca Springer joined Crowell & Moring in 1999 and currently serves as partner in the Labor & Employment Group. Her practice focuses on labor and employment litigation and counseling, particularly in the area of Office of Federal Contract Compliance Programs (OFCCP) compliance. Rebecca…

Rebecca Springer joined Crowell & Moring in 1999 and currently serves as partner in the Labor & Employment Group. Her practice focuses on labor and employment litigation and counseling, particularly in the area of Office of Federal Contract Compliance Programs (OFCCP) compliance. Rebecca has extensive experience conducting audits of personnel practices, preparing Affirmative Action Plans, and counseling clients on affirmative action issues. She also has experience conducting statistical analyses of compensation and other personnel practices for purposes of class action litigation, OFCCP compliance audits, and employer self-audits, and frequently teams with labor economists to analyze compensation and advise clients on potential risks and proactive measures to address compensation disparities.

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Photo of Monica DiFonzo Sterling Monica DiFonzo Sterling

Monica DiFonzo Sterling is a counsel in the Washington, D.C. office of Crowell & Moring, where she is a member of the firm’s Government Contracts Group.

Monica has an active government contracts counseling and litigation practice focusing on False Claims Act investigations, bid…

Monica DiFonzo Sterling is a counsel in the Washington, D.C. office of Crowell & Moring, where she is a member of the firm’s Government Contracts Group.

Monica has an active government contracts counseling and litigation practice focusing on False Claims Act investigations, bid protests, federal regulatory and ethics compliance, and government contracts disputes before the Government Accountability Office and the U.S. Court of Federal Claims.

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Photo of Jillian Ambrose Jillian Ambrose

Jillian Ambrose is a Labor & Employment Group associate in Crowell & Moring’s Washington, D.C. office. Prior to joining the firm, Jillian served as a law clerk to Judge Anthony Epstein and then to Judge Steven M. Wellner, both of the D.C. Superior…

Jillian Ambrose is a Labor & Employment Group associate in Crowell & Moring’s Washington, D.C. office. Prior to joining the firm, Jillian served as a law clerk to Judge Anthony Epstein and then to Judge Steven M. Wellner, both of the D.C. Superior Court. Before law school, Jillian was an analyst in the human capital practice of an international consulting firm, where she provided management consulting services to a portfolio of federal agency clients.

Jillian’s practice focuses on litigation of individual and class actions arising in all areas of labor and employment law. She provides counseling to clients on a variety of employment issues, including non-competition/non-solicitation agreements and contract disputes. She also assists clients with affirmative action compliance, preparing affirmative action plans, analyzing compensation practices, and providing counseling in connection with Office of Federal Contract Compliance Programs audits. Jillian has substantial experience in representing employers in wage & hour litigation and in conducting audits and compliance review of employer wage & hour policies and procedures.

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  • Posted in:
    Employment & Labor
  • Blog:
    Government Contracts Legal Forum
  • Organization:
    Crowell & Moring LLP
  • Article: View Original Source

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