Federal contractor employers are no longer subject to special federal minimum wage rates for work performed on or in connection with certain federal contracts.
Late last week President Trump issued what might be described as a “clean-up” executive order titled, “Additional Rescissions of Harmful Executive Orders and Actions.” The order follows Executive Order 14148, “Initial Recissions of Harmful Executive Orders and Actions” in which 78 Biden era orders and presidential memoranda were rescinded. In that same order, President Trump directed that various policy officials “compile lists of additional orders, memoranda, and proclamations issued by the prior administration that should be rescinded.”
That has now resulted in 18 more orders and memoranda being rescinded with this new order, including Executive Order 14026, “Increasing the Minimum Wage for Federal Contractors,” though the regulations implementing EO 14026 are technically still in place.
Whether and to what extent the Department of Labor will “clean-up” and rescind the regulations implementing EO 14026 (or EO 11246, for that matter) remains to be seen, but with the underlying authority revoked the regulations will likely simply not be enforced, relieving federal contractors of the mandate’s burden.
EO 10426 built on EO 13658, “Establishing a Minimum Wage for Contractors,” signed by President Obama in 2014. That established a minimum wage for covered contracts and annual cost of living rate increases, but was superseded by EO 14026. It is highly unlikely that any federal contracts subject to the original order survive today, and the Trump Administration has not yet revoked EO 13658.
“Closing the Barn Door?”
The federal contractor minimum wage executive orders were surprisingly complicated, applying to contracts covered by the Service Contract Act, the Davis-Bacon Act, concessions contracts not otherwise subject to the Service Contract Act, and contracts in connection with federal property or land and related to offering services for federal employees, their dependents, or the general public.
And the minimum wage only applied to work performed “on or in connection with” a covered contract. Administratively, it was a nightmare for most contractor employers to try to track what work did and did not qualify for the federal contractor minimum wage. Accordingly, many opted to simply raise their minimum wages across the board, which may very well have been the intent.
Once wages are raised, employers generally find it very difficult to lower them again for a variety of reasons. Even if it is legally permissible to do so, such a move would likely result in employee relations and morale issues that can negatively impact performance and revenue, outpacing any savings gained by lowering minimum wages.
Regardless, EO 14026 did require annual cost of living increases to the mandated minimum wage. The rescission of the order means the increase to $13.30 per hour that went into effect on January 1, 2025 was the last increase that will be imposed upon federal contractor employers.
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