Establishing a Minimum Wage for Contractors

This executive order establishes a minimum wage of $10.10 per hour for workers on new federal contracts and subcontracts, effective January 1, 2015, with annual inflation adjustments beginning January 1, 2016. It also sets a phased minimum cash wage for tipped workers reaching 70% of the standard minimum wage. The order requires implementing regulations by October 1, 2014, and applies to contracts solicited on or after January 1, 2015.

Federal Register Open PDF 79 FR 9851

Impact dates

Jan 1, 2016
First annual CPI-based minimum wage adjustment takes effect
Jan 1, 2015
$10.10 minimum wage and $4.90 tipped cash wage take effect; applies to covered contracts solicited on or after this date
Nov 30, 2014
FAR Council issues Federal Acquisition Regulation updates
Nov 30, 2014
Agencies take steps to ensure compliance for section 7(d)(i)(C) and (D) contracts
Oct 3, 2014
Secretary publishes annual adjusted minimum wage (90 days before January 1 effective date)
Oct 1, 2014
Secretary of Labor issues implementing regulations

Key directives

Secretary of Labor shall issue regulations by October 1, 2014
FAR Council shall issue regulations within 60 days of Secretary's regulations
Agencies shall take compliance steps within 60 days of Secretary's regulations
Minimum wage of $10.10 per hour effective January 1, 2015
Annual CPI-based adjustments beginning January 1, 2016, published 90 days prior
Tipped worker minimum cash wage of $4.90 beginning January 1, 2015, phasing to 70% of standard wage
Contract clause must be included in new contracts and subcontracts

Who is ordered

Secretary of Labor · Department of Labor
FAR Council · GSA/DoD/NASA
Agency Heads · Various

Timeline

Immediate

EO effective immediately upon signing
Secretary of Labor to begin drafting regulations

Near term (90d)

Regulations due by October 1, 2014
FAR Council regulations within 60 days of Secretary's regulations
Agency implementation steps within 60 days of Secretary's regulations

Long term

$10.10 minimum wage effective January 1, 2015
Annual CPI-based adjustments beginning January 1, 2016
Tipped worker cash wage phased increases through 2020s until reaching 70% of standard wage

Risks & tensions

Regulatory delay risk: October 1, 2014 deadline for Secretary's regulations is tight; subsequent 60-day deadlines for FAR Council and agencies are chained and vulnerable to cascading delays
Coverage gaps: Order applies only to 'new contracts' with solicitations issued on or after January 1, 2015; existing contracts and renewals without new solicitations may escape requirements
Tipped worker phase-in creates multi-year compliance tracking complexity with annual $0.95 increments until 70% threshold reached
CPI methodology selection (month/quarter/year) delegated to Secretary creates uncertainty until first determination
Strong encouragement but no mandate for independent agencies may create uneven application across federal contracting
Micro-purchase threshold exemption and various statutory thresholds create fragmented coverage
Section 5(b) explicitly denies Contract Disputes Act rights, channeling disputes through Secretary's regulatory process—potential due process concerns